Jim Belote's Mortgage Matters is frequently shared on this blog.   Shared for one reason alone:  great facts from the mortgage side on the Real Estate market.

Though I have been a frequently espoused the growing demand, the cause behind the great mortgage rates and slacking inventories/rising or firming prices, Jim's input from the financial side rounds out the chorus.

Scan the article if time is short.  But a read is worth the time.

	Keeping you updated on the market! For the week of  July 2, 2012 MARKET RECAP It's getting easier to understand why home builder sentiment keeps rising monthly: sales and prices are now in an established uptrend. Indeed, new home sales recorded a very solid 7.6 percent increase in May, posting at a much higher-than-expected 369,000 annualized units. Now, it's true that the national median price of a new home sold in May edged down 0.6 percent to $234,500 for the month but when we look at the past 12 months, we see that new home prices are up 5.6 percent. We see no reason why prices will backslide for long. There simply isn't enough supply to satisfy demand. The surge of buying in May lowered new-home inventory to a 4.7-month supply at the current sales rate. This is the lowest inventory level since 2005. Lack of inventory is contributing to firming prices, to be sure, but it's also impeding sales growth. While the new home sales report exceeded the consensus estimate, sales might have posted an even stronger gain if builders had more inventory for sale. Having been burned in the past with false recovery signals, builders have maintained a conservative stance on both “spec” building and co mmunity-count growth, thus limiting sales potential. Low inventory levels could become a greater issue in the existing-home sales market as well. Many of us have already dealt with lack of inventory in certain categories of homes. In many markets, supply is being kept tight for two primary reasons: Negative equity is one and expectations is the other. Potential sellers simply don't want to (or can't) come to the table with additional money, so they don't list their homes. As for expectations, more potential sellers are anticipating rising prices; therefore, they're holding inventory off the market anticipating higher prices. Expectations, in this way, is a self-fulfilling prophesy. Given the trends in inventory and median prices, we weren't at all surprised to read that the S&P/Case-Shiller home price index posted a strong gain in April. In fact, the index surged 0.7 percent – an unusually large gain, last exceeded in April 2010. If you'll remember, back then, the market was riding on the expiration of the federal tax credits for first-time home buyers. The market today is without a doubt much healthier than it was in 2010. We expect the market to remain healthy into the distant future. The NAR reports that home contract signings rose for the 13 th consecutive month, with pending home sales rising 13.3% over May 2011 and nearly 6% over April 2012. According NAR economist Lawrence Yun, we should expect to see a 9 percent to 10 percent improvement in total existing home sales for 2012. The question that looms is, can shadow inventory derail the recovery? It's a legitimate question. After all, there are four million housing units that could potentially come to market as foreclosed or short-sale property. We're not particularly worried, though. We've previously argued that we don't think shadow inventory is a game changer. Banks are processing foreclosures in an orderly and rational fashion, while at the same time they are taking on more short sales. As we like to say, markets are clearing. Here's a another consideration on shadow inventory. We consistently write about housing starts and new home sales, but we rarely talk about lost homes; that is, homes that are lost through neglect, fire, and natural disasters. According to U.S. Census data, we lose an estimated 300,000 housing units from such events, most of these are existing home, and many, we suspect, are in the shadow inventory. So, again, we think the housing recovery is on track for good. Economic Indicator Release Date and Time Consensus Estimate Analysis Construction Spending (May) Mon., July 2, 10:00 am, et 0.2% (Increase) Important. Continued strength in residential real estate construction points to rising new home sales. Factory Orders (May) Tues., July 3, 10:00 am, et 0.3% (Decrease) Moderately Important. Orders are expected to turn positive in coming months on low inventory, thus helping GDP growth. Mortgage Applications Thurs., July 5, 7:00 am, et None Important. Increases in FHA premiums have increased weekly volatility, but the longer-term trends remain positive. Employment Situation (June) Fri., July 6, 8:30 am, et Unemployment Rate: 8.2% Payrolls: 100,000 (Increase) Very Important. Any unexpected divergence from the consensus estimate will move interest rates. It's Not Really Greek To Us Well, mortgage lending rates hit another record low in many markets this past week. This is becoming a weekly occurrence, albeit one in small increments. We mentioned last week how the Federal Reserve has stiffened its resolve to keep long-term lending rates at record lows at least through this year. The Fed is accomplishing this task by rolling short-term securities into long-term U.S. Treasury notes and bonds and mortgage-backed securities. The increased demand in these longer-maturity issues increases their price and thus lowers their yield. The Fed is also being helped by our friends in the Mediterranean, namely Greece. People are often perplexed how Greece's fiscal woes impact our lending markets. The short answer is that we operate in a world financial market, not a national one. That means money and capital easily and frequently cross national borders. Many financial institutions – domestic and foreign – own the sovereign debt issued by other countries. When the risk of owning the debt of a particular country (like Greece) rises, investors sell and often seek haven in less risky securities, like U.S. Treasury securities. As with Fed demand, private investor demand increases prices and lowers yield. Investors have been dumping Greek debt and buying U.S. Treasury debt in recent months, thus helping the Fed to maintain low lending rates. There is a familiar saying “that's Greek to me,” which means “I don't understand.” In this case, it really is easy to understand Greek, when you understand that today's financial markets are global in nature. If you wish to unsubscribe, click on the link below and send the email. If this message was forwarded to you, please reply to the sender. Click Here To Unsubscribe EQUAL HOUSING LENDER This Newsletter is for informational purposes only. The information contained herein may not be applicable to every situation or jurisdiction and we urge you to consult your professional advisor prior to acting on information contained herein. The content, accuracy and opinions expressed herein are not verified or endorsed by the sponsor hereof.