Homes Appreciate 12.4%
U.S. single-family home prices rose in March, a closely watched survey said Tuesday, as the housing market extended its fragile recovery.
The S&P/Case-Shiller composite index of 20 metropolitan areas rose 0.9 percent in March on a seasonally adjusted basis, up from the prior month’s gain of 0.8 percent.
Year over year, the index jumped 12.4 percent, S&P/Case-Shiller said, a slightly well above Wall Street’s estimates of 11.9 percent.
In a separate report released today by the Federal Housing Finance Agency, their House Price Index for the 1st Quarter of 2014 rose 1.3 percent compared to the 4th Quarter of 2013. This is the 11th straight quarterly rise in home prices. On a year-over-year basis, Housing Prices increased 6.6 percent.
Mortgage backed securities (MBS) gained +29 basis points (BPS) from last Friday’s close which caused 30 year fixed mortgage rates to move slightly lower from the prior week. The market saw the lowest rates on Friday and the highest rates on Tuesday.
The stock market (S&P 500) and our benchmark mortgage backed security tested our intra-day highs for 2014 as both stocks and bonds improved.
The bond market (which sets your rates) continued to receive a tremendous amount of international demand (a.k.a “flight to safety”) as the following overseas events concerned investors:
– Thailand’s Military has suspended their 2007 constitution and kicked out the controlling party.
– Intense fighting flares up in Eastern Ukraine.
– Weaker than expected PMI readings out of Europe.
– China’s PMI numbers dropped but actually less than expected.
– The market is pricing in the ECB officially releasing details of their QE in just a few days
Domestically, we had a very “thin” week for the number of economic releases. Many bond traders simply went home on Thursday afternoon as the bond market closed early on Friday and left for the long weekend early which meant that we say very light volumes.
The biggest event of the week was the release of the minutes from the last Fed meeting .
There was discussion on the slack in the labor market and a tightening in the housing market and they cited global concern over Ukraine and China. They discussed the actual process to tighten their Fed Fund rate without giving guidance as to form or timeline. They also discussed existing tools that can be used to partially mitigate the impact of a higher Fed Fund Rate. This was largely expected by the bond market and did not materially change pricing.
We got two reports on housing. Existing Home Sales improved from 4.59 million to 4.65 million units on an annualized basis and New Home Sales rose from 407k to 433K.
What to Watch Out For This Week:
Date Time (ET) Economic Release Actual Market Expects Prior 27-May 8:30 AM Durable Orders – -1.30% 2.90% 27-May 8:30 AM Durable Goods -ex transportation – -0.20% 2.40% 27-May 9:00 AM Case-Shiller 20-city Index – 11.80% 12.90% 27-May 9:00 AM FHFA Housing Price Index – NA 0.60% 27-May 10:00 AM Consumer Confidence – 82.7 82.3 28-May 7:00 AM MBA Mortgage Index – NA 0.90% 29-May 8:30 AM Initial Claims – 318K 326K 29-May 8:30 AM Continuing Claims – 2650K 2653K 29-May 8:30 AM GDP – Second Estimate – -0.50% 0.10% 29-May 8:30 AM GDP Deflator – Second Estimate – 1.30% 1.30% 29-May 10:00 AM Pending Home Sales – 1.00% 3.40% 29-May 10:30 AM Natural Gas Inventories – NA 106 bcf 29-May 11:00 AM Crude Inventories – NA -7.226M 30-May 8:30 AM Personal Income – 0.30% 0.50% 30-May 8:30 AM Personal Spending – 0.20% 0.90% 30-May 8:30 AM PCE Prices – Core – 0.20% 0.20% 30-May 9:45 AM Chicago PMI – 60.3 63 30-May 9:55 AM Michigan Sentiment – Final – 81.4 81.8
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.