Home Builder Confidence at 7-Year High
For the first time in over seven years, the nation’s home builders are feeling solidly confident about the housing market. A monthly sentiment index from the National Association of Home Builders jumped eight points in June to a reading of 52. Anything above 50 means builders view sales conditions as good.
“With the low inventory of existing homes, an increasing number of buyers are gravitating toward new homes,” said NAHB chairman Rick Judson in a release.
“Builders are experiencing some relief in the headwinds that are holding back a more robust recovery,” said NAHB Chief Economist David Crowe. “Today’s report is consistent with our forecast for a 29 percent increase in total housing starts this year, which would mark the first time since 2007 that starts have topped the 1 million mark.”
What Happened to Rates Last Week:
Mortgage backed securities (MBS) gained +51 basis points from last Friday’s close.
MBS have been selling off ever since the end of April. Which meant higher and higher mortgage rates each week. But we finally got a little “breather” as MBS had their first weekly improvement in seven weeks. We had a choppy session as we had 100 basis points between our highs and lows.
We had plenty of reasons for MBS to sell off further with a pull-back in demand for our 10 year and 30 year Treasury auctions, better than expected Retail Sales, fewer new weekly jobless claims and Consumer Sentiment just off some of their best levels.
But offsetting the above were events outside the U.S. which drove up demand for both our bonds and stocks. The Japanese stock market (Nikkei) tanked and investors watch massive riots in Turkey. This global instability caused foreign investors to seek refuge in the U.S. market – which in turn helped to lower mortgage rates (temporarily).
|Date||ET||Economic Release||Actual||Market Expects||Prior|
|17-Jun||8:30 AM||Empire Manufacturing||–||0.8||-1.4|
|17-Jun||9:00 AM||Net Long-Term TIC Flows||–||NA||-$13.5B|
|17-Jun||10:00 AM||NAHB Housing Market Index||–||45||44|
|18-Jun||8:30 AM||Core CPI||–||0.10%||0.10%|
|18-Jun||8:30 AM||Housing Starts||–||950K||853K|
|18-Jun||8:30 AM||Building Permits||–||983K||1017K|
|19-Jun||7:00 AM||MBA Mortgage Index||–||NA||5.00%|
|19-Jun||10:30 AM||Crude Inventories||–||NA||2.523M|
|19-Jun||2:00 PM||FOMC Rate Decision||–||0.25%||0.25%|
|20-Jun||8:30 AM||Initial Claims||–||340K||334K|
|20-Jun||8:30 AM||Continuing Claims||–||2967K||2973K|
|20-Jun||10:00 AM||Existing Home Sales||–||5.00M||4.97M|
|20-Jun||10:00 AM||Philadelphia Fed||–||-0.2||-5.2|
|20-Jun||10:00 AM||Leading Indicators||–||0.20%||0.60%|
|20-Jun||10:30 AM||Natural Gas Inventories||–||NA||95 bcf|
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.