After many states had moved towards phased reopenings of their respective economies, many are now preparing to hunker back down as COVID numbers rise and uncertainty continues to prevail.
Nonetheless, July brought plenty of good news throughout the market. Overall, the United States economy appears to be recovering quicker than originally expected.
Service Sector Excels
The ISM national services index measured 57.1 at the end of June, up from 45.4 in May. This recording was well beyond most economic forecasts. The good news is that readings above 50 indicate an expansion within the sector. This is particularly interesting news since the service sector makes up over two-thirds of the United States economy.
The big question now for investors and economists is how well this rapid improvement will be sustained. Rising levels of COVID are putting a halt to reopening plans.
Consumer Spending Explodes
After slow months of April and May, June and July have proved to be explosive for consumer spending. In June, retail sales were up 7.5% from May, and growth was seen in nearly every avenue of consumer spending.
Consumer spending accounts for around 70% of United States economic activity, so this growth sheds a positive light on the current state of the market.
Housing Market Shines
The housing market has been another area of exceptional recovery. In June, the sale of existing homes, which constitutes around 90% of the housing market, was up a record 21% from May. However, these numbers are still lower than 2019.
The average price for existing homes was up 4% from 2019. Inventory levels remained worrisome as they were down over 18% from a year ago. The supply of homes was good for 4.0 months, below the 6.0-month supply mark typically indicative of a healthy housing market.
New home sales in June were also well above predictions. They were up 14% from May and still 7% higher than 2019.
The uncertainty and slowed economic recovery have been positive for the mortgage rates. Both Freddie Mac and the Mortgage Bankers Association have reported that their average rates for the 30-year fixed have hit more record lows. The MBA even reported that applications for new homes and refinancing were up 33% and 111%, respectively, over the last year.
Looking Ahead
There is certainly a lot to look ahead towards. The end of the weekly $600 increased unemployment benefit comes to an end at the end of July. With millions of Americans still unemployed, many lawmakers are pushing for more aid. Congress is currently working on a new stimulus package.
All eyes are on the reopening plans for each individual state. Investors want to know if economic activity is going to be halted across the country. News on the potential vaccine can be a huge push for the market, good or bad.
Lastly, unrest in many major cities across the U.S. remains a cause for concern as well. Portland, Oregon has seen over 60 straight days of protest, and many others have seen much of the same. How this continues to impact economic activity in those cities and beyond remains a focus for investors.
For further information on the loan and real estate market, get in touch with one of the title and escrow specialists at Plymouth Title Guaranty Corporation.
Information accredited to MBSQuoteline.
Please note: The safety of our staff and clients is our highest priority. Effective immediately, Plymouth Title Guaranty Corp. will be taking the following precautions to limit the spread of the COVID-19 virus:
All purchase transactions need to take place at a Plymouth Title Guaranty Corp. closing office
- If a party to the closing is not feeling well, please contact your closer prior to the closing so appropriate precautions can be taken.
- We ask visitors to utilize the restroom in our building upon arrival to thoroughly wash hands before entering our office.
- Only individuals required to sign and/or deliver documents at closings will be allowed in our office. Specifically, closings will be limited to borrower(s), seller(s), agents, and lenders.
- All pens used in the closing will be given to the client after use.
- All closing rooms will be cleaned and disinfected in-between each closing.
- Those picking up checks at our office will be instructed to call our main line and request to speak to a staff member who will make arrangements for delivery to the lobby or parking lot of our office; and
- All staff will refrain from shaking hands before or after closings and ask clients do the same
Please be advised that our staffing may be impacted during this unprecedented event. While we are committed to continuing to provide outstanding service, we ask for your patience in the face of this pandemic.
This is a fluid situation and we will continue to adjust our protocols as necessary while following the CDC guidelines.