IndyBank Update

Consumer prices edged up only 0.2% in April, slightly lower than the 0.3% rise that economists anticipated, the Labor Department reported May 14. Core inflation, which excludes food and energy prices, increased just 0.1%, also lower than analysts’ 0.2% forecast. Helping keep a lid on inflation was the price of hotel rooms, which fell by 1.9% in April, the third straight monthly decline reflecting cutbacks in business and vacation travel.
Housing posted a surprising rebound in April as the pace of new-home construction rose 8.2%, the biggest monthly increase in more than two years, the Commerce Department said May 16. Most growth came from a 36% jump in apartment construction.
The housing market was further buoyed by Fannie Mae’s announcement on May 16 that it was eliminating higher minimum down payment requirements for borrowers in distressed real estate markets. The government-sponsored enterprise said it will require minimum down payments of between 3% and 5% for all loans it guarantees. The change replaces a December policy that required a higher minimum if the loan was for a home in a declining real estate market.
Fannie’s reversal is much needed because the number of U.S. homes facing foreclosure in April shot up 65% versus the same month a year ago, and 4% since March, RealtyTrac said May 14. One in every 519 U.S. households received a foreclosure notice in April.
The slowing economy contributed to the lowest level of consumer confidence in 28 years, according to the Reuters/University of Michigan consumer sentiment index, which has been tracking consumer confidence in the economy for more than half a century. The preliminary index fell to 59.5 in May from 62.6 in April. A reading above 100 indicates strong consumer confidence.
Economic news due out this week includes the Conference Board’s Leading Economic Indicators report on May 19 and the existing home sales update on May 23.
Economic data compiled from government reports and news services Bloomberg.com, msnbc.com, cnbc.com, cnn.money.com and Yahoo Economic Calendar.

Zillow - First Quater Charlotte Home Values

According to Zillow's latest Home Value Report, home values in Charlotte increased 2.5% in the first quarter of 2008, compared to the first quarter of 2007. Nationally, single-family home values decreased 7.5% while condo values declined 9.0% during this same period. Use this information to help keep your clients informed.

Indymac Update

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New Change Benefits Homeowners

As part of the Economic Stimulus package recently passed by Congress, limits on conforming home loans have been temporarily raised from $417,000 to a maximum $729,750 in certain high-cost areas across the country ($793,750 in some locations in Hawaii). Other real estate markets have also seen an increase from the old maximum of $417,000. Instead of paying the higher interest rates associated with jumbo loans, larger loans will now carry the lower interest rate of a conforming loan. Federal Housing Administration (FHA) loans also benefit from this increase.

Last Week In The News from IndyMac

Acting aggressively to spur the U.S. economy, the Federal Reserve on January 30 reduced the federal funds rate (the rate at which banks borrow from one another) a half point from 3.5% to 3%. The cut followed a .75% cut on January 22, the largest one-day reduction in more than two decades.
The most recent Fed cut came on the same day the Commerce Department announced that the nation’s gross domestic product or GDP grew at an annual rate of 0.6% in the last quarter of 2007, while it expanded 2.2% over the whole year, the slowest pace in five years.
The economy didn’t get much help from consumers whose spending edged up just 0.2% in December, the weakest performance in six months, the Commerce Department said January 31.
Nor was December good for construction spending, which dropped 1.1%, the most in 15 months and twice as much as economists had been expecting, the Commerce Department said February 1.
Employment also showed weakness as U.S. employers cut 17,000 non-farm jobs in January, the first time since August 2003 that U.S. payrolls shrank, the Labor Department reported February 1. Analysts had forecast a gain of 80,000 jobs.
There were some economic bright spots. The Institute for Supply Management’s manufacturing index reentered positive territory with a reading of 50.7 in January, up from 48.4 in December. A reading above 50 indicates growth. Orders for durable goods, big-ticket items expected to last three or more years, also posted a larger-than-expected gain of 5.2% in December, the Commerce Department said January 29.
This week look for updates on factory orders on February 4.
Economic data compiled from government reports and news services msnbc.com, cnbc.com, cnn.money.com and Yahoo Economic Calendar.