Pending Home Sales jump 7% from a year ago
Contracts to buy existing homes rose in March, and would have increased even more it it wasn’t for a historically low supply of for-sale listings nationwide.
The Pending Home Sales Index from the National Association of Realtors increased 1.5 percent month to month which was better than the 1.0 percent increase that economists expected. It is 7 percent higher than March of 2012.
“Contract activity has been in a narrow range in recent months, not from a pause in demand but because of limited supply,” said the Realtors’ chief economist Lawrence Yun in a release. “Little movement is expected in the near-term sales closings, but they should edge up modestly as the year progresses.
The lack of inventory is due to several factors but one of the newer trends is that many sellers are waiting to put their homes on the market because they are waiting to see how much further home prices will increase.
Regionally, the Realtors’ pending home sales index was unchanged in the Northeast from February, up 0.3 percent in the Midwest, up 2.7 percent in the South and up 1.5 percent in the West.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) gained+39 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 Thursday and our lowest rates on Friday morning.
MBS were trapped in a very narrow trading channel for the past nine trading sessions which caused pricing to move sideways. But that certainly changed on Friday with the release of the GDP data. The first release (it will be revised two more times) of the first quarter GDP missed the mark and came in much weaker than expected (2.5% vs 3.0%).
Historically speaking, a national growth rate of 2.5% is very desirable. It shows growth without any major inflationary pressure. The market expectations for growth of 3.0% would have been inflationary and bonds hate inflation, so when this number came in lower than expected – bonds rallied as a result.
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|
|29-Apr||8:30 AM||Personal Income||–||0.30%||1.10%|
|29-Apr||8:30 AM||Personal Spending||–||0.10%||0.70%|
|29-Apr||8:30 AM||PCE Prices – Core||–||0.10%||0.10%|
|29-Apr||10:00 AM||Pending Home Sales||–||0.10%||-0.40%|
|30-Apr||8:30 AM||Employment Cost Index||–||0.50%||0.50%|
|30-Apr||9:00 AM||Case-Shiller 20-city Index||–||8.70%||8.10%|
|30-Apr||9:45 AM||Chicago PMI||–||52||52.4|
|30-Apr||10:00 AM||Consumer Confidence||–||61||59.7|
|1-May||7:00 AM||MBA Mortgage Index||–||NA||0.20%|
|1-May||8:15 AM||ADP Employment Change||–||155K||158K|
|1-May||10:00 AM||ISM Index||–||51||51.3|
|1-May||10:00 AM||Construction Spending||–||0.40%||1.20%|
|1-May||10:30 AM||Crude Inventories||–||NA||0.947M|
|1-May||2:15 PM||FOMC Rate Decision||–||0.25%||0.25%|
|1-May||3:00 PM||Auto Sales||–||NA||5.3M|
|1-May||3:00 PM||Truck Sales||–||NA||6.7M|
|2-May||7:30 AM||Challenger Job Cuts||–||NA||30.00%|
|2-May||8:30 AM||Initial Claims||–||346K||339K|
|2-May||8:30 AM||Continuing Claims||–||3050K||3000K|
|2-May||8:30 AM||Unit Labor Costs||–||1.60%||4.60%|
|2-May||8:30 AM||Trade Balance||–||-$43.5B||-$43.0B|
|2-May||10:30 AM||Natural Gas Inventories||–||NA||30 bcf|
|3-May||8:30 AM||Nonfarm Payrolls||–||150K||88K|
|3-May||8:30 AM||Nonfarm Private Payrolls||–||166K||95K|
|3-May||8:30 AM||Unemployment Rate||–||7.60%||7.60%|
|3-May||8:30 AM||Hourly Earnings||–||0.20%||0.00%|
|3-May||8:30 AM||Average Workweek||–||34.6||34.6|
|3-May||10:00 AM||Factory Orders||–||-2.50%||3.00%|
|3-May||10:00 AM||ISM Services||–||54||54.4|
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.