Miller Tabak + Co.
Contract signings of existing homes surprisingly rose by 2.4% in June vs an expected drop of 2% and follows an 8.2% rise in May. The jump was led by the high foreclosure regions of the West and South as the Northeast and Midwest saw declines. Bottom line, while there was an unexpected jump in pending sales, there has been a major issue of turning these contracts into closings because of tight lending standards and appraisals coming in below the agreed upon purchase price so today’s figure only tells one part of the story. Also of issue will be whether higher end homes will close as the government moves closer to having FNM and FRE lower the maximum amount of a mortgage they will participate in and lenders avoid these loans as a result. A jumbo will then be that buyers alternative where a 30 yr mortgage rate is priced 50 bps above a conventional.