Housing Starts Top 1 million for first time in 5 years:
U.S. homebuilders broke the 1 million mark in March for the first time since June 2008. The gain signals continued strength for the housing recovery at the start of the spring buying season.As we have been reporting for over a year, home prices are rising. That is the good news. The bad news is that wages are not.
The overall pace of homes started rose 7 percent from February to March to a seasonally adjusted annual rate of 1.04 million, the Commerce Department said Tuesday.
Apartment construction, which tends to fluctuate sharply from month to month, led the surge: It jumped nearly 31 percent to an annual rate of 417,000, the fastest pace since January 2006.
A scarcity in ready-to-build land has many builders working to get local governments to approve new land for construction, he said. The process can take 12 to 18 months. A survey of homebuilders released Monday noted similar concerns.
The jump in home building is expected to contribute to economic growth in 2013 for a second straight year — a reversal from 2006 through 2011, when it held back the economy.
Steady job growth, near record-low mortgage rates and rising home values have encouraged more people to buy homes. In response to higher demand and a low supply of available homes for sale, builders have stepped up construction.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) gained+5 basis points from last Friday to the prior Friday which caused 30 year fixed mortgage rates to move sideways. We had our highest mortgage rates on Friday and our lowest rates on Monday morning.
MBS were trapped in a very narrow trading channel which caused pricing to move sideways. The majority of the economic data was generally favorable for MBS pricing and therefore rates. Both the Empire Manufacturing index and the Philly Fed showed much weaker than expected regional manufacturing levels. The Consumer Price Index was very tame which showed a reduced threat of inflation in the near term and Initial Jobless Claims ticked up. All of these reports were favorable for bonds and therefore rates too.
But the rally with MBS prices was slowed due to a much better than expected Housing Starts and comments by a member of the Federal Reserve that he favored ending QE3 earlier than the rest of the board.
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|
|22-Apr||10:00 AM||Existing Home Sales||–||5.01M||4.98M|
|23-Apr||9:00 AM||FHFA Housing Price Index||–||NA||0.60%|
|23-Apr||10:00 AM||New Home Sales||–||415K||411K|
|24-Apr||7:00 AM||MBA Mortgage Index||–||NA||4.80%|
|24-Apr||8:30 AM||Durable Orders||–||-3.10%||5.60%|
|24-Apr||8:30 AM||Durable Goods -ex transportation||–||0.00%||-0.70%|
|24-Apr||10:30 AM||Crude Inventories||–||NA||-1.233M|
|25-Apr||8:30 AM||Initial Claims||–||351K||352K|
|25-Apr||8:30 AM||Continuing Claims||–||3060K||3068K|
|25-Apr||10:30 AM||Natural Gas Inventories||–||NA||31 bcf|
|26-Apr||8:30 AM||Chain Deflator-Adv.||–||1.60%||1.00%|
|26-Apr||9:55 AM||Michigan Sentiment – Final||–||72.4||72.3|
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.