With the Pacific Coast Builders Conference coming up in less than two weeks on June 22 at the Moscone Center in San Francisco, we decided it would be appropriate to take a lok at housing stats for the state of California in our data feature this week, courtesy of Housing IntelligencePro.  Overall, total closings in the first quarter for California are down about 6% from the same period last year.  Regular resales, which make up the largest portion of total activity in the state, held up the best while the new homes market experienced the steepest pullback.  Existing home closings, excluding sales of bank-owned properties, accounted for almost 52% of all closings during the first quarter and increased roughly 1% compared to the same period last year.  New home closings, which made up just a little less than 5% of all housing activity during the first three months of the year, experienced a 30% drop in activity from the same year-ago period.  REO sales were about 43.5% of all home closings in the first quarter and fell 10% from year-ago levels.

In broader economic news, financial markets continued  their downward trend with little economic and housing data released this past week to alter its course.  General sentiment has been that economic growth is losing steam and conditions in the housing market are still poor.  Despite a relatively positive Fed “Beige Book” released earlier this week, the markets do not seem convinced that we have just hit a temporary “soft patch” and that growth will resume in the second half of the year. 

A slightly stronger dollar and falling stock prices are driving demand in treasury bonds which has driven mortgage rates back down to near all-time record lows.  The fixed rate on a 30-year mortgage has declined for 8 straight weeks now which is the most consecutive weeks of declines recorded since the string of 11 straight weekly declines at the end of 2008 going into the beginning of 2009.  Rates are back down to their lowest levels since the first week of December.  However, indications show that lower rates have not necessarily translated over into higher demand for housing.  The Mortgage Bankers Association’s Purchase Index declined to its lowest reading since the first week of May just this past week.

The Economy
First-time unemployment claims increased marginally by 1,000 to a seasonally-adjusted 427,000 in the week ended June 4th from an upwardly revised figure of 426,000 last week.  The increase in jobless claims this past was unexpected as most forecasters estimated that initial applications for jobless benefits would decline.  This is the ninth straight week that initial jobless claims have remained above the 400,000 level.  These elevated levels in first-time jobless claims will make it difficult for continued improvement in the U.S. labor market.

Housing Market
National average mortgage declined from the previous week to 4.49% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on June 9th.  This is the eighth consecutive week that rates have declined.  Rates are at their lowest levels since the first week of December.  The 30-year fixed-rate mortgage has averaged below 5.0% for 16 consecutive weeks.

In the week ending June 3rd, the MBA’s seasonally-adjusted purchase index declined 4.44% from the previous week but increased 9.0% compared to this same time last year.  This is the lowest the purchase index has been since the first week of May.  However, it is also the third straight week that the purchase index has recorded an increase from the same time last year.

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