Two more positive economic reports came out today… The Fed's "beige book" periodic reading on the economy was more optimistic than last month, and the National Association of Home Builders said sentiment rose in April to the highest level since last October.
The Fed's report showed that the economic decline may be starting to moderate in some parts of the country, with 5 of the 12 districts showing a slowdown in the pace of decline and a few more districts showed certain parts of the economy were stabilizing.
Reports from the Cleveland, New York, and Dallas districts either showed the pace of decline had slowed or that factory activity had stabilized. Manufacturers' assessments of future factory activity improved marginally over the survey period as well, with contacts in the Boston, New York, Philadelphia, Atlanta, and Kansas City Districts noting a slight upturn in the outlook for production and sales.
Meanwhile, housing markets remained "depressed," but "there were some signs that conditions may be stabilizing," the report said, adding that homebuyer tax credits, lower mortgage rates and lower prices have attracted buyers in the Richmond, Atlanta, Minneapolis, Kansas City and San Francisco districts.
"Low mortgage rates were fueling refinancing activity," said the report. "Outlooks for the housing sector were generally more optimistic than in earlier surveys, with respondents hopeful that increased buyer interest would lead to better sales."
Most districts reported weaker bank loan demand. But the New York, Richmond and Kansas City districts saw an increase in residential real estate loans. Additionally, residential refinancing activity was "brisk" – despite reports of more stringent underwriting standards.
Analysts said the fact that some regions and some sectors are showing signs of stabilization is not a surprise given some of the economic data that have been released recently. Federal Reserve Chairman Ben Bernanke has also been cautiously optimistic about the economy. On Tuesday, Bernanke said he was optimistic about the economy's longer-term prospects. Pointing to figures on housing, consumer spending and new vehicle sales, he added that there have been signs that the sharp decline in economic activity might be slowing. (More: Fundamentally Optimistic)
Also today the National Association of Home Builders said sentiment rose in April to the highest level since last October. Plus analyst Carl Reichardt of Wachovia Capital Markets LLC came out with a bullish note for home builders – "The group could be poised for a short-term rally, citing the salutary effects of lower mortgage rates and prices and the federal government's tax credit for first-time homebuyers."
Reichardt sees a flow of positive macroeconomic news relevant to builders, especially since expectations are so low, and said first-quarter orders could come in better than he had originally expected. The latest monthly survey of 160 homebuilders nationwide by Irvine, California-based John Burns Real Estate Consulting supports Reichardt's notion that lower prices and rates might actually boost orders.
"We can point to a shift in builders' optimism in many metros," the survey said. "We think the improvement is attributable primarily to improved affordability." Traffic rose in every region except Southern Florida and no region reported declining net sales per community this month, according to the survey. Most builders won't be profitable in 2009 and only about half will reach profitability in 2010, he added.
Plus out earlier today, March foreclosures are up and will continue to rise while we catch up on the backlog of foreclosures now hitting the banks books since the moratoriums were lifted last month. Read More: Foreclosures Soar in March, Up 44 Percent Over February's High
Catch me on CBS Nightly News with Katie Couric tonight as I discuss my housing and foreclosure outlook for 2009. If you miss the interview, we will have the video clip up on our site tomorrow here. I do expect the foreclosure numbers will slow down in the second half of the year as new loan modifications and refinancing affects take hold.
Remember, just because it's a foreclosure, does not make it a good deal. You must "Do the Math Right" before you write your offers and lock in your 15% minimum profit when you buy. I will show you how next Tuesday in my Mastering Mini-Lab Live Webinar and Conference Call. You must register in advance. More here.
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