I know this week is about earnings, but we have gotten a few reads on housing, and they couldn't come at a better time. Housing simply cannot gain any traction and it is extraordinarily frustrating. New home sales have fared well. However, with existing homes and the continued reluctance of younger fence-sitters, we need to see first-time buyers climb above 30%, and eventually get north of 40% before we can call the housing market healthy.
That being said…
The bullish case for the housing market coming into the week included the lack of supply in absolute numbers as measured by the months' supply plunging recently for new homes and trending near post recession lows for existing home sales.
In addition, mortgage applications have begun to take off, although there have been many false starts during the past couple of years...it looks like something's in the air beyond the smell of springtime. On a year-to-year comparison, applications to purchase have gathered steam as the 30-year rate began to drift lower.
Corporate earnings and all the excuses will take center stage; however, housing data could carry the session. Below are some of the notable companies that reported earnings Wednesday morning.
Wednesday’s Session
The Mortgage Bankers’ Association (MBA) announced that weekly mortgage purchase applications recovered during the week ended April 17th. The composite index rose 2.3% after declining 2.3% the prior week, largely influenced by purchasing component rebounding 5% after falling 3% in the prior week – year-over-year purchase applications are up 16% for the week of April 17th. This shows that momentum is building, however, year-over-year changes provided a clearer picture of what’s really going on in the market. Also, with rates remaining low at 3.83%, consumers are becoming more encouraged to refinance their homes. The refinancing component rose 1% after falling 2% in the prior week.
Improvements in the housing market were highlighted by real estate firm, ABI. On a month over month basis, the amount of new units, contracts, and types of buildings constructed improved on a monthly basis:
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