New Home Sales Soar by 18%
Sales of new U.S. single-family homes surged in August and hit their highest level in more than six years, offering confirmation that the housing recovery remains on course.
The Commerce Department said on Wednesday sales jumped 18.0 percent to a seasonally adjusted annual rate of 504,000 units. That was the highest level since May 2008 and marked the second straight month of gains.
While the new home sales segment accounts for only 9.1 percent of the housing market, the increase last month should allay fears of renewed housing weakness after a surprise decline in home resales last month.
A survey last week showed homebuilder sentiment hit its highest level in nearly nine years in September, with builders reporting a sharp pick-up in buyer traffic.
In August, new home sales soared 50 percent in the West to their highest level since January 2008.
Sales in the populous South increased 7.8 percent to their highest level in 10 months. In the Northeast, sales rose 29.2 percent, but were flat in the Midwest.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) gained +31 basis points (BPS) from last Friday’s close which caused 30 year fixed mortgage rates to improve slightly from the prior week. We saw our best rateson Thursday and our worst rates on Monday.
Trading for our benchmark Fannie Mae 3.50% September MBS was confined to a very well-defined trading channel that had terrific support from our 10 day moving average and overhead resistance from our 25 day moving average. While we bounced around within that channel, there was no economic or global news that was strong enough to break us out of that range.
On the housing front, Existing Home Sales missed (5.05M units vs est of 5.20M) but the pull-back was mostly in investment properties and not owner-occupied which is the meat of the market. New Home Sales were stronger than expected and hit their best levels since 2008.
The two biggest reports of the week were Durable Goods Orders and GDP. Durable Goods Ex-Transports were right on the money with a reading of +0.7% vs est of +0.7% and the final revision to the 2nd QTR GDP rose from 4.2% to 4.6%. Neither report had a significant impact on rates or pricing though.
What to Watch Out For This Week:
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|29-Sep||8:30 AM||Personal Income||–||0.30%||0.20%|
|29-Sep||8:30 AM||Personal Spending||–||0.40%||-0.10%|
|29-Sep||8:30 AM||PCE Prices – Core||–||0.00%||0.10%|
|29-Sep||10:00 AM||Pending Home Sales||–||-0.20%||3.30%|
|30-Sep||9:00 AM||Case-Shiller 20-city Index||–||7.40%||8.10%|
|30-Sep||9:45 AM||Chicago PMI||–||61.5||64.3|
|30-Sep||10:00 AM||Consumer Confidence||–||92||92.4|
|1-Oct||7:00 AM||MBA Mortgage Index||–||NA||-4.10%|
|1-Oct||8:15 AM||ADP Employment Change||–||202K||204K|
|1-Oct||10:00 AM||ISM Index||–||58.5||59|
|1-Oct||10:00 AM||Construction Spending||–||0.40%||1.80%|
|1-Oct||10:30 AM||Crude Inventories||–||NA||-4.273M|
|1-Oct||2:00 PM||Auto Sales||–||NA||6.2M|
|1-Oct||2:00 PM||Truck Sales||–||NA||7.9M|
|2-Oct||7:30 AM||Challenger Job Cuts||–||NA||-20.70%|
|2-Oct||8:30 AM||Initial Claims||–||297K||293K|
|2-Oct||8:30 AM||Continuing Claims||–||2458K||2439K|
|2-Oct||10:00 AM||Factory Orders||–||-9.30%||10.50%|
|2-Oct||10:30 AM||Natural Gas Inventories||–||NA||97 bcf|
|3-Oct||8:30 AM||Nonfarm Payrolls||–||210K||142K|
|3-Oct||8:30 AM||Nonfarm Private Payrolls||–||205K||134K|
|3-Oct||8:30 AM||Unemployment Rate||–||6.10%||6.10%|
|3-Oct||8:30 AM||Hourly Earnings||–||0.20%||0.20%|
|3-Oct||8:30 AM||Average Workweek||–||34.5||34.5|
|3-Oct||8:30 AM||Trade Balance||–||-$40.9B||-$40.5B|
|3-Oct||10:00 AM||ISM Services||–||58.9||59.6|
The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. 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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