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August 12th, 2008

Bad News Turning (Ever so Slightly) Good

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For longer than many of us care to remember, it seems as though the dark clouds have settled over the entire financial system with no signs of passing over. Yet, over recent weeks positive trends have taken shape that suggest all news is not bad news.

Fist off, and probably the most inspiring, has been the steady decline in oil prices. Despite the conflict in Georgia which forced oil producer BP to close two of its oil and natural gas pipelines, oil dropped below $114 a barrel today, proving that despite shaky, even deadly conditions abroad are having little effect on raising prices at the pump.

Food inflation was a hot topic in the beginning of the summer, but has seemed to cool off as reports today hailed the second largest corn crop in history – 12.288 billion bushels. The Agricultural Department predicts the fall’s soybean harvest will be the fourth largest on record. Immense harvests can only lead to increased supply, forcing food prices to go down.

Pending Homes Sales increased 5.3% in June despite economist predictions of a 1% decline. The National Association of Realtors’ Pending Home Sales Index rose to 89 from 84.5 in May. Analysts predict the boost in signed contracts was a result of banks aggressively lowering the prices of their foreclosed properties. That being the case, any positive trends in the housing market are a very welcome and encouraging sign. One fact to remember: potential buyers still retain the option to opt out of these potential sales, since the NAR’s Pending Home Sales Index measures signed contracts — not sold homes.

This morning the Census Bureau announced the Trade Deficit narrowed to $56.8 billion in June, down from $59.2 billion in May. Although imports increased in June from May by $3.9 billion, record-setting petroleum purchases were to blame. As the decline in oil prices catch up to August’s deficit report, we will most likely see an even greater decline in the trade deficit.

To be sure, our financial system has more than its share of problems. Yet as we continue to move forward, any signs of economic improvement help to show that current conditions aren’t as desolate as many experts claim.

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One Response to “Bad News Turning (Ever so Slightly) Good”

  1. nontruths Says: August 14th, 2008 at 5:02 pm

    The trade deficit, in my opinion, was excellent news! The Fed assumed a -$72.5 billion goods deficit and the report showed a -$70.0 billion deficit – good news! Along with other recent and positive statistics on construction and inventories, Q2 GDP will likely be revised upward to 2.5%-3%.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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