Philadelphia, Bucks County & Huntingdon Valley PA Real Estate - Homes For Sale

For the most part, geopolitical events took a backseat to economic reports this week. The picture of the economic outlook painted by the Fed last week received a great deal of support from nearly all of the data released this week, lending much needed credibility to the relatively new head of the Fed, Ben Bernanke. A nice summary of domestic activity emerged on Wednesday when the Fed released its Beige Book, outlining current conditions in each of the districts. The general message contained elements of a slowing pace of economic growth, a cooling off in the residential real estate market, and "modest" increases in wages and prices. Confirmation of less rapid growth, along with moderate inflationary pressures, was great news for mortgage rates.

By far the most important economic data of the week came out on Friday. Second quarter Gross Domestic Product (GDP) was expected to increase at a 3.0% rate, but the actual results showed growth of only 2.5%, which was a far cry from the 5.6% pace seen in the first quarter. As an added bonus for mortgage markets, the report revealed lower than expected inflation as well. In fact, the employment cost index increased at a rate which was almost completely offset by productivity gains, meaning that workers are getting paid a little more, but they’re also completing more work. The GDP report provided further evidence that economic growth is slowing and reduced the perceived need for another Fed rate hike.

For the week, Freddie Mac reported that average 30 year fixed rates decreased by 0.08%, while the news from the housing sector continued to reveal signs of a slowdown from last year’s record levels. New Home Sales in June displayed even more weakness than economists had predicted, and the pace of sales was down 17% from its peak last summer. June Existing Home Sales also slipped. Median existing home prices increased 1% from one year ago, and inventories rose to the highest level since 1997. After the data, the NAR suggested that the housing market is leveling off, and the slowdown provided one more reason for the Fed to refrain from raising interest rates again.