Economist's Commentary: April 9, 2008

Quick Take on the Economy: April 9, 2008

By Lawrence Yun, Chief Economist

NAR Chief Economist Lawrence Yun

Mortgage applications for home purchases rose 8 percent in the latest week. The index is down by 7 percent from a year before. The latest reading was 385. That is a tad higher than the 375 average reading in the past two months, but it is down from above 400 reading for most of 2007.
Refinance applications also rose in the latest week. The very volatile refinance-index increased 3 percent after falling 38 percent last week and after having risen 82 percent two weeks ago. The latest reading of 2725 is higher than the approximately 2000 average reading last year. Increased refinancing nearly always mean an improving financial condition for homeowners as they lock in lower rates.

Wholesale trade fell 0.8 percent in February, but was up 12 percent from a year ago. The 12-month change is fairly robust considering it grew at slightly less than 10 percent in the past three years. It contracted in the 2001 recession.
The inventory-to-sales ratio grew from 1.10 in January to 1.12 in February. The ratio is still at essentially historic lows and is down from 1.17 a year ago.
Wholesale trade does not say too much about consumer spending activity. Businesses are still actively trading goods. Low inventory assures no major pull back on future production.

He remarked that U.S. home price declines will end well before early next year. In the third or fourth quarter of this year? He did not say.

The economy is not in dire straits. Other data has pointed towards very slow or no economic growth, but we do not yet have an affirmative indication of an economic contraction.
Home price trends vary so much locally. With home prices in places like Sacramento and Ft. Myers already having fallen by more than 20 percent and so quickly, we could indeed see an end to price declines before the year's end.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

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