Pending Home Sales Increase 5.2%
More good news for housing as an index measuring the number of Americans who signed contracts to buy homes in October jumped to nearly its highest level in almost six years.
Steady job gains and record-low mortgage rates have made home buying more attractive.
The National Association of Realtors said Thursday that its seasonally adjusted pending home sales index rose 5.2 percentage points to 104.8 in October. Excluding a few months when the index spiked because of a homebuyer tax credit, that is the highest level since March 2007.
Signed contracts jumped 15.6% in the Midwest and rose 5.5% in the South. But they fell 1.1% in the West and dipped 0.1% in the Northeast.
In a separate report, the Case-Shiller Home Price Index moved upward again as national home prices increased 3%.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) gained +53 basis points from last Friday to the prior Friday which caused 30 year fixed mortgage rates to move lower and snapped a two week streak of higher rates. We had our highest mortgage rates on Monday and our lowest rates on Friday.
It was a week for strong economic data with big improvements in Durable Goods Orders, 3rd QTR GDP, Home Price Index, and Pending Home Sales. We also saw very good readings for Consumer Confidence and Chicago PMI. Normally, these type of positive readings would have caused a huge sell-off in MBS which in turn would have moved mortgage rates higher.
However, concern over the fiscal cliff more than offset that near-term positive economic news as the House and Senate majority leaders held several press conferences that clearly demonstrated that there was still a huge divide between the two sides. This uncertainty about a resolution to the “fiscal cliff” at the end of the year causes massive fear and uncertainty in the financial marketplace and that is what provided a lift to bonds and helped mortgage rates.
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|
|3-Dec||10:00 AM||ISM Index||49.5||51.2||51.7|
|3-Dec||10:00 AM||Construction Spending||1.4%||0.40%||0.60%|
|3-Dec||4:00 PM||Total Auto Sales||14.3||NA||5.2M|
|5-Dec||7:00 AM||MBA Mortgage Index||–||NA||-0.90%|
|5-Dec||8:15 AM||ADP Employment Change||–||125K||158K|
|5-Dec||8:30 AM||Unit Labor Costs -Rev||–||-0.80%||-0.10%|
|5-Dec||10:00 AM||Factory Orders||–||-0.10%||4.80%|
|5-Dec||10:00 AM||ISM Services||–||53.7||54.2|
|5-Dec||10:30 AM||Crude Inventories||–||NA||-0.347M|
|6-Dec||7:30 AM||Challenger Job Cuts||–||NA||11.60%|
|6-Dec||8:30 AM||Initial Claims||–||382K||393K|
|6-Dec||8:30 AM||Continuing Claims||–||3275K||3287K|
|7-Dec||8:30 AM||Nonfarm Payrolls||–||90K||171K|
|7-Dec||8:30 AM||Nonfarm Private Payrolls||–||120K||184K|
|7-Dec||8:30 AM||Unemployment Rate||–||8.00%||7.90%|
|7-Dec||8:30 AM||Hourly Earnings||–||0.10%||0.00%|
|7-Dec||8:30 AM||Average Workweek||–||34.4||34.4|
|7-Dec||9:55 AM||Mich Sentiment||–||82.4||82.7|
|7-Dec||3:00 PM||Consumer Credit||–||$9.9B||$11.4B|
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.