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1 out of 4 Sellers said they lowered their prices in July. They lowered there prices an average of 10%. July Single Family Pending Home Sales (put under agreement) was down 18% year over year and Condo’s were down 28%. This was the 3rd straight down number for pending home sales which brings up a good question is a double dip recession coming for the housing market? Its hard to believe with rates at record lows why isn’t the housing market improving? I think the answer is simple. Consumer Confidence, Jobs, and the Economy…. It seems some buyers are worried about values but, one thing is for certain its a buyers market and it may never be a better time to buy.

The DOW so far this week has been down more than 350 points to 10,320.

Gold is at $1,217 an ounce and Oil is at $76 a barrel.

Rates have done well again. 30 year fixed rate is at 4.57% w/ .89 points and the 15 year is at 3.95% w/ 1.08 points.

Dow Jones Trading Floor

The Bank of England leaves rates unchanged at .5%. This was good news and shows they are on the same page as the Federal Reserve and monitoring the financial situation closely. The $64,000 question is who will win the fight of Inflation VS. Deflation? Both are a pretty bad situation to be hoping for. Higher inflation means higher prices on goods and services but deflation means prices on goods and services are going down which typically may suggest a recession. When prices don’t go up that means companies aren’t generating higher profits which is bad for the stock market.

Another key question is if the consumer is slowing down? The health of the consumer is on everyones mind. Companies like Proctor & Gamble, Dean Foods, and Clorox all guided lower earnings going forward. The consumer and spending is what we need to stay ahead of the curve in order not to fall back into a recession.

30 Year Fixed Rate Average hit another record low at 4.60% and the 15 Year Fixed Rate Average is at 4.03%

Oil is at $82.21 a barrel and gold is at $1,197 an ounce. The DOW was up 209 point through Thursday so far this week and the jobs number tomorrow will sure be a guide to what happens.

Deflation, Is the Fed our friend?

Weekly jobless claims were down 11,000 to 457,000 week ending 7/24 and continuing claims week ending 7/17 was 4.565 Million vs. 4.484 Million the prior week. Consumer confidence for July dipped to 50.4 vs. June’s 54.3.

June new home sales (new construction) surged up 23.6% vs. May’s horrendous down figure of 36.7% which was sort of puzzling. These numbers came as a surprise as most Realtors say that buyer traffic is down since the ending of the home buyer tax credit program. My only thought is that this number represents new construction sales that went under contract prior to April 30th and continue to close due to the extension till September 30, 2010.

Fannie Mae and Freddie Mac say that prime loans are accelerating into foreclosure and a noticeable decline in home prices has occurred from May to June which breaks down as the following

Foreclosures prices down 6.8%
Short Sale prices down 6.3%
Non-Distressed prices down 4.6%

So key questions for the housing market going forward is what happens if rates go up and will that spark buyers to move? 30 year fixed rates are at 4.64% and 15 year fixed rates are at 4.12% Mortgage apps fell 4.4% last week as refi’s fell 5.9% as purchase apps rose 2%.

The market did okay this week, the DOW was up 144 points as Oil reached $78.96 and Gold is at $1,184 an ounce.

I think the questions going forward is not if the 800 Billion Dollar Stimulus Plan worked or as to how well did it work? I feel that one thing that needs to be done is extending the Bush Tax Cuts! I defiantly don’t see the U.S. Taxing our way out of this situation. I think that the private sector needs any incentives to expend growth which will lead to job creation! The facts are that 14.5 Million people are out of work in the U.S. and 7.5 Million of them have been out of work for more than 24 months. That is not good! We need to provide benefits and tax cuts to small business / employers to create these jobs. I think that there is a silver lining here. Even though this negative environment companies continue to have good earnings. There still hasn’t been a better time in the past 20 years to be a home buyer and with historic low interest rates this could be the opportunity people are looking for.

What is a bit concerning is that these are numbers when the Home Buyer Tax Credit Program was still going on in April and they were still weak. 1st time buyers still represent 43% of the market and all cash buyers are a staggering 27%! This is the breakdown of Existing Home across the region. Northeast was up 7.9%, Midwest was down 7.5%, South was down 6.5%, and the West was down 9.3%. Distressed sales are still 1/3 of all market transactions 32%. Foreclosure sales are falling as short sales are rising. 30 Year Fixed Rate National Average was down to 4.59% and the 15 Year was down 4.05%. June Building Permits were up 2.1% as June Housing Starts were down 5.0%. One step forward and two steps back.

1st Time Initial Jobless Claims rose more than expected up 37,000 to 464,000 week ended July 17. This number was alittle out of line from expected but continuing claims week ending July 10th were better than expected at 4.487 Million vs the prior week 4.710 Million.

The Fed Chairman Ben Bernanke was on Capitol Hill to give his testimony on the condition of the US Economy on its Semi Annual Address. I felt most of the 2 day address was pretty positive. The fact is that most of this information is old and we already know most of these facts. Even though, the market sold off on Wednesday but rebounded on Thursday. Most of the concern of the testimony was about the exist strategy plan when the Fed eventually has to start raising rates. This isn’t necessarily a bad thing cause it means the worst is behind us and the economy is getting better. Some of the highlights was the following.

*Fed expects inflation to be subdued
*Unemployment is improving
*Expansion is proceeding at a moderate pace
*The Fed still has tools in its tool box if the economy does slow
*Financial Regulation Bill will enforce stronger standards which will minimize risk of another crisis

The one statement the markets didn’t like was that the Fed feels that the economic outlook remains unusually uncertain!

The way I see it is that the real problem is the Federal Government and their unwillingness to understand that it is small business that will help the economy with job growth. If you easy the burden on small businesses with lower tax rates it will help expansion and further growth. The Federal Government has only gotten bigger and they are now taking a bigger role in the private sector which is only going to create bigger problems, more regulation, and higher taxes. This is clearly not the way to prosperity. The good news is that even with this negative environment companies area coming out with big earnings and things look a recovery is coming!