19 of 20 Case-Shiller Index Markets Improve In August

Home values rose to close out the summer, according to the S&P/Case-Shiller Index, a national home-valuation tracker.
Nationwide, values rose 0.9% between July and August 2012 with 19 of 20 tracked markets showing improvement. Only one tracked city -- Seattle, Washington -- showed a decrease, falling just 0.1 percent.
On an annual basis, 17 of the 20 Case-Shiller Index markets improved, led by Phoenix. Home values in the Arizona city are up 18.8 percent from August 2011. The next closest city in terms of home price gains is Detroit, Michigan at 7.6 percent
We should temper our excitement for the August Case-Shiller Index, however. Although it suggests an ongoing U.S. housing recovery, the methodology of the Case-Shiller Index is far-from-perfect. In fact, one could argue that the index is more effective for policy-makers than for actual buyers and sellers of real estate.
There are three reasons for this :

1. The Case-Shiller Index tracks home prices of single-family homes only. Multi-unit homes are excluded.
2. The Case-Shiller Index can be distorted by "discounted" home sales (e.g.; foreclosure, short sale).
3. The Case-Shiller Index publishes on a two-month delay -- data is hardly current.

Beyond the above three points, however, the Case-Shiller Index falls short in another area -- it ignores the basic tenet of housing that "all real estate is local". In using 20 cities to represent the entire United States, the Case-Shiller Index reduces more than 3,100 municipalities into a single "market".

Even within its 20 tracked cities, the Case-Shiller Index fails short as a housing market barometer. This is because -- even with cities -- home values vary. Some Windermere zip codes perform better than others, for example, as do some streets within Doctor Phillips. The Case-Shiller Index can't capture markets with that level of detail.
National housing data helps in spotting broader trends of growth but provides very little for today's active buyers and sellers of real estate who need "real-time" data. For that, talk to a local real estate agent.

Pending Home Sales Index Suggests Housing Momentum Into 2013

Existing home resales are expected to finish the year strong. Last month, for the fifth straight month, the Pending Home Sales Index hovered near its benchmark value of 100, registering 99.5 in September.

The Pending Home Sales Index tracks homes under contract to sell, but not yet sold, and is published by the National Association of REALTORS®. The index is a relative one. It compares today's  housing market activity to the housing market activity of 2001 -- the index's first year of existence.

The Pending Home Sales Index has averaged 99.1 this year. Among housing market indicators, the Pending Home Sales Index is unique. It doesn't report on prior market activity as the Existing Home Sales and New Home Sales reports do. By contrast, the Pending Home Sales Index is a forward-looking indicator.

The real estate trade association tell us that 80% of U.S. homes under contract go to closing within 60 days, and many of the rest go within Months 3 and 4. In this way, the monthly Pending Home Sales Index can foreshadow to today's Orlando home buyers and sellers what's next for housing.

Based on September's Pending Home Sales Index, then, we should expect to see closed home sales stay strong through November and December. That said, home sales are expected to vary by region, especially in Florida.

Here is how the Pending Home Sales Index broke down by area last month as compared to one year ago on a seasonally-adjusted, annualized basis :

• Northeast Region : +26.1% from September 2011
• Midwest Region : +19.3% from September 2011
• South Region : +17.6% from September 2011
• West Region : +0.8% from September 2011

Often, the last few months of a year are considered to be a "slow" period for the housing market. Based on regional, annual Pending Home Sales Index improvements, though, 2012 may be different. The market looks poised to finish with momentum that may carry home prices higher into 2013.

The bottom line: For today's home buyers, mortgage rates remain low and home prices have only started to climb.

What's Ahead For Mortgage Rates In Orlando : October 29, 2012

Mortgage markets ended the week slightly better last week. Wall Street took its cues from U.S. economic data, from developments in Europe, and from the Federal Reserve, moving mortgage rates lower in Florida and nationwide.

Pricing for both conforming (including the HARP 2.0 refinance) and FHA mortgage (including the new FHA streamline refinance) rates improved between Monday and Friday, with the majority of gains occurring late in the week.

The timing of the gains explains why Freddie Mac's weekly mortgage rate report showed the average 30-year fixed rate mortgage rate rising this week when, in fact, it did not. Because Freddie Mac conducts its mortgage rate survey at the start of the week, its survey respondents had no time to acknowledge late-week improvements.

Freddie Mac said the 30-year fixed rate mortgage rate rose to 3.41% for home buyers and refinancing households willing to pay 0.7 discount points at closing plus a full set of closing costs.
Mortgage applicants choosing zero-point mortgages should expect a higher rate.

The biggest event of last week was the Federal Open Market Committee's seventh scheduled meeting of the year. The FOMC's post-meeting press release described the U.S. economy as growing, and inflation as stable. The Fed re-iterated its pledge to QE3, a stimulus program geared at keeping mortgage rates suppressed. The group also said it would hold the Fed Funds Rate low until at least mid-2015.

Lastly, the Fed showed optimism about the broader U.S. housing market -- and for good reason. Since October 2011, housing has trended higher and last week saw the release of the September New Homes Sales report and the September Pending Home Sales Index. Both showed strength.
This week, the market's biggest story is Friday's release of the October Non-Farm Payrolls report. Jobs are a keystone in the U.S. economic recovery so the monthly jobs report holds sway over mortgage rates.  The U.S. economy has added jobs in each of the previous 24 months.

The bottom line: If the number of jobs created exceeds Wall Street expectations, mortgage rates in Orlando will rise and purchasing power will shrink.

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