Remember the Housing Boom? We are Actually Doing Better Now in 1000 Markets:
Home prices are moving so far, so fast, that at least 1,000 local housing markets have hit all-time price highs, according to Zillow. It should come as no surprise, therefore, that potential home sellers are giddy with value.
Confidence is behind it all. Fifty-two percent said they were confident that now is a good time to sell, versus just 37.5 percent three months ago. This, conversely, as sales of existing homes were actually lower in March by 7.5 percent from a year ago, according to the National Association of Realtors.
Another survey of 1,000 homeowners and renters by mortgage giant Fannie Mae found that those who say it is a good time to buy a house held steady in April at 69 percent, but those who say it is a good time to sell increased 4 percentage points from the previous month to 42 percent, an all-time survey high.
Sellers are more likely to get their asking price from an all-cash buyer, and all cash means there will be no appraisal issues. However, for those in markets where there are fewer investors and all-cash buyers, commanding an above-market price is a dicey proposition. Even if they do strike a deal with a credit-dependent buyer, they are at the mercy of the appraiser, who will make the final decision as to the real market value of the home.
Mortgage backed securities (MBS) lost -12 basis points (BPS) from last Friday’s close which caused 30 year fixed mortgage rates to move slightly higher from the prior week. The market saw the lowest rates on Thursday and the highest rates on Friday.
We once again had a great week for economic data that showed expansion in the U.S.. As you can see by the table below, the biggest reports of the week would normally really push up mortgage rates:
|Economic Release||Results||Estimates||MBS||on Rates|
|Initial Weekly Jobless Claims||319K||325K||Negative||Higher|
|Unit Labor Costs||4.2||2.5||Negative||Higher|
We also had a large supply of Treasuries hit the market. We saw good demand for the 3 year and 10 year notes but the 30 year bond auction saw weaker than normal demand for our debt.
Federal Reserve Chair Janet Yellen testified on capital hill but the bond market had no real reaction to her statements as they were largely a repeat of the last Fed statement and the economic outlook she presented was what the market had already expected.
But for the seventh straight week, our positive economic data that would normally cause mortgage backed securities to sell off and therefore cause mortgage rates to increase, was largely ignored by the markets as concern over the Ukraine and Russia get a massive wave of foreign dollars fleeing into the low returns but high safety of U.S. bonds. This kept your interest rates much, much lower than they otherwise would have been.
What to Watch Out For This Week:
Date Time (ET) Economic Release Actual Market Expects Prior 12-May 2:00 PM Treasury Budget – +$114.0B +$112.9B 13-May 8:30 AM Retail Sales – 0.30% 1.20% 13-May 8:30 AM Retail Sales ex-auto – 0.60% 0.70% 13-May 8:30 AM Export Prices ex-ag. – NA 0.50% 13-May 8:30 AM Import Prices ex-oil – NA 0.30% 13-May 10:00 AM Business Inventories – 0.40% 0.40% 14-May 7:00 AM MBA Mortgage Index – NA 5.30% 14-May 8:30 AM PPI – 0.20% 0.50% 14-May 8:30 AM Core PPI – 0.20% 0.60% 14-May 10:30 AM Crude Inventories – NA -1.781M 15-May 8:30 AM Initial Claims – 325K 319K 15-May 8:30 AM Continuing Claims – 2700K 2685K 15-May 8:30 AM CPI – 0.30% 0.20% 15-May 8:30 AM Core CPI – 0.20% 0.20% 15-May 8:30 AM Empire Manufacturing – 4.8 1.3 15-May 9:00 AM Net Long-Term TIC Flows – NA $85.7B 15-May 9:15 AM Industrial Production – 0.10% 0.70% 15-May 9:15 AM Capacity Utilization – 79.20% 79.20% 15-May 10:00 AM Philadelphia Fed – 9.1 16.6 15-May 10:00 AM NAHB Housing Market Index – 48 47 15-May 10:30 AM Natural Gas Inventories – NA 74 bcf 16-May 8:30 AM Housing Starts – 975K 946K 16-May 8:30 AM Building Permits – 1000K 990K 16-May 9:55 AM Mich Sentiment – 84.5 84.1
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.