Housing: A Broken Record
Good housing reports are starting to sound like a “broken record” with the same beat over and over. And that beat sounds great! Each week and month we continue to get more great housing news which makes it very clear that this is a real trend that will continue for some time. Here are last week’s housing reports:
Home Prices Increase Again: The Case-Shiller Home Price Index once again showed that home values were increasing with a year-over-year increase of 6.82% in their 20 city index. The monthly gain was at 0.88%.
Pending Home Sale Jump: The National Association of Realtors said Wednesday that its seasonally adjusted index for pending home sales rose 4.5% last month to 105.9. Volume is now 9.5 percent above January 2012 and is the highest reading since April 2010.
New Home Sales Best Since 2008: New home sales surged in January, rising almost 16% from December in another sign of an improving housing market. Sales of new single-family homes in January came in at a seasonally adjusted annual rate of 437,000, the government said Tuesday.
That’s three separate reports last week, all from separate sources that all show the same thing that we have been seeing for several months. Housing is clearly on the right path.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) gained +72 basis points from last Friday to the prior Friday which caused 30 year fixed mortgage rates to move to their lowest levels in 4 weeks. We had our highest mortgage rates on Monday and our lowest rates on Friday.
We had a slew of much better than expected economic data. Normally, when we get strong economic data, bonds sell off (which causes higher mortgage rates) but the economic data was over-shadowed by financial fear in global markets. First up was the Italian elections. The results have investors concerned that Italy will not follow their current path to austerity and that threatens the stability of the entire European Union. Here at home, the U.S.A. continues to operate without a budget and faces another debt ceiling and automatically triggered spending cuts. These events are what primarily drove mortgage rates downward.
Our economy continues to chug along. We saw major improvements in both the ISM Manufacturing and the Chicago PMI reports which show strong growth in the manufacturing sector. Consumer Confidence improved and so did Consumer Sentiment. Housing continued to impress with gains home values (Case-Shiller Index) and sales (New Home Sales and Pending Home Sales).
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|
|5-Mar||10:00 AM||ISM Services||–||55.4||55.2|
|6-Mar||7:00 AM||MBA Mortgage Index||–||NA||-3.80%|
|6-Mar||8:15 AM||ADP Employment Change||–||150K||192K|
|6-Mar||10:00 AM||Factory Orders||–||-2.20%||1.80%|
|6-Mar||10:30 AM||Crude Inventories||–||NA||1.130M|
|6-Mar||2:00 PM||Fed’s Beige Book||–||–||–|
|7-Mar||8:30 AM||Initial Claims||–||350K||344K|
|7-Mar||8:30 AM||Continuing Claims||–||3100K||3074K|
|7-Mar||8:30 AM||Trade Balance||–||-$43.0B||-$38.5B|
|7-Mar||8:30 AM||Unit Labor Costs -Rev||–||4.20%||4.50%|
|7-Mar||10:30 AM||Natural Gas Inventories||–||NA||-171 bcf|
|7-Mar||3:00 PM||Consumer Credit||–||$12.8B||$14.6B|
|8-Mar||8:30 AM||Nonfarm Payrolls||–||165K||157K|
|8-Mar||8:30 AM||Nonfarm Private Payrolls||–||178K||166K|
|8-Mar||8:30 AM||Unemployment Rate||–||7.90%||7.90%|
|8-Mar||8:30 AM||Hourly Earnings||–||0.20%||0.20%|
|8-Mar||8:30 AM||Average Workweek||–||34.4||34.4|
|8-Mar||10:00 AM||Wholesale Inventories||–||0.20%||-0.10%|
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.