A silver lining in housing? The New Home Sales was a disappointment this morning. Even though sales were a bit higher than expected, the inventory of unsold homes remained unchanged with Jan at 9.8 months supply, a bit disappointing.
But there is not all bad news out there in housing. Consider two points
1) The National Association of Realtor's Housing Affordability Index has been quietly moving up for months, since bottoming in July of last year. Thanks to a decline in mortgage rates and prices, the composite index stands at 130.3, which means that a family earning the median family income had 130.3 percent of the income necessary to qualify for a conventional loan covering 80 percent of a median-priced existing single-family home in January 2007. It was as low as 103.6 last July, and has been going up every month since then. The next release is tomorrow, for February; given the rates went down in February, I anticipate it will drop again.
2) Speaking of mortgage rates: they have dropped to their lowest levels since early February. As a result, refinancing applications rose 82 percent and purchases rose 10.6 percent, both to the highest levels also since early February.
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