Apartment Rents Rise, Vacancy Drops
The U.S. apartment vacancy rate eased to its lowest level in more than a decade, but stagnant income growth moderated rent increases
The national apartment vacancy rate fell 0.1 percentage point to 4.1 percent in the fourth quarter from the third quarter, according to a preliminary report by real estate research firm Reis Inc. It was the lowest vacancy rate since the third quarter of 2001, when it was 3.9 percent.
What does this mean for the housing market? Rising rents has always made owning a home more attractive as the difference between monthly payments between owning and renting becomes smaller and in many cases is actually lower to own than to rent. And with homes appreciating at over 10% per year (and has risen for 20 straight months), the fear of owning a home and losing your investment has dissipated.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) gained +67 basis points (BPS) from last Friday’s close which caused 30 year fixed rates to move lower for the week. We saw our best rates on Friday and our worst rates on Monday morning.
Mortgage backed securities (MBS), and therefore rates, moved sideways for most of the week. Making a gain of +26BPS one day, but then loosing -32BPS the next day. This sideways trend continued until we got Friday’s Non-Farm Payroll data.
Last week was all about jobs data. The table was set on Wednesday after the much better than expected ADP Private Payrolls hit 238K. This caused everyone to raise their estimates for the Non-Farm Payroll numbers on Friday. But the Non-Farm Payroll data shocked the markets by coming in at just 74K when the markets were expecting something in the 190K-200K range. This weaker than expected data was favorable for bonds and mortgage backed securities rallied +80BPS which caused mortgage rates to drop.
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|13-Jan||2:00 PM||Treasury Budget||–||+$44.0B||-$1.2B|
|14-Jan||8:30 AM||Retail Sales||–||0.00%||0.70%|
|14-Jan||8:30 AM||Retail Sales ex-auto||–||0.40%||0.40%|
|14-Jan||8:30 AM||Export Prices ex-ag.||–||NA||0.10%|
|14-Jan||8:30 AM||Import Prices ex-oil||–||NA||0.00%|
|14-Jan||10:00 AM||Business Inventories||–||0.30%||0.70%|
|15-Jan||7:00 AM||MBA Mortgage Index||–||NA||2.60%|
|15-Jan||8:30 AM||Core PPI||–||0.10%||0.10%|
|15-Jan||8:30 AM||Empire Manufacturing||–||3.5||1|
|15-Jan||10:30 AM||Crude Inventories||–||NA||-2.675M|
|15-Jan||2:00 PM||Fed’s Beige Book||–||–||–|
|16-Jan||8:30 AM||Initial Claims||–||333K||330K|
|16-Jan||8:30 AM||Continuing Claims||–||2835K||2865K|
|16-Jan||8:30 AM||Core CPI||–||0.20%||0.20%|
|16-Jan||9:00 AM||Net Long-Term TIC Flows||–||NA||$35.4B|
|16-Jan||10:00 AM||Philadelphia Fed||–||8||6.4|
|16-Jan||10:00 AM||NAHB Housing Market Index||–||57||58|
|16-Jan||10:30 AM||Natural Gas Inventories||–||NA||-157 bcf|
|17-Jan||8:30 AM||Housing Starts||–||986K||1091K|
|17-Jan||8:30 AM||Building Permits||–||1000K||1007K|
|17-Jan||9:15 AM||Industrial Production||–||0.30%||1.10%|
|17-Jan||9:15 AM||Capacity Utilization||–||79.10%||79.00%|
|17-Jan||9:55 AM||Mich Sentiment||–||83||82.5|
|17-Jan||10:00 AM||JOLTS – Job Openings||–||NA||3.925M|
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.