New Home Sales Prices Hit Record High
Today’s report out of the U.S. Commerce Department showed that New Home Sales for December was a mixed bag.
On the positive side, inventories shrank 2.8 percent to 171K units which was the lowest level since July. At the current pace of sales, it would take just 5.0 months to wipe out the supply of new homes for sale. The median price jumped up 4.6% last month.
For the entire year of 2013 new home prices shot up 8.4% which is the hottest pace since the housing boom of 2005. The median home price rose to $265,800 which is the highest on record.
Monthly sales did pull back from 445K in November to 414K in December but this was largely due to frigid temperatures in the North and North East regions.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) gained +59 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 Wednesday.
MBS moved higher (and therefore mortgage rates moved lower) on global concerns. Historically, when we have a light week for economic releases, MBS tend to drift upward and we had a holiday shortened week and a very light economic schedule where we only had one day (Thursday) with any economic data.
As a result, bond traders focused on international events and MBS moved upward on concern over several developing situations. First up was China’s PMI data which showed the lowest rate of manufacturing in six months. Also, China’s bank system was a huge source of concern among investors. Puerto Rico, Argentina and Turkey were also in the spotlight as their bond yields shot up as investors are becoming very concerned about their ability to repay their debts. This all made any U.S. based bonds very attractive and caused our 10 year Treasury yield to tank and MBS prices to surge and that gave us our lowest rates since November 27th.
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|27-Jan||10:00 AM||New Home Sales||–||457K||464K|
|28-Jan||8:30 AM||Durable Orders||–||2.10%||3.40%|
|28-Jan||8:30 AM||Durable Goods -ex transportation||–||0.60%||1.20%|
|28-Jan||9:00 AM||Case-Shiller 20-city Index||–||13.80%||13.60%|
|28-Jan||10:00 AM||Consumer Confidence||–||77.5||78.1|
|29-Jan||7:00 AM||MBA Mortgage Index||–||NA||4.70%|
|29-Jan||10:30 AM||Crude Inventories||–||NA||0.990M|
|29-Jan||2:00 PM||FOMC Rate Decision||–||0.25%||0.25%|
|30-Jan||8:30 AM||Initial Claims||–||325K||326K|
|30-Jan||8:30 AM||Continuing Claims||–||3000K||3056K|
|30-Jan||8:30 AM||Chain Deflator-Adv.||–||1.20%||2.00%|
|30-Jan||10:00 AM||Pending Home Sales||–||-0.20%||0.20%|
|30-Jan||10:30 AM||Natural Gas Inventories||–||NA||-107 bcf|
|31-Jan||8:30 AM||Personal Income||–||0.20%||0.20%|
|31-Jan||8:30 AM||Personal Spending||–||0.20%||0.50%|
|31-Jan||8:30 AM||PCE Prices – Core||–||0.10%||0.10%|
|31-Jan||8:30 AM||Employment Cost Index||–||0.40%||0.40%|
|31-Jan||9:45 AM||Chicago PMI||–||58||60.8|
|31-Jan||9:55 AM||Michigan Sentiment – Final||–||80.4||80.4|
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.