Can These Positive Trends Continue?by Tim Manni
We were slightly shocked but very excited to write about increases in both January and February’s housing statistics. As additional reports are released, it seems that the beginning of the year has some more good news for us.
On the heels of February’s existing home sales report, single-family new-home sales reported a 4.7% increase last month — the highest monthly gain since last April. While real-estate sales remain week on a yearly basis, falling median homes prices as well as government initiatives aimed at the mortgage market are serving to entice buyers.
The housing reports out so far this year are certainly optimistic, but we’ll have to wait until we see several months of improvement before we can declare a bottom to the market.
Another market desperately seeking consistency is durable goods. The demand for these products has been low and inconsistent for a long time. February’s durable-goods report surprised economists by increasing 3.4% after six-straight months of declines.
Perhaps what surprised economists the most was that the Census Bureau reported increases across the board. Not one single factor contributed to last month’s gain, increases were reported in several sectors. Due to January’s revised drop of a steep 7.3%, many economists fear that February’s report was little more than a hiccup. Fluke or not, stocks moved higher after the report was released.
Confidence is key in re-establishing a bull market. The Mortgage Bankers Association (MBA) is not short on confidence as they’ve increased their originations forecast for 2009. The “MBA now expects originations to total $2.78 trillion, which would make 2009 the fourth highest originations year on record, behind only 2002, 2003, 2005.”
While we believe the MBA’s expectations to be somewhat inflated, originations in 2009 should be led by borrowers looking to refinance through the government’s Homeowner Affordability and Stability Plan.
How confident are you that these positive trends will continue throughout the year?