Texas dominates our Data Feature of the Week brought to you by Housing IntelligencePro.  The Lone Star state is indeed one of the few stars when it comes to housing markets.  In terms of new home closing volume, Texas markets capture three of the top seven spots.  The state overall grabs 17% of all new home closings across the country.  As we’ve discussed before, the nationwide average for new homes as a share of all home sales is currently around 10%, but in Texas that share is a much healthier 16%.  For comparison, the most-populous state of California has less than half as many new home closings so far in 2010, but more than twice as many REO sales while the numbers of regular resale transactions in the two states are about equal.  It’s a stark comparison which demonstrates the healthier economic situation in Texas and a far less dramatic boom/bust cycle in housing than what was experienced in California.

In broader news, a relatively positive October employment report and the Fed announcement of additional quantitative easing have sparked enthusiasm in stock markets this week.  However, the major events that took place this past week along with a gradually recovering economy does not necessarily mean clear sailing for the housing market.  New and existing home sales did both increase in September but both still significantly trailed last year’s pace.  The recent halt in foreclosure activity will likely slow sales in the existing homes market in the months ahead and potentially drag out the housing recovery even longer.

The Fed furthered its commitment to spark economic growth with its plan to purchase $600 billion in government bonds.  The Fed stated it would purchase $75 billion of longer-term U.S. Treasury bonds each month through the end of June 2011 in order to keep borrowing costs low for businesses and consumers in an attempt to spark economic activity.

Employment conditions in October were more positive than most had anticipated as the U.S. created 151,000 payrolls on a seasonally-adjusted basis which was the first monthly increase in employment since May.  Steady declines in first-time unemployment claims over the past few weeks had suggested that employment conditions were improving but a 20,000 increase in initial jobless claims for the most recent week creates some doubt about a sustained longer-term recovery in the labor market.

In the equity markets, the broader S&P 500 index jumped 3.4% over the past week as of mid-day trading on Friday.  While the Fed’s second round of quantitative easing is aimed at boosting the economy, primarily through increasing the value of assets like stocks, it remains to be seen what effect there will be on housing.  The Fed actions will likely keep mortgage rates low for quite some time, although rates will probably not move significantly lower than their current all-time lows.  If potential homebuyers are not rushing out to buy homes now, this will probably not create any additional sense of urgency.  The stability of the labor market remains the most important factor for homebuyers because if people do not have jobs or do no feel secure at their current jobs, they are probably not going to make the single largest purchase of their lives.

The Economy
The U.S. economy created 151,000 payrolls in October on a seasonally-adjusted basis which was stronger than most economists had expected.  Employment figures for the previous two months were also revised drastically higher in the most recent employment report which suggests that the current job market is stronger than previously thought.  For the months of August and September, there was an upward revision of 110,000 payrolls in the two months combined.  October was the first month since May that the U.S. economy has created jobs following four straight months of job losses.

Despite the job creation in October, the U.S. unemployment rate remained unchanged in October at 9.6%.  This is the third consecutive month that the unemployment rate has remained at those levels.  With workers re-entering the labor force as the economy is showing signs of improvement, it will take larger and more consistent gains in employment to put a dent in the unemployment rate.

Initial unemployment claims experienced a setback this past week following three straight weeks of declines.  First-time jobless claims increased by 20,000 to 457,000 in the week ended October 30th.  The gain in first-time unemployment claims was larger than anticipated and creates further uncertainty about a recovery in the labor market going forward.

In September, personal incomes in the United States declined slightly to $12,546.4 billion compared to a revised figure of $12,563.2 billion in August.  This was the first time personal incomes reported a monthly decline since September of last year.  Personal incomes are up 3.1% from $12,169.7 billion in September of last year. Personal incomes recorded its strongest annual increase last month in August since September 2008.

Housing Market
After increasing for two straight months, pending home sales eased slightly in September.  The National Association of Realtors’ Pending Home Sales Index declined 1.8% to a reading of 80.9 in September from an upwardly revised August figure of 82.4.

National average mortgage rates increased from the previous week to 4.24% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on November 4th.  This is the third consecutive week that mortgage rates have increased although they still remain just slightly higher than all-time record lows.  Mortgage rates have now averaged less than 5.0% for 26 straight weeks.

In the week ending October 29th, the MBA’s seasonally-adjusted purchase index increased 1.42% from the previous week but was down 28.53% compared to the same time last year.  This is the second straight week that the purchase index has increased.  However, the index remains near 14-year lows.

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