September 26th, 2012 9:40 AM by Mel Samick
Several regulatory issues were talked about this week. Senators Barbara Boxer, D-CA, and Robert Menendez, D-NJ, have reintroduced a bill to help borrowers refinance who are current with their mortgage but are unable to do so because of the guidelines from Fannie Mac and Freddie Mac. The act would also streamline and align the agencies' refi processes and eliminate some costs while improving lender competition. In other news, the FHFA is considering an upfront fee for states with higher default-related costs. These states include; Connecticut, Florida, Illinois, New Jersey, and New York. The FHFA director, Edward DeMarco, is asking for public comment within the next 60 days.
A study by Trulia concluded that homeownership was 45 percent cheaper than renting. The most affordable city was Detroit and the least affordable was in Honolulu and San Francisco. The National Association of Home Builders/Wells Fargo housing market index rose 3 points to hit a reading of 40. This was the highest level since June of 2006. The index still has a way to go to hit a reading of "good", which is 50; but, it is much better than it was at the peak of the recession, when it was at 8. Additionally, U.S. housing starts were up 2.3 percent in August. The real estate sector is continuing a positive trend likely due to low interest rates and a high demand. However, permits for new construction were down from 811,000 in July to 803,000 in August. This could signal a decrease on the horizon for housing starts. While housing starts continued to be robust, sales of existing homes also continue on a blistering pace. Existing Sales soared 7.8 percent in August. This is a high since May of 2010. The median existing home price also gained as it was up 9.5 percent from last year. The median house price is $187,400.
United States Jobless Claims were a little lower this week. 382,000 Americans applied for unemployment benefits last week, down from 385,000 the week prior. However, claims were up slightly two weeks ago due to Hurricane Isaac. The four-week average was up 2,000, the highest level since June. All of this points to minimal job creation.
The September reading for the United States Flash Manufacturing report by Markit was unchanged at 51.5. As new orders picked up, there was a slight decrease in production. The good news is that anything over 50 reflects growth. The Conference Board reflected this number as they said that U.S. growth is unlikely to change. The Leading Economic Index was down slightly, .1%, in August. The LEI is a weighted barometer of ten indicators that reflect business cycles. Six of the ten indicators showed negative growth. The largest negative indicator was new orders for manufacturers. The largest positive contribution was from interest rate spread.
The big news for equities, this week, was the release of the iPhone 5 on Friday. Apple was anticipating that sales of their new phone would reach 6 million by Monday of this week. And a reminder for beer drinkers: September 22nd was the start of the 179th Oktoberfest in Germany. Party-goers are expected to consume 7.5 million liters of beer over the 16 day festival. The cost for a liter of beer (33 oz) is between $11.60 and $12.15. Germany may be in good shape financially after the celebration to provide plenty more bail-out funds.
Information provided by NYCB Capital Markets