A sharp jump in mortgage rates was the week’s most significant development.

• 30-year mortgage rates rose to 6.32%, largely in response to growing inflation fears
• Federal Reserve officials may also respond to the inflation threat, as they’ve begun to hint at possible hikes in the Fed rate later this year
• The grim news on the interest rate front overshadowed what otherwise would have been a bright spot, a bounce back in mortgage application activity

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Recently-released data on home sales sent mixed signals to prospective buyers:

• The S&P/Case-Shiller index of home prices in 20 major markets showed a 14.4% year-over-year decline through the end of March, 2008
• The U.S. Commerce Department reported that the number of new home sales increased 3.3% in the month of April  

While conflicting signals on housing might give home buyers reason to pause, two other developments might spur them to action:

• Revised GDP data strengthened the earlier indication that the U.S. economy avoided slipping into recession in the first quarter of 2008
• Mortgage rates broke out of a month-long holding pattern and showed hints of a possible upward trend

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Economist say we are seeing some action with first time home buyers. For the economy to rebound it has to start with the housing market, so can first time buyers boost the market or are there too few options available for this to happen? Also with lower housing prices, what do you need to do as a seller to make sure your house sells in this first time buyer’s market?

For more on this read:
U.S. housing slump may require tax credit to encourage buyers
Part one: Shoppers can get more house for their money across price ranges
First-time home buyers have few options

According to BBC News, tent cities are popping up in the US as the economy gets worse and more are displaced by the mortgage crisis.

For more on this:
Tent cities popping up all over America
America’s new subprime shanty-towns
Housing crisis at historic level

Mortgage news overall continued to spell opportunity for potential home buyers, but there are also signs that favorable mortgage rates might not last:

• 30-year mortgage rates posted a fifth consecutive reading between 5.85% and 5.88%
• Mortgage foreclosure rates continued to rise
• Southern California home prices reached a four-year low
• Signs are spreading that inflation is taking hold

The combination of low mortgage rates and falling home prices is great for today’s home buyers, but the inflation signals are a reminder that these conditions may not last. 

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As the US economy slows, consumers are trading down. More and more consumers are “hunting for deals” as the prices of everyday items continue to rise. Many are leaving upscale distributors and heading to Walmart in hopes of lower prices, not to save up for a luxury item, but to be able to get by from paycheck to paycheck.

For more on this read:

U.S. Economy: Trade Gap Unexpectedly Grew on Imports
U.S. consumer borrowing slows
U.S. Economy Cools As Consumers Pull Back

What is the difference between a home equity loan and a HELOC? Find out the main differences between the two and which one might be a smarter choice in todays market.

For more on this read:
Thousands of Homeowners Facing HELOC Foreclosure
When HEL Freezes Over — Who’s out in the cold with the HELOC freeze?
The $1.1 Trillion HELOC Problem

Beverly Hills Real Estate Broker Connie De Groot talks with Neil Cavuto about the luxury home market and how it is holding up in light of the recent housing slumps. If the “rich” continue to buy and sell, will the market be spared from further falls?

For more on this read:
A Bright Spot Among the Construction Services Companies — Hamptons Luxury Homes 2007 Results Outperforms Industry Trends
Housing Market Tracker - It’s About Affordability, Stupid.
The luxury property market shrugs off the slowdown

The Federal Reserve chairman met with members of congress to discuss measures to stop the current recession of the US economy. In addition to lowering interest rates, the Federal Reserve plans to go forward with a “quick, stimulus package” to alleviate the recession woes. Watch the video to find out what this includes.

For more information read:

Taxpayers Would Get Checks Under Economic Stimulus Plan
Fed Chairman Backs Stimulus
Bush Favors Tax Rebates In Stimulus Plan
Economic stimulus plan has 3-pronged attack

30-year mortgage rates settled in below 6.0% for the second consecutive week, amid continued discussion of how much the economy would slow:

• The latest GDP estimate indicated that the U.S. economy slowed to nearly a standstill in the final quarter of 2007.
• Housing prices continued to slide, with year-over-year declines now reaching double digits.
• Meanwhile, President George W. Bush reminded Americans that help may be on the way, in the form of tax rebate checks that are due to start arriving in May.

When considering what to make of all these reports, mortgage shoppers would do well to minimize discussions of the past and the future, and focus on the status of the here and now. In that light, there are concrete indications that this is a good time to act.

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