Existing home sales rose 5.1% in Feburary to a stronger than expected pace of 4.72 million units. This is the latest in a series of tiny whispers or as Larry Kudlow calls them “mustard seeds” that we may indeed be in a bottoming process. The other signs include:
- Homebuilders are breaking ground on new homes again
- First-time jobless claims are falling
- Inflation is present and, therefore, deflation is not
This is great news for a real estate market that has really seen nothing but gloom and doom for the past 2 years. It also confirms my suspicion which I wrote about in another post that we are seeing meaningful signs of a bottom in housing.
Should the economy continue trend stronger through the summer, it will likely fuel stock market gains, drawing cash away from mortgage bonds. This would lead mortgage rates higher — perhaps for good.
Today’s levels are artificially low, after all, supported by government intervention more than economic fundamentals. After the Fed’s Wednesday afternoon announcement, rates fell to all-time lows before recovering sharply into the weekend on economic optimism and fears of inflation.
With mortgage rates still below 5%, and prices still down 15% from a year ago, it is starting to look like this may fast becoming one of those rare “windows of opportunity” to buy a new home in a great school district at a phenomenal price. Homebuyers with good credit, a steady job and a little down payement money should have no trouble qualifying for a mortgage.
(Image courtesy of: Arizona Mortgage News)