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Wednesday, August 24, 2016
Lower markets on housing data
Dow lost 35, decliners over advancers 3-2 & NAZ was off 4. The MLP index gave back 1 to the 311s & the REIT index fell 2+ to 360. Junk bond funds were higher & Treasuries are heading lower. Oil & & gold both dropped.
Home prices in the US rose 5.6% in Q2 from a
year earlier, extending gains that have cut into affordability for many
buyers. Prices climbed 1.2% on a seasonally adjusted basis
from the previous 3 months, the Federal Housing Finance Agency said. In Jun, prices climbed 0.2% on a seasonally
adjusted basis from May. The estimate was for a
0.3% gain. “Although the appreciation rate for the second
quarter was of similar magnitude to what we’ve been seeing for several
years now, a close look at the month-over-month price changes during the
quarter reveals a potentially significant market shift,” the agency said. The increase was just 0.2% in each of the 3
months, a more-modest pace of appreciation that “most likely reflects
accumulated pressures from significantly reduced home affordability.” Demand for housing has outstripped supply, pushing
prices up. A total of 5.5M homes, including condos &
single-family houses, changed hands in Q2, up 4.2% from a year earlier, according to
the National Association of Realtors. The transactions are from a
shrinking pool of available properties, as 2.12M homes were
available for sale at the end of the qtr, down 5.8%. Prices in Q2 rose from a year earlier in every state except Vermont, the FHFA said. The
FHFA index measures transactions for single-family properties financed
with mortgages owned or securitized by gov-sponsored Fannie Mae & Freddie Mac but doesn't provide prices. The national median price of
an existing single-family home rose to $240K in Q2,
up 4.9% from a year earlier, Realtors data show.
Saudi Arabia kept its spot as China's biggest oil supplier for the
first 7 months this year after pumping record output in Jul, even
as Russia threatens to overtake the kingdom in their contest for sales
to the world's largest energy consumer. The biggest crude exporter
shipped an average of 1.05M barrels a day to China in the year
thru Jul 31, giving it a market share of 14%, according to China's General Administration
of Customs. Russia's share was 13.6% & Russia has gained ground in China this year, exceeding
imports from Saudi Arabia in 3 months.
Oil climbed more than 20% to enter a bull market last week
amid speculation that supplier talks in Sep in Algiers may lead to
action to stabilize the market. The biggest producers are
fighting for market share as prices are still at half the level of 2
years ago. Saudi Arabia pumped 10.67M barrels a day in Jul, while Russia's output was 11.01M, according to OPEC. China bought more oil from Russia than from Saudi
Arabia from Mar-May. For all of
last year, Russia's share was 12.6% against Saudi Arabia's 15.1%.
US home resales fell more than expected in Jul after 4 straight
months of strong gains as a lack of inventory limited choice for
buyers, but further gains in prices suggested the housing market
remained on solid ground. The National Association of Realtors said existing
home sales declined 3.2% to an annual rate of 5.39M units
last month. Economists
had forecast sales slipping 0.4% to a 5.51M. Home resales were down 1.6% from a
year ago. "Severely restrained inventory and the tightening grip it's
putting on affordability is the primary culprit for the considerable
sales slump throughout much of the country last month," the NAR said. Against the backdrop of a tightening labor market that is
steadily pushing up wages, & mortgage rates near historically low
levels, the drop in sales is likely to be temporary. The number of unsold homes on the market in Jul inched up 0.9% to 2.13M. But supply was down 5.8% from a year
ago. At the Jul sales pace, it would take 4.7 months to clear the stock
of houses on the market, up from 4.5 months in Jun. A 6-month supply
is viewed as a healthy balance. With inventory still tight, the median house price rose 5.3% from a year ago to $244K. The NAR said rising
prices were causing problems with appraisals, leading to delays in
closing contracts.
This is another non event day for the stock market. The big interest is in what Janet has to say in her speech as the popular averages hover near record levels.
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