July 2009 - MND NewsWire

Department of Housing and Urban Development (HUD) Secretary Shaun Donovan released new guidelines on Thursday for FHA's Affordable Modification Program to bring it into compliance with The Helping Families Save Their Homes Act of 2009 signed by President Obama in May.

After a two-day pause on Tuesday and Wednesday, markets are continuing the rally that began three weeks ago. Midway through Thursday, markets are up close to 2%, with the Nasdaq crossing the 2,000 mark for the first time since October.

Mortgage rates climbed for the second straight week, pulling down demand for mortgage applications, particularly for refinancing, according to a weekly industry survey. The Mortgage Bankers Association said average rates for a 30-year mortgage moved up 0.05 percentage points to 5.36% in the week ending July 24, which follows a rebound from 5.05% to 5.31% in the prior week. The jump in rates caused demand to shrink for the first time in four weeks.

Home prices across the nation improved for their fourth consecutive month in May but remain about 17% lower than one year ago, according to the S&P Case-Shiller Home Price Index. The 10-City and 20-City Composites are 16.8% and 17.1% lower, respectively, compared to May 2008. Historically, those are major declines, but in the current context they represent the slowest annual price drops in close to a year. Just one month before, the figures were -18.0% and -18.1%.

The morning began with great news for the housing market. Sales of new single-family homes shot up 11% in June ― the biggest one-month jump in eight years ― bringing the annual pace of sales to 384,000, well above the market consensus of just 350,000. “This report along with recent data on housing starts and existing home sales tells us the housing sector is finally in recovery mode,” said Joseph LaVorgna, chief US economist at Deutsche Bank. “This will go a long way to eventually helping to stabilize the economy in the second half of this year and to provide us with much better overall economic growth prospects next year.”

Federal Reserve chairman Ben Bernanke made it clear earlier in the week that the central bank wouldn’t be taking the punch bowl away any time soon, but more talk of increased regulation from Treasury Secretary Tim Geithner appears to be scaring off investors from drinking the punch anyway following a nine-day rally.

Home buyers and refinancers waiting and hoping for a return of record low rates suffered a setback this week as fixed rates reversed a three-week downward trend. Only the short-term adjustable rate mortgage was lower than the previous week.