Switching from yesterday's post to today's almost makes me feel like I have bi-polar disease; but, that's the nature of this market. We should all be ready to take any good news whenever and wherever we can find it. Take the latest (May) National Association of Realtors home resale report: Sales were up by 2 percent nationally in May, and up 5.5 in the Midwest and 4.6 percent in the Northeast. Condo sales also jumped 5.5 percent nationwide.
Sales of existing homes were up even in some of the hardest hit local markets -- Sarasota on the Gulf Coast of Florida, for example, and Sacramento California and Battle Creek Michigan. A lot of that activity is attributable to severely depressed home prices, short sales, and banks dumping foreclosures. No question that's true. But the down cycle has to stop somewhere, and in the toughest local markets and that means deeply-discounted and distressed properties coming out of foreclosure now look like excellent deals to bargain hunters. Locally, there are still foreclosure bargains to be had; but, much of the resale market activity for the last month has been in non-foreclosed houses, and that’s a good sign, too.
So, houses with slashed prices are selling fast and pushing up sales numbers. That's the way cycles work. The cyclical rebound gets rolling on the wreckage left over from the boom. There are other signs of possible relief in the housing market as well: The federal government agency that tracks home price movements -- based on multiple sales of houses financed by Fannie Mae and Freddie Mac -- found home values actually increased in two major regions in the U.S. last month. Prices continue to rise in Texas, Louisiana, Arkansas, Oklahoma, Kentucky, Tennessee and Mississippi. Dozens of metropolitan markets in the mid section of the country never participated in the boom, and they are showing steady increases in prices.
Still another plus: Mortgage rates took a surprise dip last week -- reversing the previous week's sharp increases. Thirty year fixed rate loans are back down to 6.4 percent and fifteen year rates are under six percent again. And here's one more positive sign to add to the mix: Personal consumption -- an important indicator of the economy's underlying rate of expansion -- rose by four tenths of a percent in May. That's the largest gain since December of 2006. Of course we still need to watch how the Fed reacts to rising inflation. If the Fed clamps down on credit to stop inflation, that could cause this delicate recovery to stall out again. Let’s keep our fingers crossed that they don’t do that.
For now, heading into the long Fourth of July weekend, things are looking up a bit. Local activity is relatively high. People are buying and selling houses, and not just foreclosed houses. It’s too early to declare that a turn-around has taken place, but it sure feels like we’re not headed on down the slope at nearly the same pace as we have been.