New and Existing Home Sales Jump – Best in Several Years
The National Association of Realtors said that December sales of previously-owned homes were up 12.8% from a year ago. That brought full-year sales to 4.65 million, up 9% from 2011 and the best year for home sales since 2007, when there were 5 million homes sold just before the start of the recession.
The improved demand for homes in December led to the inventory of homes for sale to fall to 1.82 million homes on the market, the lowest supply since January 2001 .The tighter supply, and the drop in distressed sales, have helped to lift home prices so that the median sales price for the year rose to $176,600, up 6.3% from 2011. That’s the biggest gain in prices in since the bubble year of 2005.
And the Realtors are predicting strong sales should continue into 2013 and beyond. It has a forecast for 5.1 million existing home sales this year, and 5.4 million next year.
The Commerce Department said than New U.S. single-family home sales hit a seasonally adjusted 369,000-unit annual rate.
The median price for a new home rose to $248,900 in December from $245,600 in November, according to figures that are not adjusted for seasonal swings. Rising prices are seen as a sign of improving health in the housing market.
Economists think home building added to economic growth last year for the first time since 2005. Friday’s report showed 367,000 new homes were sold last year, the most since 2009.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) lost -72 basis points from last Friday to the prior Friday which caused 30 year fixed mortgage rates to move higher. We had our highest mortgage rates on Friday and our lowest rates on Wednesday.
We had a holiday-shortened week, MBS and mortgage rates moved sideways until Thursday morning and then everything changed. MBS sold off after a much better than expected Weekly Initial Jobless Claims report which surprised to the downside for the second straight week. This positive jobs data sank bond prices. Mortgage rates move inversely to bond prices, so as bonds sold for less money….mortgage rates increased.
Bonds continued their “free fall” Friday as the markets continued to reposition after the World Economic Forum in Davos. Essentially, the consensus among global economists was that the U.S. has turned the corner and is starting to see growth also their outlook brightened on Europe. Bonds are very popular when there is no growth…so this was negative news for bonds and mortgage rates in general.
MBS have now sold off -146 basis points this year. We have seen an increase in mortgage rates as a result. If we continue to get good economic news out of the U.S., this trend will continue.
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|
|28-Jan||8:30 AM||Durable Orders||–||1.60%||0.80%|
|28-Jan||8:30 AM||Durable Goods -ex transportation||–||0.00%||1.60%|
|28-Jan||10:00 AM||Pending Home Sales||–||0.00%||1.70%|
|29-Jan||9:00 AM||Case-Shiller 20-city Index||–||5.20%||4.30%|
|29-Jan||10:00 AM||Consumer Confidence||–||65.1||65.1|
|30-Jan||7:00 AM||MBA Mortgage Index||–||NA||7.00%|
|30-Jan||8:15 AM||ADP Employment Change||–||175K||215K|
|30-Jan||8:30 AM||Chain Deflator-Adv.||–||1.60%||2.70%|
|30-Jan||10:30 AM||Crude Inventories||–||NA||2.813M|
|30-Jan||2:15 PM||FOMC Rate Decision||–||0.25%||0.25%|
|31-Jan||7:30 AM||Challenger Job Cuts||–||NA||34.40%|
|31-Jan||8:30 AM||Initial Claims||–||345K||330K|
|31-Jan||8:30 AM||Continuing Claims||–||3200K||3157K|
|31-Jan||8:30 AM||Personal Income||–||0.70%||0.60%|
|31-Jan||8:30 AM||Personal Spending||–||0.30%||0.40%|
|31-Jan||8:30 AM||PCE Prices – Core||–||0.10%||0.00%|
|31-Jan||8:30 AM||Employment Cost Index||–||0.50%||0.40%|
|31-Jan||9:45 AM||Chicago PMI||–||50.5||48.9|
|31-Jan||10:30 AM||Natural Gas Inventories||–||NA||-172 bcf|
|1-Feb||8:30 AM||Nonfarm Payrolls||–||180K||155K|
|1-Feb||8:30 AM||Nonfarm Private Payrolls||–||193K||168K|
|1-Feb||8:30 AM||Unemployment Rate||–||7.70%||7.80%|
|1-Feb||8:30 AM||Hourly Earnings||–||0.20%||0.30%|
|1-Feb||8:30 AM||Average Workweek||–||34.5||34.5|
|1-Feb||9:55 AM||Michigan Sentiment – Final||–||71.4||71.3|
|1-Feb||10:00 AM||ISM Index||–||50.5||50.7|
|1-Feb||10:00 AM||Construction Spending||–||0.50%||-0.30%|
|1-Feb||2:00 PM||Auto Sales||–||NA||5.5M|
|1-Feb||2:00 PM||Truck Sales||–||NA||6.5M|
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.