Remodeling Market Continues to Show Growth
Entering into the holiday season, which has been a slower season in recent years, remodelers are reporting the highest overall rating on business conditions at 6.41, up from 6.31 reported during the second quarter. This rating has steadily increased in the six quarters NARI has been tracking.
The National Association of the Remodeling Industry’s (NARI) third-quarter Remodeling Business Pulse (RBP) data of current and future remodeling business conditions continues to soar. Quarter-over-quarter increases are evident in nearly all sub-components measuring remodeling activity.
“From the comments on the Remodeling Business Pulse survey, pent-up demand continues to drive the current remodeling market,” says Tom O’Grady, CR, CKBR, chairman of NARI’s Strategic Planning & Research Committee and president of O’Grady Builders, based in Drexel Hill, Pa. “The general sense is that consumers are tired of waiting and feel more secure about spending money, which is also reflected in the higher values in jobs sold.”
This, in turn, is leading the way for additional growth in the housing market as properties improve in appearance and value in their local markets.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) lost -64 basis points from last Friday’s close which caused 30 year fixed rates to move higher for the week and completely wiped out the prior week’s +61BPS gain.. We saw our best rates on Wednesday and our worst rates on Friday.
There was a lot of economic data last week and the benchmark FNMA 3.5 November mortgage backed security (MBS) traded in a very narrow range for most of the week.
But there were two items that moved MBS lower (higher rates for you). The Federal Reserve and manufacturing data.
The Federal Open Market Committee (FOMC) concluded two days of meetings and voting. On Wednesday afternoon they released their Interest Rate Decision and Policy Statement. As widely expected, they did not change their key Fed Fund rate and they did not announce any change to their massive monthly Treasury and mortgage backed security purchase program. But MBS did sell off after their meeting. This was due to the omission of a small statement that was in their last policy statement where they stated that there was a risk to the economy if they began to tighten their bond purchases too early. Since that last part was removed, traders wondered if the Fed was willing to taper at some earlier point than originally projected.
The other factor which pressured rates upward was the much stronger dose of manufacturing data. The Chicago Purchasing Manager’s Index (PMI) reading came in at 65.9 which is the best reading since April 2011. And the ISM Manufacturing Index was 56.4 which was the best reading since May 2011. A reading above 50 in either of these reports shows manufacturing expansion and growth. And these two reading were much hotter than that. Long term bonds such as mortgage backed securities react negatively (worse rates for you) on strong economic data as it leads to inflation and bonds hate inflation.
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|4-Nov||10:00 AM||Factory Orders||–||0.30%||-2.40%|
|4-Nov||10:00 AM||Factory Orders||–||1.80%||NA|
|5-Nov||10:00 AM||ISM Services||–||54||54.4|
|6-Nov||7:00 AM||MBA Mortgage Index||–||NA||6.40%|
|6-Nov||10:00 AM||Leading Indicators||–||0.60%||0.70%|
|6-Nov||10:30 AM||Crude Inventories||–||NA||4.087|
|7-Nov||7:30 AM||Challenger Job Cuts||–||NA||19.10%|
|7-Nov||8:30 AM||Initial Claims||–||335K||340K|
|7-Nov||8:30 AM||Continuing Claims||–||2863K||2881K|
|7-Nov||8:30 AM||Chain Deflator-Adv.||–||1.40%||0.60%|
|7-Nov||10:30 AM||Natural Gas Inventories||–||NA||38 bcf|
|7-Nov||3:00 PM||Consumer Credit||–||$11.0B||$13.6B|
|8-Nov||8:30 AM||Nonfarm Payrolls||–||100K||148K|
|8-Nov||8:30 AM||Nonfarm Private Payrolls||–||110K||126K|
|8-Nov||8:30 AM||Unemployment Rate||–||7.30%||7.20%|
|8-Nov||8:30 AM||Hourly Earnings||–||0.20%||0.10%|
|8-Nov||8:30 AM||Average Workweek||–||34.4||34.5|
|8-Nov||8:30 AM||Personal Income||–||0.20%||0.40%|
|8-Nov||8:30 AM||Personal Spending||–||0.20%||0.30%|
|8-Nov||8:30 AM||PCE Prices – Core||–||0.10%||0.20%|
|8-Nov||9:55 AM||Mich Sentiment||–||75.3||73.2|
|8-Nov||10:00 AM||JOLTS – Job Openings||–||NA||3.883M|
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.