Homebuilder Hits 5 Year High
U.S. homebuilder sentiment rose in August to its highest level in more than five years, a fresh sign that the battered housing market is turning the corner, data from the National Association of Home Builders showed.
The NAHB/Wells Fargo Housing Market index gained to 37 this month from 35 in July, the group said in a statement, topping economists’ expectations for it to hold steady with last month.
It was the highest level since February 2007 and the fourth month in a row sentiment has improved. The index has surged by more than 20 points since last summer.
In a separate report, the Commerce Department reported that new permits for building homes rose 6.8 percent in July to a 812,000 unit pace, the highest rate since August 2008.
In another positive sign for housing, the University of Michigan’s U.S. Consumer Sentiment Index improved in early August to its highest level in three months.
Layer upon Layer, economic news keeps stacking up to support a stronger housing market.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) lost -96 basis points from last Friday to the prior Friday which caused 30 year fixed mortgage rates to move upward to their highest levels since May.
We had more good economic news with much stronger than expected Retail Sales, a very mild Consumer Price Index and better than expected Consumer Sentiment.
This positive economic news certainly pressured MBS pricing and therefore mortgage rates as well. But the main reason that MBS sold off to their worst levels since May was growing speculation by traders that the European Central Bank (ECB) would begin to purchase bonds from Span and Italy soon. Even Germany made a public statement supporting the ECB last week.
What to Watch Out For This Week:
The following 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:
|Date||ET||Economic Release||Actual||Market Expects||Prior|
|21-Aug||2:00 PM||FOMC Minutes||–||–||–|
|22-Aug||7:00 AM||MBA Mortgage Index||–||NA||-4.50%|
|22-Aug||10:00 AM||Existing Home Sales||–||4.55M||4.37M|
|22-Aug||10:30 AM||Crude Inventories||–||NA||-3.699M|
|23-Aug||8:30 AM||Initial Claims||–||365K||366K|
|23-Aug||8:30 AM||Continuing Claims||–||3298K||3305K|
|23-Aug||10:00 AM||FHFA Housing Price Index||–||NA||0.80%|
|23-Aug||10:00 AM||New Home Sales||–||368K||350K|
|24-Aug||8:30 AM||Durable Orders||–||2.50%||1.30%|
|24-Aug||8:30 AM||Durable Orders -ex Transportation||–||0.50%||-1.40%|
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.