October 25, 2021

Contracts to Purchase Homes Dropped Slightly in July

WASHINGTON — Fewer people signed contracts to buy American homes in July, but the level stayed close to a six-and-a-half-year high. The modest decline suggests that higher mortgage rates have yet to slow sales sharply.

The National Association of Realtors said its seasonally adjusted index for pending home sales declined 1.3 percent, to 109.5 in July. That is close to May’s reading of 111.3, which was the highest since December 2006.

The small decline suggests that sales of previously owned homes should remain healthy in the coming months. There is generally a one- to two-month lag between a signed contract and a completed sale.

Final sales jumped to an annual pace of 5.4 million in July, the highest in three and a half years, the group said last week. Such a pace is consistent with a healthy housing market.

Higher mortgage rates appeared to have had a bigger impact on new-home sales, which plummeted last month. That raised fears that rate increases were restraining the housing recovery.

But many economists note that home prices and mortgage rates remain low by historical standards. Consistent job gains and rising consumer confidence may also support sales in the coming months.

“Higher mortgage rates are clearly negative for housing, but other key drivers — including the labor market, confidence and expectations for prices and interest rates — still point to improvement,” Jim O’Sullivan, chief United States economist at High Frequency Economics, said in a note to clients.

The average rate on a 30-year mortgage reached 4.58 percent last week, the highest level in two years and up from 3.35 percent in early May. Still, that is below the average since 1985 of about 7 percent, according to Bankrate.com.

Mortgage rates began to rise after the Federal Reserve chairman, Ben S. Bernanke, signaled that the Fed might reduce its bond purchases later this year. The purchases have helped keep borrowing costs low.

Rising home prices and more construction have bolstered economic growth and created more jobs. The housing recovery has provided crucial support to the economy when other drivers, like manufacturing, have struggled.

Gains in home prices may be starting to level off, however. Prices jumped 12.1 percent in June from a year earlier, according to the Standard Poor’s/Case-Shiller home price index released on Tuesday. That is slightly slower than May’s 12.2 percent year-over-year gain. But price increases slowed in June from May in 14 of the 20 cities tracked by the index.

The stabilization in prices is not necessarily a bad thing, economists said, because it could keep homes affordable and help prevent a bubble from developing in the housing market.

Article source: http://www.nytimes.com/2013/08/29/business/economy/contracts-to-buy-homes-fall-slightly.html?partner=rss&emc=rss

U.S. Home Sales Highest in 5 Years

The National Association of Realtors said on Tuesday that home sales declined in December to an annual rate of 4.94 million. That rate was down from 4.99 million in November, which was revised lower but was still the highest in three years.

Total home sales last year increased to 4.65 million. That is 9.2 percent higher than 2011 and the most since 2007. Sales finished below the roughly 5.5 million that is consistent with a healthy market. Still, most economists say that home sales are improving steadily and that the gains should continue this year.

Stable hiring, record-low mortgage rates and a tight supply of homes available for sale have helped increase sales and prices in most markets.

”We remain convinced that the housing recovery is well under way and should continue through 2013,” said Dan Greenhaus, chief global strategist at BTIG, an institutional brokerage.

The market is being held back by the shrinking supply of homes for sale. The inventory of available homes on the market dropped to 1.82 million in December, the lowest in 12 years.

And first-time buyers, who are critical to a housing recovery, made up only 30 percent of sales in December. That is down slightly from a year ago and well below the 40 percent that is typical in a healthy market.

Since the housing bubble collapsed six years ago, banks have tightened credit standards and are requiring larger down payments. Many would-be buyers are unable to qualify for the lowest mortgage rates on record.

The rate on the 30-year fixed mortgage averaged 3.66 percent in 2012, the lowest annual average in 65 years, according to Freddie Mac.

Sales are rising faster for more expensive homes, the Realtors group said. Sales of homes priced $1 million or more surged 62 percent in 2012, while sales of homes below $100,000 fell 17 percent.

Home prices rose 7.4 percent on an annual rate in November, the real estate data provider CoreLogic reported. That is the biggest annual increase since 2006, when the housing bubble burst. CoreLogic forecasts that home prices will rise 6 percent nationally this year.

Article source: http://www.nytimes.com/2013/01/23/business/economy/existing-home-sales-decline.html?partner=rss&emc=rss

Mortgages: Co-Signing a Loan

But money managers and lenders caution those who are asked about co-signing against jumping into such an arrangement.

“A co-signer is really a co-borrower,” said John J. Vento, the president of the Comprehensive Wealth Management Group, a financial planning firm in Staten Island. “Unless you’re ready, willing and able to make the payments for the family member, I would recommend not co-signing for the loan.”

Indeed, if the principal party defaults on the loan, the co-signer is on the hook.

Ronald Rogé, a financial planner in Bohemia, N.Y., suggests that as a less risky alternative, potential co-signers consider providing a cash gift for the down payment. Under current tax laws, you can generally give as much as $13,000 to a person, free of gift taxes, or $26,000 per person, if a married couple filing jointly is giving the money.

“The only reason they want you to co-sign is they can’t afford the house,” Mr. Rogé said. “Make it between them and the bank” on the actual loan.

In 2010, 27 percent of first-time buyers received gifts from friends or relatives toward home purchases, up from 22 percent in 2009, according to a National Association of Realtors survey of 8,449 buyers released last fall. Nine percent received loans from relatives or friends, virtually the same number as during the boom year of 2005, the poll showed.

Those who are considering co-signing a mortgage must conduct some serious due diligence. First, you must understand why the family member or friend is asking for help. Even though it may be, say, your son or your sister, don’t be afraid to look into that person’s personal finances to help determine whether he or she will be able to repay the loan, and to peruse credit reports, which will show the track record for paying off debts.

“Take emotions out of it,” said Neil Diamond, a mortgage banker at Legacy Real Estate in Commack, N.Y. “Ask the questions you would of a stranger, as if it were an investment.”

Also, discuss worst-case scenarios before you co-sign. If your child lost her job or the mortgage became delinquent, what recourse would you have? Work out a written contract containing an agreement that you could, for example, require a sale of the property if the person you were helping was in danger of defaulting. Think about how to protect your interests in a foreclosure or loan default, Mr. Diamond said.

Other financial experts suggest you consider the family connection: how close you are to the person asking for a guarantor.

“When it gets into nephews and cousins,” said Ed Mooney, a wealth strategist with BNY Mellon in Manhattan, “it tends to be more tenuous” to agree to co-sign.

In addition to the potential for being held responsible for repaying a large mortgage if your relative or friend fell behind on payments, there are other potential risks. The mortgage shows up on your credit report, and that could affect your ability to borrow money or buy a second home. Any late payments by the principal borrower will also show up on your report — and if there are several of them, they will very likely reduce your credit score.

Yet Mr. Mooney and others say that co-signing may be inevitable in some instances, given the financial environment. So after you’ve signed on the dotted line and the person you are helping has moved in, keep regular track of that person’s mortgage payments. Request that you be copied in on statements or online payments so you know they are being made, Mr. Mooney added.

And who knows? In three years or so, your relative may have improved his creditworthiness and might even remove you as a co-signer.

Article source: http://feeds.nytimes.com/click.phdo?i=de5d2df900dac306de3e18af5d6dbc45

Mortgages: Co-Signing on the Dotted Line

But money managers and lenders caution those who are asked about co-signing against jumping into such an arrangement.

“A co-signer is really a co-borrower,” said John J. Vento, the president of the Comprehensive Wealth Management Group, a financial planning firm in Staten Island. “Unless you’re ready, willing and able to make the payments for the family member, I would recommend not co-signing for the loan.”

Indeed, if the principal party defaults on the loan, the co-signer is on the hook.

Ronald Rogé, a financial planner in Bohemia, N.Y., suggests that as a less risky alternative, potential co-signers consider providing a cash gift for the down payment. Under current tax laws, you can generally give as much as $13,000 to a person, free of gift taxes, or $26,000 per person, if a married couple filing jointly is giving the money.

“The only reason they want you to co-sign is they can’t afford the house,” Mr. Rogé said. “Make it between them and the bank” on the actual loan.

In 2010, 27 percent of first-time buyers received gifts from friends or relatives toward home purchases, up from 22 percent in 2009, according to a National Association of Realtors survey of 8,449 buyers released last fall. Nine percent received loans from relatives or friends, virtually the same number as during the boom year of 2005, the poll showed.

Those who are considering co-signing a mortgage must conduct some serious due diligence. First, you must understand why the family member or friend is asking for help. Even though it may be, say, your son or your sister, don’t be afraid to look into that person’s personal finances to help determine whether he or she will be able to repay the loan, and to peruse credit reports, which will show the track record for paying off debts.

“Take emotions out of it,” said Neil Diamond, a mortgage banker at Legacy Real Estate in Commack, N.Y. “Ask the questions you would of a stranger, as if it were an investment.”

Also, discuss worst-case scenarios before you co-sign. If your child lost her job or the mortgage became delinquent, what recourse would you have? Work out a written contract containing an agreement that you could, for example, require a sale of the property if the person you were helping was in danger of defaulting. Think about how to protect your interests in a foreclosure or loan default, Mr. Diamond said.

Other financial experts suggest you consider the family connection: how close you are to the person asking for a guarantor.

“When it gets into nephews and cousins,” said Ed Mooney, a wealth strategist with BNY Mellon in Manhattan, “it tends to be more tenuous” to agree to co-sign.

In addition to the potential for being held responsible for repaying a large mortgage if your relative or friend fell behind on payments, there are other potential risks. The mortgage shows up on your credit report, and that could affect your ability to borrow money or buy a second home. Any late payments by the principal borrower will also show up on your report — and if there are several of them, they will very likely reduce your credit score.

Yet Mr. Mooney and others say that co-signing may be inevitable in some instances, given the financial environment. So after you’ve signed on the dotted line and the person you are helping has moved in, keep regular track of that person’s mortgage payments. Request that you be copied in on statements or online payments so you know they are being made, Mr. Mooney added.

And who knows? In three years or so, your relative may have improved his creditworthiness and might even remove you as a co-signer.

Article source: http://feeds.nytimes.com/click.phdo?i=de5d2df900dac306de3e18af5d6dbc45

U.S. Jobless Claims Fall Under Key Level

WASHINGTON — First-time claims for state unemployment benefits fell more than expected last week, dropping below the important 400,000 level for the first time since April, according to a government report on Thursday.

At the same time, a private trade group said sales of existing homes rose unexpectedly in June, and both statistics gave investors a reason for optimism.

Jobless claims dropped 24,000, to a seasonally adjusted 398,000, the Labor Department said.

The drop below the 400,000 level that is normally associated with stable job growth will be welcome news for the economy after a recent string of weak data. Employment growth stumbled badly in May and June, with the increase in nonfarm payrolls totaling only 43,000.

Economists had forecast that claims would fall to 415,000. The prior week’s figure was revised to 422,000 from 418,000.

The government was expected to report on Friday that the economy grew at a 1.8 percent annual rate, according to a Reuters survey, after a tepid 1.9 percent pace in the first three months of the year.

On Wednesday, the Federal Reserve said growth had slowed in much of the country in June and early July.

Pending sales of existing homes unexpectedly rose in June from May and rose sharply from a year ago, data from a real estate trade group showed on Thursday.

The National Association of Realtors Pending Home Sales Index, based on contracts signed in June, was up 2.4 percent to 90.9 from 88.8 in May. The index was up 19.8 percent from a year ago.

Economists polled by Reuters ahead of the report were expecting pending home sales to fall 2.0 percent.

The association’s senior economist, Lawrence Yun, said despite the uptick, the latest monthly reading showed tight credit and economic uncertainty were still constricting the market.

“The best way to ensure a more solid recovery in housing is to simply return to normal, sound credit standards so more creditworthy home buyers can get a mortgage,” he said.

At the Labor Department, an official said there were no special factors in last week’s jobless claims data.

The four-week moving average of claims, considered a better measure of labor market trends, fell 8,500, to 413,750.

A total of 7.65 million people were claiming unemployment benefits in the week ended July 9 under all programs, up 320,152 from the previous week.

Article source: http://feeds.nytimes.com/click.phdo?i=b8d6e0b1c01c566eb0f5e677d615d524

Earnings Upswing Propels A Broad-Based Rally

Investors had been set up for a series of disappointments but got an unexpected lift from two bellwether companies — Intel and United Technologies — helping to spur a broad-based rally that put equities on the path for more gains in coming weeks.

“Until yesterday, earnings were lackluster, not too exciting, even disappointing,” said Nick Kalivas, senior equity index analyst at MF Global. He said the last round of reports “shifted the psychology quite significantly.”

Shares of Intel rose 7.8 percent to $21.41 while United Technology gained 4.3 percent to $85.90.

At the close, the Dow Jones industrial average had gained 186.79 points, or 1.52 percent, to 12,453.54. The Standard Poor’s 500-stock index rose 17.74 points, or 1.35 percent, to 1,330.36. The Nasdaq, driven by Intel, added 57.54 points, or 2.10 percent, to 2,802.51.

The Nasdaq posted its largest daily percentage gain since Octobe, while the Dow hit its highest close since early June 2008. The S. P. 500 had its best performance in a month.

European shares also closed sharply higher, with the FTSE 100 in London adding 2.1 percent and the DAX in Frankfurt gaining almost 3 percent.

For a second day, investors in the United States received some positive news about the housing market in the United States.

The National Association of Realtors said that the sale of existing homes in March rose 3.7 percent from February to an annual rate of 5.10 million units. Economists had expected a smaller increase to a five million unit pace.

But the median home price fell 5.9 percent in March from a year earlier to $159,600.

“The underlying trend for existing home sales is improving, but only at a gradual pace,” said Michael Gapen, an economist at Barclays Capital in New York. “Demand should gradually firm as labor market conditions continue to improve.”

On Tuesday, the Commerce Department said that home construction rose 7.2 percent in March from February to a seasonally adjusted 549,000 units a year. Building permits, an indicator of future construction, rose 11.2 percent after hitting a five-decade low in February.

The trend of positive earnings continued after the market’s close on Wednesday and could help spur another rally on Thursday, the last trading day before the Easter holiday. Apple rose 2.7 percent in after-hours trading after a blowout quarter that surged past expectations. Revenue for the technology giant rose 83 percent from the quarter a year ago.

F5 Networks, considered a momentum favorite for investors, climbed 7.3 percent to $99.74 after its second-quarter profit topped expectations and the company forecast third-quarter earnings largely above estimates.

American Express rose 0.8 percent to $47, recovering from earlier losses. While the company’s profit topped expectations, expenses at the credit card company rose.

I.B.M. slipped 0.4 percent to $164.75 after reporting a drop in signings of new business at its global services division during the first quarter. Its profit and revenue, however, came in above analysts’ projections, and it raised its full-year profit view.

In the bond market, Treasury prices fell Wednesday as investors preferred riskier assets. The price of the 10-year Treasury note fell 12/32, while the yield rose to 3.41 percent from 3.36 percent late Tuesday.

Article source: http://feeds.nytimes.com/click.phdo?i=8968268ca67b83c2fe8299163de96aa5