Home Builders’ Confidence Surges Again
After leaping decisively into positive territory in July, home builder sentiment increased again in August.
A monthly index from the National Association of Home Builders measuring confidence among single-family home builders rose 2 points to 55; analysts had expected the index to hold unchanged at its July level of 53.
A reading above 50 is considered positive sentiment. This is the third-consecutive monthly gain and puts the index at its highest level since January. “As the employment picture brightens, builders are seeing a noticeable increase in the number of serious buyers entering the market,” said NAHB Chairman Kevin Kelly.
“Factors contributing to this rise include sustained job growth, historically low mortgage rates and affordable home prices, which are helping to unleash pent-up demand.” NAHB Chief Economist David Crowe said.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) gained +62 basis points (BPS) from last Friday’s close which caused 30 year fixed mortgage rates to move lower and hit their best levels since May 29th. We saw our best rates on Friday and our worst on Monday.
Another week, another mixed week for domestic economic data as Retail Sales, Business Inventories, Consumer Sentiment and Weekly Jobless Claims all disappointed while Industrial Production and Capacity Utilization were better than expected. We also had two reports that showed very light inflation, which is always great for rates. Import Prices dropped -0.2% and the Producer Price Index was very low with a monthly reading of only 0.1%. The combination of all the economic data above was slightly positive for MBS and therefore good for mortgage rates.
But once again, it was the foreign headlines that kept up steady demand for our U.S. bonds and as a result rates made a big improvement on Friday as news broke out that Ukraine had attacked a Russian military column that had made its way across Ukraine’s borders. The “fear factor” bond buying spiked as a result due to traders being very concerned that Russia would answer in a very big way which could cause an all-out war to begin between the two.
What to Watch Out For This Week:
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|18-Aug||10:00 AM||NAHB Housing Market Index||–||53||53|
|19-Aug||8:30 AM||Core CPI||–||0.10%||0.10%|
|19-Aug||8:30 AM||Housing Starts||–||964K||893K|
|19-Aug||8:30 AM||Building Permits||–||1001K||963K|
|20-Aug||7:00 AM||MBA Mortgage Index||–||NA||-2.70%|
|20-Aug||10:30 AM||Crude Inventories||–||NA||1.401M|
|20-Aug||2:00 PM||FOMC Minutes||–||–||–|
|21-Aug||8:30 AM||Initial Claims||–||308K||311K|
|21-Aug||8:30 AM||Continuing Claims||–||2530K||2544K|
|21-Aug||10:00 AM||Existing Home Sales||–||5.00M||5.04M|
|21-Aug||10:00 AM||Philadelphia Fed||–||15.5||23.9|
|21-Aug||10:00 AM||Leading Indicators||–||0.70%||0.30%|
|21-Aug||10:30 AM||Natural Gas Inventories||–||NA||78 bcf|
The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. 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.