Home Builder Sentiment Hits Six Month High
The nation’s home builders are clearly feeling better about the housing recovery. A monthly sentiment index from the National Association of Home Builders jumped 4 points in July to 53, finally crossing into positive territory; 50 is the line between positive and negative sentiment.
“This is the first time that builder confidence has been above 50 since January and an important sign that it is strengthening as pent-up demand brings more buyers into the marketplace,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.
Employment is improving, and low levels of existing homes for sale is creating more demand for new construction.
“An improving job market goes hand in hand with a rise in builder confidence,” said NAHB Chief Economist David Crowe. “As employment increases and those with jobs feel more secure about their own economic situation, they are more likely to feel comfortable about buying a home.”
Mortgage backed securities (MBS) gained just +2 basis points (BPS) from last Friday’s close which caused 30 year fixed mortgage rates to move sideways. We saw our best rates on Thursday and our worst rates on Wednesday.
As you can see by the big green “candle” in the chart above, MBS were on a steady downward trendMonday through Wednesday (worse rates for you) but had a big rebound on Thursday which reversed the trend and got MBS back into positive territory (better rates for you).
We had a lot of very important data hit the market. Retail Sales were lighter than expected, PPI (a key measure of inflation) was higher than expected, Housing Starts and Building Permits were lower than expected and so was Industrial Production. Plus we got a double-dose of Fed Chair Janet Yellen as she testified before both the Senate and House last week. The bond market had almost no reaction to her comments though as they were essentially the same as what they have been in terms of what the Fed is looking for out of our economy before the begin to increase their Fed Fund Rate.
Back to that green “candle” that we mentioned earlier. That was directly due to an increased amount of fear among international traders after the Malaysian passenger plane was shot down over Ukraine and Israel beginning their ground campaign in Gaza. This caused a “flight to safety” into U.S. bonds and that increased demand for our debt drove up bond prices which in turn drove interest rates back down.
What to Watch Out For This Week:
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|22-Jul||8:30 AM||Core CPI||–||NA||0.30%|
|22-Jul||8:30 AM||Core CPI||–||0.20%||0.30%|
|22-Jul||9:00 AM||FHFA Housing Price Index||–||NA||0.00%|
|22-Jul||10:00 AM||Existing Home Sales||–||5.00M||4.89M|
|23-Jul||7:00 AM||MBA Mortgage Index||–||NA||-3.60%|
|23-Jul||10:30 AM||Crude Inventories||–||NA||-7.525M|
|24-Jul||8:30 AM||Initial Claims||–||308K||302K|
|24-Jul||8:30 AM||Continuing Claims||–||2533K||2507K|
|24-Jul||10:00 AM||New Home Sales||–||475K||504K|
|24-Jul||10:30 AM||Natural Gas Inventories||–||NA||107 bcf|
|25-Jul||8:30 AM||Durable Orders||–||0.30%||-0.90%|
|25-Jul||8:30 AM||Durable Goods -ex transportation||–||0.70%||0.00%|
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.