Pending Home Sales Climb 10.9%
Pending Home Sales climbed 10.9% from this time last year according to the National Association of Realtors (NAR). Pending Home Sales are homes that have active sales contracts but have not yet closed.
On a month-over-month basis, sales pulled back -0.4 percent. This is actually positive news as the market was expected a drop of over 1.00% due to higher mortgage rates during this term. The fact that the housing market is able to absorb the slight uptick in mortgage rates is good news.
Based on year-to-date sales activity, and stable contract signings expected for the balance of the year, NAR projects existing-home sales to rise more than 8 percent in 2013. Inventory shortages will lead the median price to rise by nearly 11 percent this year.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) lost -49 basis points from last Friday’s close which caused 30 year fixed rates to move higher. This ended the bond rally that had lasted for the two weeks prior to last week.
As we have discussed, MBS sell off when there is positive economic news. We certainly could have sold off even more given last week’s data with Durable Goods Orders much stronger than expected (4.2 vs 0.5) and the Consumer Sentiment Index rising from 84.1 to 85.1. Existing Home Sales missed the market expectations but was still robust. New Home Sales enjoyed some nice gains in terms of unit sales and price increases.
Demand for our 7 year Treasury auction saw some decent demand but our 5 year and 2 year auctions saw decreased demand.
MBS would have lost more ground (even higher rates for you) if it weren’t for a WSJ article that speculated that the Fed would change their language at this week’s FOMC meeting to calm the markets that they would not be increasing their rates for a long time. We agree. They will certainly leave their Fed Funds rate alone but they will eventually have to start to pull back on bond purchases and those bond purchases are what impacts your mortgage rates…not their Fed Fund rate.
|Date||ET||Economic Release||Actual||Market Expects||Prior|
|29-Jul||10:00 AM||Pending Home Sales||–||-1.70%||6.70%|
|30-Jul||9:00 AM||Case-Shiller 20-city Index||–||10.50%||12.10%|
|30-Jul||10:00 AM||Consumer Confidence||–||81.6||81.4|
|31-Jul||7:00 AM||MBA Mortgage Index||–||NA||-1.20%|
|31-Jul||8:15 AM||ADP Employment Change||–||175K||188K|
|31-Jul||8:30 AM||Chain Deflator-Adv.||–||1.20%||1.20%|
|31-Jul||8:30 AM||Employment Cost Index||–||0.40%||0.30%|
|31-Jul||9:45 AM||Chicago PMI||–||51.5||51.6|
|31-Jul||10:30 AM||Crude Inventories||–||NA||-2.825M|
|31-Jul||2:00 PM||FOMC Rate Decision||–||0.25%||0.25%|
|1-Aug||7:30 AM||Challenger Job Cuts||–||NA||4.80%|
|1-Aug||8:30 AM||Initial Claims||–||345K||343K|
|1-Aug||8:30 AM||Continuing Claims||–||2995K||2997K|
|1-Aug||10:00 AM||ISM Index||–||51.5||50.9|
|1-Aug||10:00 AM||Construction Spending||–||0.20%||0.50%|
|1-Aug||10:30 AM||Natural Gas Inventories||–||NA||41 bcf|
|1-Aug||2:00 PM||Auto Sales||–||NA||5.7M|
|1-Aug||2:00 PM||Truck Sales||–||NA||6.8M|
|2-Aug||8:30 AM||Nonfarm Payrolls||–||175K||195K|
|2-Aug||8:30 AM||Nonfarm Private Payrolls||–||195K||202K|
|2-Aug||8:30 AM||Unemployment Rate||–||7.50%||7.60%|
|2-Aug||8:30 AM||Hourly Earnings||–||0.20%||0.40%|
|2-Aug||8:30 AM||Average Workweek||–||34.5||34.5|
|2-Aug||8:30 AM||Personal Income||–||0.50%||0.50%|
|2-Aug||8:30 AM||Personal Spending||–||0.40%||0.30%|
|2-Aug||8:30 AM||PCE Prices – Core||–||0.20%||0.10%|
|2-Aug||10:00 AM||Factory Orders||–||2.20%||2.10%|
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.