Existing Home Sales Hit 3 Year High, Home Prices Rise
U.S. home resales (the largest segment of the housing market) hit a three-year high in February and prices jumped, adding to signs of an acceleration in the housing market recovery.
The National Association of Realtors said on Thursday existing home sales increased 0.8 percent to an annual rate of 4.98 million units last month, the highest level since November 2009. The January sales pace was revised upward to 4.94 million units from the previously reported 4.92 million units.
The median home sales price in February rose 11.6 percent from a year ago to $173,6000.
In a separate report, the U.S. Department of Commerce reported that New Home Starts rose. Building Permits for new construction approached a five-year high.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) gained just +9 basis points from last Friday to the prior Friday which caused 30 year fixed mortgage rates to move to sideways. We had a very choppy week with had our highest mortgage rates on Friday and our lowest rates on Tuesday.
News about the bailout negotiations with Cyprus dominated the week and overshadowed any U.S. economic data. Essentially, as fears rose that Cyprus would not be able to raise five billion euros to qualify for its bailout, MBS improved which in turn improved mortgage rates. As fear dissipated over Cyprus then MBS sold off which moved mortgage rates upward.
New Home Starts and Building Permits were both better than expected and Initial Weekly Jobless Claims fell again. Existing Home Sales improved and would have improved even more but were constrained due to lack of inventory. The FOMC had their moment in the sun on Wednesday. As expected there was no change in their interest rate and their policy statement was almost the same as the last two meetings. The only small change is that Bernanke stated that they would be reviewing the amount of their monthly bond purchases as our economy continues to grow.
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|
|26-Mar||8:30 AM||Durable Orders||–||3.80%||-4.90%|
|26-Mar||8:30 AM||Durable Goods -ex transportation||–||-0.20%||2.30%|
|26-Mar||9:00 AM||Case-Shiller 20-city Index||–||7.50%||6.80%|
|26-Mar||10:00 AM||Consumer Confidence||–||66.9||69|
|26-Mar||10:00 AM||New Home Sales||–||426K||437K|
|27-Mar||7:00 AM||MBA Mortgage Index||–||NA||NA|
|27-Mar||10:00 AM||Pending Home Sales||–||2.00%||4.50%|
|27-Mar||10:30 AM||Crude Inventories||–||NA||-1.314M|
|28-Mar||8:30 AM||Initial Claims||–||338K||336K|
|28-Mar||8:30 AM||Continuing Claims||–||3040K||3053K|
|28-Mar||8:30 AM||GDP – Third Estimate||–||0.30%||0.10%|
|28-Mar||8:30 AM||GDP Deflator – Third Estimate||–||0.90%||0.90%|
|28-Mar||9:45 AM||Chicago PMI||–||56.5||56.8|
|28-Mar||10:30 AM||Natural Gas Inventories||–||NA||-62 bcf|
|29-Mar||8:30 AM||Personal Income||–||0.80%||-3.60%|
|29-Mar||8:30 AM||Personal Spending||–||0.60%||0.20%|
|29-Mar||8:30 AM||PCE Prices – Core||–||0.10%||0.10%|
|29-Mar||9:55 AM||Michigan Sentiment – Final||–||72.4||71.8|
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.