Home Prices Jump 14%, Sales Up 17%
We received more good news about our housing market last week as median home prices soared 14% and total unit sales jumped 17% from the same period last year. Remember when home prices went up 10% each year?…well its back!
Existing home sales rose 6.5% on a monthly basis and 17% on an annualized basis in July, reaching their highest level in nearly four years, the National Association of Realtors reported.
Homes sold at a 5.39 million seasonally adjusted annual rate, the group said, handily beating economists’ forecasts of a 5.15 million sales pace, it was the highest since November, 2009.
The Realtors said July’s median home price, where half of all homes are more expensive and half are less expensive, was $213,500, up 14% from last July. That was the biggest year-over-year gain since 2005.
“We haven’t had three straight months of 5 million or greater since the second quarter of 2007,” NAR spokesman Walter Molony said. “To go back and find a month with a higher sales volume, without the benefit of federal tax credits, you have to go back to March 2007.”
The ongoing strength of the housing market was cited in minutes of the Federal Reserve’s Federal Open Markets Committee, released Wednesday, as a primary reason the Fed thinks economic growth will accelerate by later this year.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) gained +28 basis points from last Friday’s close which caused 30 year fixed rates to move lower.
We had a fairly light week in terms of the number of economic releases and there were no major U.S. Treasury auctions to guide bond trades.
It was a very choppy week as MBS sold off on Monday (higher rates), rebounded Tuesday (lower rates) and then sold off again on Wednesday (higher rates). On Friday, MBS rallied (better rates). We had a mixed bag of housing data as Existing Home Sales were much stronger than expected, while New Home Sales were much weaker than expected.
The Federal Reserve Open Market Committee (FOMC) released the minutes from their last meeting. While it didn’t provide any clear direction on the Fed’s time table to start reducing their monthly bond purchases, it did appear as though a larger percentage of the voting members were open to some sort of taper in September.
Friday’s rally gave you the best rates of the week. This was due to the Fed’s Bullard making a comment that the Fed can “afford to be deliberate” about their timing of reducing their monthly bond purchases. The rally was accelerated by a much weaker than expected New Home Sales report.
|Date||ET||Economic Release||Actual||Market Expects||Prior|
|26-Aug||8:30 AM||Durable Orders||–||-5.00%||3.90%|
|26-Aug||8:30 AM||Durable Goods -ex transportation||–||0.60%||-0.10%|
|27-Aug||9:00 AM||Case-Shiller 20-city Index||–||12.00%||12.20%|
|27-Aug||10:00 AM||Consumer Confidence||–||77||80.3|
|28-Aug||7:00 AM||MBA Mortgage Index||–||NA||-4.60%|
|28-Aug||10:00 AM||Pending Home Sales||–||0.20%||-0.40%|
|28-Aug||10:30 AM||Crude Inventories||–||NA||-1.428M|
|29-Aug||8:30 AM||Initial Claims||–||330K||336K|
|29-Aug||8:30 AM||Continuing Claims||–||2969K||2999K|
|29-Aug||8:30 AM||GDP – Second Estimate||–||2.10%||1.70%|
|29-Aug||8:30 AM||GDP Deflator – Second Estimate||–||0.70%||0.70%|
|29-Aug||10:30 AM||Natural Gas Inventories||–||NA||57 bcf|
|30-Aug||8:30 AM||Personal Income||–||0.10%||0.30%|
|30-Aug||8:30 AM||Personal Spending||–||0.30%||0.50%|
|30-Aug||8:30 AM||PCE Prices – Core||–||0.20%||0.20%|
|30-Aug||9:45 AM||Chicago PMI||–||53||52.3|
|30-Aug||9:55 AM||Michigan Sentiment – Final||–||80||80|
I will be watching these reports closely for you and let you know if there are any big surprises:
It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.
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