Economist's Commentary: June 26, 2008

Quick Take on the Economy: June 26, 2008

By Ken Fears, Manager of Regional Economics

Existing home sales rose 2.0% to 4.99 million (seasonally adjusted at annual rates) from 4.89 million in April.
The median home price stands at $208,600, down 6.3% compared to May of 2007.
The months-supply of homes eased 3.6% to 10.8.
Read the full commentary here.

The average rate on the conforming, 30-year fixed rate mortgage rose 3 basis points to 6.45% this week.

Annual homes sales continue to walk a steady plateau just under 5.0 million (SAAR). Prices moderated again which helps affordability and shows that sellers are willing to work with buyers.
The increase in mortgage rates is of concern, but remains significantly lower than rates seen last July.
Even with the rate increase, affordability is much stronger today than a year ago. FHA usage last year was a fraction of what it is today in the high-priced markets. Buyers' only option was a subprime loan where the average 30-year FRM was roughly 3.0 percentage points higher. Thus, even with the rate hike, affordability is significantly better for FHA users in this group.
GDP grew better than initially estimated for the 1st quarter but remains lower than needed. The employment and income derived from GDP should remain strong for a down-market helping to build up the reserve of demand for housing and forestall some foreclosures.

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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