Appreciation is Over 13%
Welcome back to double-digit appreciation rates. And its not a fad. Home Prices have now logged 20 straight months of gains in home values.
The S&P Case-Shiller 20-city home price index climbed 1.05% month-over-month in October. On a year-over-year basis, home prices were up 13.61%.
This was the biggest gain since February 2006.
“Home prices increased again in October,” David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices said in a press release. “Both Composites’ annual returns have been in double-digit territory since March 2013 and increasing; now up 13.6% in the year ending in October.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) gained +14 basis points (BPS) from last Friday’s close which caused 30 year fixed rates to move sideways. This small week-over-week gain in MBS prices was the first after six straight weeks of losses. We saw our best rates on Monday and our worst rates on Fridaymorning.
This was our second straight holiday-shortened week that saw very few economic releases and no major U.S. Treasury auctions. On the housing front, the Case-Shiller Home Price Index showed a year-over-year gain of 13.6%. Manufacturing was very strong. The Chicago PMI came in a 59.1 and the ISM Manufacturing Index was a robust 57.0. Construction Spending was also a bright spot last week.
Normally, these type of readings would have pressured MBS pricing and therefore increased mortgage rates across the board. But after six straight weeks of selling off, MBS found some support in large part due to the 10 year Treasury note yield. As it once again closed below the important 3.000% yield. There is not a one-to-one relationship between the 10 year note and mortgage rates as mortgage rates are set by the prices of long term bonds known as mortgage backed securities. But the 3.000% yield mark on the 10Y note is widely seen as a support level for most long term trades. And since it has held all week, MBS and rates moved sideways.
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|6-Jan||10:00 AM||Factory Orders||–||1.70%||-0.90%|
|6-Jan||10:00 AM||ISM Services||–||54.6||53.9|
|7-Jan||8:30 AM||Trade Balance||–||-$40.4B||-$40.6B|
|8-Jan||7:00 AM||MBA Mortgage Index||–||NA||NA|
|8-Jan||8:15 AM||ADP Employment Change||–||203K||215K|
|8-Jan||10:30 AM||Crude Inventories||–||NA||-7.007M|
|8-Jan||2:00 PM||FOMC Minutes||–||–||–|
|8-Jan||3:00 PM||Consumer Credit||–||$15.2B||$18.2B|
|9-Jan||7:30 AM||Challenger Job Cuts||–||NA||-20.60%|
|9-Jan||8:30 AM||Initial Claims||–||338K||NA|
|9-Jan||8:30 AM||Continuing Claims||–||2875K||NA|
|9-Jan||10:30 AM||Natural Gas Inventories||–||NA||-97 bcf|
|10-Jan||8:30 AM||Nonfarm Payrolls||–||197K||203K|
|10-Jan||8:30 AM||Nonfarm Private Payrolls||–||198K||196K|
|10-Jan||8:30 AM||Unemployment Rate||–||7.00%||7.00%|
|10-Jan||8:30 AM||Hourly Earnings||–||0.20%||0.20%|
|10-Jan||8:30 AM||Average Workweek||–||34.5||34.5|
|10-Jan||10:00 AM||Wholesale Inventories||–||0.20%||1.40%|
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.