Tag Archives: Capital Economics

The national homeownership rate stands at 65.3 percent as of the end of the third quarter, up 0.3 percentage points from the previous quarter, but down 0.2 percentage points from last year, according to the Census Bureau. While the quarterly rise has some analysts expressing hope that housing has reached a turning point, others focused more on the slow pace of growth as a sign that young adults still aren't in a position to create their own households.

Mortgage application volume increased throughout October, but a substantial decline recorded in the month's final days has experts at Capital Economics doubting that the trend will continue for the time being. Using application numbers released by the Mortgage Bankers Association (MBA), Capital Economics calculated a 7.5 percent increase in applications in October, pulling activity up from a five-month streak of declines. However, for the week ending November 1, MBA reported a 7.0 percent drop.

Capital Economics is ready to acknowledge that rising mortgage rates may provide more drag than the firm's analysts first thought.

The University of Michigan's Index of Consumer Sentiment declined to a nine-month low in its preliminary October reading, but analysts say the drop wasn't as bad as it could have been. The index plunged to 75.2 in the mid-month report, down from 77.5 at the end of September. The fall in the headline index was due entirely to a drop in consumer expectations. The Surveys of Consumers' Index of Consumer Expectations fell to a 2013 low of 63.9 from September's 67.8.

Using weekly data released by the Mortgage Bankers Association (MBA), Capital Economics economist Paul Diggle calculated a 7.7 percent drop in mortgage applications from August to September.

Most economists agreed that the broader effects of the shutdown should be minimal, assuming that the shutdown is short-lived.

Market indicators continue to point to an imminent slowdown in home price gains--further allaying fears of another housing bubble in the making, Capital Economic says.

Though the national unemployment rate continued to fall in August, disappointing payroll numbers over the last several months have analysts wondering what the latest jobs report might mean for the Federal Reserve's plan to taper its monthly asset purchases. "As it stands now, [the six-month payroll] average isn't much higher than it was a year ago when the Fed felt it necessary to launch QE3," commented Paul Ashworth, chief U.S. economist for the firm.

Mortgage application volume continued to suffer throughout August as interest rates increased, but analysts at Capital Economics note bigger factors at play may aid lending in the near future.

Even with home prices marching ever upward and mortgage rates bouncing back more than a full percentage point over last year, Capital Economics' Paul Diggle insists housing affordability is still as good as most other experts say it is--if not better. Even with first-time buyers earning less on average and paying more of their income for their starter homes, "metrics are still considerably more favourable than historical norms," he said, suggesting that concerns about a bubble are "premature."