Economist's Commentary: August 13, 2008

Quick Take on the Economy: August 13, 2008

By Ken Fears, Manager, Regional Economics

The purchase portion of the mortgage applications index was unchanged from last week. The government purchase index (e.g. FHA) rose 2.9%, while the conventional purchase index fell 1.2%.

Retail sales slid 0.1% in July, down from an upwardly revised 0.3% increase in June.

Retail sales remain soft. The U.S. needs many more months of stable growth for employers to start to boost payroll again. New jobs are important for home sales.
The purchase index is beginning to reflect the strengthening position of FHA loans in the market. Now that people can buy larger homes with FHA loans, expect this vehicle to grow in market share, especially in the more expensive markets of the Northeast and West.
The economy is still soft and has some tough times ahead, but the slashing of jobs should moderate and stabilize. Despite higher average mortgage rates, better financing options like FHA are now available to a broader portion of the market than ever before. This represents a sharp improvement in affordability for most that should boost sales in some regions.

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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