Pending Home Sales Rise
Signed contracts to buy existing homes rose slightly in November, breaking a five-month negative streak, according to the National Association of Realtors.
Pending homes sales ticked 0.2 percent higher from October. These signed contracts are an indicator of closed sales in December and January.
Regionally, the South and West saw monthly increases in pending home sales while the Northeast and Midwest posted decreases.
As this year draws to a close, Yum expects higher mortgage rates coupled with strong price increases to lead to more modest growth in values in 2014.
This year, total existing home sales are forecast to gain nearly 10 percent to about 5.1 million—a number that’s expected to repeat in 2014.
The national medium existing home price rose about 12 percent this year. In 2014, prices are expected to rise more moderately at about 5 to 5.5 percent, according to the association.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) lost -37 basis points (BPS) from last Friday’s close which caused 30 year fixed rates to move higher for the sixth consecutive week. We saw our best rates on Mondayand our worst rates on Thursday morning. MBS have now lost -149 BPS for the month of December.
We had a holiday-shortened week that saw very few economic releases and no major U.S. Treasury auctions. We had very good New Home Sales and Consumer Sentiment reports but the biggest market mover were the results of the Durable Goods Orders report. This key report showed economic expansion and was much stronger than the consensus estimates (3.5 vs 2.0). When you strip out the transportation sector, the reading was double market expectations (1.2 vs 0.6). Unexpected economic strength is always negative for bonds (and therefore mortgage rates).
The stock market continued to make solid gains but stocks do not have a direct impact on mortgage rates. Bonds do. And our 10 year Treasury yield traded above the important 3.000% mark for several days. The fact that the 3.000% yield held is what kept mortgage backed securities from selling off even more than they did.
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|30-Dec||10:00||Pending Home Sales||1.50%||-0.60%|
|31-Dec||9:00||Case-Shiller 20-city Index||13.80%||13.30%|
|2-Jan||10:30||Natural Gas Inventories||NA||177 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.