The MBA mortgage applications index fell 10.7% to 595.8% for the week ending December 18. Both the purchase and refinance indexes fell last week, 11.6% and 10.1% respectively. Recent declines in application activity suggest weaker home sales, however, November existing home sales suggest otherwise. While downside risks in the form of rising foreclosures remain, economists expect housing activity to trend modestly higher going forward.
Personal income rose 0.4% in November after slight upward revisions in the previous two months. In a positive sign, wages and salaries increased 0.3%. Transfer income, originating mainly from fiscal stimulus gained 0.5%. Consumer spending increased 0.5% on the month and is up a modest 2.3% over the past year. For now, the main support to incomes and spending continues to be the government, which is not sustainable in the long run.
New home sales plunged 11.3% in November to an annual pace of 355k, compared to market expectations for a small gain to a rate of 438k. After recovering somewhat in recent months, new home sales have tumbled anew to a near record low. It may be explained in part by the earlier expiration date of the first-time buyer tax credit. Extension of the tax credit should help to lift sales in the next several months
Consumer sentiment, while slightly lower than the mid-month reading, increased to 72.5% in December from a reading of 67.4% in November. Consumers gave higher ratings for both current conditions and expectations month-over-month. Sentiment has not entirely thawed from severely weakened levels earlier this year but is at least on a modestly improving trend.
These numbers suggest continued strength in the foreclosure market in the Prescott, Prescott Valley, and Chino Valley real estate markets. If you are looking to take advantage of the bargains out there right now, contact me.
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