Housing Sector is Continuing to Gain Traction
U.S. home resales rose in October and a gauge of homebuilder sentiment climbed to a six-year high in November, a sign the housing sector is continuing to gain traction.
The National Association of Realtors said on Monday that existing home sales climbed 2.1 percent last month to a seasonally adjusted annual rate of 4.79 million units, beating forecasts by Wall Street economists.
The data suggests America’s recovery from the 2007-09 recession is becoming increasingly self-sustaining, with job creation helping drive home sales, which in turn are supporting economic growth.
In October, the median price for a home resale was $178,600, up 11.1 percent from a year earlier as fewer people sold their homes under distressed conditions compared to the same period in 2011. Distressed sales include foreclosures.
The nation’s inventory of existing homes for sale fell 1.4 percent during the month to 2.14 million, the lowest level since December 2002. At the current pace of sales, inventories would be exhausted in 5.4 months, the lowest rate since February 2006.
In a separate report, U.S. housing starts rose to their highest rate in more than four years in October, the Commerce Department said housing starts increased 3.6 percent to a seasonally adjusted annual rate of 894,000 units — the highest since July 2008.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) lost -38 basis points from last Friday to the prior Friday which caused 30 year fixed mortgage rates to move slightly higher. We had our highest mortgage rates on Wednesday and our lowest rates on Monday morning.
It was another holiday-shortened week with the bond market closed in observance of Thanksgiving Day on Thursday and Friday. MBS traded in a fairly narrow range for most of the week. Pricing was supported by a very strong 50 day moving average and capped by our 25 day moving average.
We had some good economic news with very strong readings in Consumer Sentiment, Existing Home Sales, New Housing Starts and Builder’s Sentiment all of which combined to pressure MBS pricing lower. This in turn pushed mortgage rates upward as rates move in the opposite direction of better mortgage backed securities pricing.
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|
|27-Nov||8:30 AM||Durable Orders||–||-0.40%||9.80%|
|27-Nov||8:30 AM||Durable Orders -ex Transportation||–||-0.40%||2.00%|
|27-Nov||9:00 AM||Case-Shiller 20-city Index||–||3.10%||2.00%|
|27-Nov||10:00 AM||Consumer Confidence||–||73||72.2|
|27-Nov||10:00 AM||FHFA Housing Price Index||–||NA||0.70%|
|28-Nov||7:00 AM||MBA Mortgage Index||–||NA||-2.20%|
|28-Nov||10:00 AM||New Home Sales||–||388K||389K|
|28-Nov||10:30 AM||Crude Inventories||–||NA||-1.466M|
|28-Nov||2:00 PM||Fed’s Beige Book||–||–||–|
|29-Nov||8:30 AM||Initial Claims||–||395K||410K|
|29-Nov||8:30 AM||Continuing Claims||–||3325K||3337K|
|29-Nov||8:30 AM||GDP – Second Estimate||–||2.80%||2.00%|
|29-Nov||8:30 AM||GDP Deflator – Second Estimate||–||2.80%||2.80%|
|29-Nov||10:00 AM||Pending Home Sales||–||1.00%||0.30%|
|30-Nov||8:30 AM||Personal Income||–||0.20%||0.40%|
|30-Nov||8:30 AM||Personal Spending||–||0.10%||0.80%|
|30-Nov||8:30 AM||PCE Prices – Core||–||0.20%||0.10%|
|30-Nov||9:45 AM||Chicago PMI||–||50.7||49.9|
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.