The National Association of Realtors' Pending March home sales index was lower by one percent. The miracle is that it wasn't worse.
March homebuyers were rattled by news that we might finally be in a recession. Employers cut jobs for the third month straight, and production slowed. Complicating the economy, were credit bottlenecks brought on by banks reluctant to lend mortgage money, despite incredible support from the Feds, including raising conforming loan limits.
March was also the period when investment bank Bear Stearns was brought down by its subprime loan portfolio, and the stock market began shedding its gains in earnest. The Senate Banking Committee, the Financial Services Committee of the House, the Office of Thrift Supervision and other government agencies hammered out programs to save foreclosed homeowners, but Bear Stearns was bailed out instead.
Add to that toxic brew the steady drumbeat of pundits that housing sales haven't bottomed yet, and it's amazing that pending sales held up as well as they did. Mortgage interest rates dropped on the glum news, although it will be a while before we know whether or not rates were tempting enough.
We're talking one percent down, folks, which is hardly worth jumping off the ledge.
In fact, things are already on the upswing again. Just this week, the Mortgage Bankers Association announced that mortgage applications were up for the week ending May 2, 2008 by 15.6 compared to the week before. While that's still down 4.4 percent from a year ago, it's better than expected, considering that adjustable rate mortgages and other non-prime products are out and conforming loans are in.
Purchase applications were up 12 percent, and refinancings also rose. Rates averaged 5.91 percent for 30 year fixed term loans.
Sales will most likely remain flat, say the NAR.
