With July 4th celebrations still on the mind, we thought it would be interesting to take a look at areas in the country that are more independent in their own right: less dependent on bank financing and putting more cash down when it comes to home purchases.  What we found was that the three metropolitan areas across the country with the least percent financed on average for all home closing transactions during the first quarter were all in the state of Alabama, according to data from Housing IntelligencePro.  Though Alabama does not come to mind as a nexus of housing activity, when we filtered out only medium to large metro areas (places that recorded at least 1,000 closings during the first three months of the year), Mobile, Daphne, and Huntsville all ranked as the top-3 markets with the lowest average percent financed in home purchases.

In broader economic news, the end of the first half of the year marks the conclusion of the Federal Reserve’s second round of quantitative easing, which amountd to a $600 billion program of purchasing Treasury securities.  While that has come to an end, the central bank may still reinvest principal from maturing securities which means it is not totally over.  Now it will be important to see how financial markets respond in the coming months without the additional stimulus.  Rates have already experienced a slight increase over the past couple of days and weeks.  The average fixed rate on a 30-year mortgage is at its highest levels in a month.  The conclusion of “QE2” along with a surge in stocks have also pushed yields on the 10-year Treasury higher which will likely lead to another increase in average mortgage rates for the coming week.

The Economy
First-time unemployment claims declined slightly by 1,000 to a seasonally-adjusted figure of 428,000 in the week ended June 15th from a figure of 429,000 last week.  The downward trend in initial jobless claims has stalled recently after coming off of its highs in April.  Claims remain at stubbornly elevated levels that will make it difficult for any significant improvement in the labor market.

Consumer confidence declined for the second straight month in June to a reading of 58.8 compared to a reading of 61.7 last month.  However, the index is still higher than it was this time last year when it stood at 54.3.  This is the lowest the consumer confidence index has been since November.  Slower estimates for economic growth, a sluggish job market, and the European debt situation have been negatively weighing on consumer confidence.  Both the present situation index and the expectations declined as well in June.

Personal incomes in May increased to $13,063.3 billion compared to a downwardly revised figure of $13,027.1 billion in April.  This is the eighth consecutive monthly increase for personal incomes.  Personal incomes are up 4.2% from $12,532.8 billion in May of last year.  However, this is the lowest annual increase in personal income growth for any month since December.  Personal incomes have now recorded 18 straight months of year-over-year gains.  Consumer spending slowed considerably last month. Personal consumption expenditures, PCE, increased just 0.04% from last month to $10,774.8 billion.

Housing Market
The National Association of Realtors’ Pending Home Sales Index rebounded in May which suggests an increase in housing activity in the coming months.  The index in May increased 8.2% from the previous month to a reading of 88.8 from an upwardly revised figure of 82.1 in April.  This is the largest one-month gain in the index since this past November.  This is the first time since April 2010 that the pending home sales index has recorded a year-over-year increase.

National average mortgage increased slightly from the previous week to 4.51% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on June 30th.  Rates have recorded slight weekly gains in two out of the past three weeks and are now at their highest levels in a month.  However, rates on a 30-year fixed mortgage have averaged below 5.0% for 19 consecutive weeks and remain near historically low levels.

In the week ending June 24th, the MBA’s seasonally-adjusted purchase index declined 2.96% from the previous week but increased 4.76% compared to this same time last year.  This is the second straight week that the purchase index has declined and the lowest it has been since the end of February.  However, this is the sixth consecutive week that the index has recorded a year-over-year gain.

For additional market-level data and analysis please visit our website at http://www.housingintelligence.com.  For more detailed information on New Home Sales and other indicators, please visit the following links: