Existing Home Sales Impress, New Home Sales Light
Americans resold their homes in July at the fastest pace in almost a year, a sign the housing market continues to gain steam.
The National Association of Realtors said on Thursday existing home sales increased 2.4 percent to an annual rate of 5.15 million units. That was above analysts’ expectations and marked the fourth straight month the pace of home resales accelerated.
Another positive sign for the housing market – Distressed sales, which include foreclosures and short sales, made up only 9 percent of sales last month, the lowest share since the NAR starting tracking this information in October 2008.
No run-away price appreciate as the median sale price increased again to $222,900, which is 4.9 percent higher than in July 2013. This is a nice and steady reading. A ready that is too high starts to get into that “bubble” territory.
New Home Sales were a tad lighter than expected (412K vs estimates of 430K). The Commerce Department said on Monday that sales slipped 2.4 percent but June’s sales were revised to show a 7.0 percent decline instead of the previously reported 8.1 percent slump. New Homes are a very small part of the housing market and not a major indicator of housing demand like the Existing Home Sales are.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) lost -31 basis points (BPS) from last Friday’s close which caused 30 year fixed mortgage rates to move slightly higher from the prior week. We saw our best rates on Monday and our worst rates on Wednesday.
We had two major events last week that the long-market was focused on and both provided almost no momentum to pricing. The minutes from the last FOMC meeting were released on Wednesdayand contained no real surprises. Federal Reserve Chair Janet Yellen gave a speech on Friday that focused on the labor market and it also contained no surprises as she made it clear that the labor market is improving and that the Fed is not on a pre-defined course to raise rates and is very “data-dependent”. Essentially, she said that if the labor market improves faster than the Fed has projected – then their first Fed Fund rate increase will be sooner. If the labor market weakens – then the rate hike will be further out.
The housing market received better than expected news. The NAHB Housing Market Index was hotter than expected with a reading of 55, New Housing Starts broke above a million units (1.093M) and Existing Home Sale increased to 5.15M which was much better than the consensus estimates of 5.01M.
What to Watch Out For This Week:
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|25-Aug||10:00 AM||New Home Sales||–||427K||406K|
|26-Aug||8:30 AM||Durable Orders||–||7.00%||1.70%|
|26-Aug||8:30 AM||Durable Goods -ex transportation||–||0.60%||1.90%|
|26-Aug||9:00 AM||Case-Shiller 20-city Index||–||8.30%||9.30%|
|26-Aug||9:00 AM||FHFA Housing Price Index||–||NA||0.40%|
|26-Aug||10:00 AM||Consumer Confidence||–||88.3||90.9|
|27-Aug||7:00 AM||MBA Mortgage Index||–||NA||1.40%|
|27-Aug||10:30 AM||Crude Inventories||–||NA||-4.474M|
|28-Aug||8:30 AM||Initial Claims||–||302K||298K|
|28-Aug||8:30 AM||Continuing Claims||–||2520K||2500K|
|28-Aug||8:30 AM||GDP – Second Estimate||–||4.00%||4.00%|
|28-Aug||8:30 AM||GDP Deflator – Second Estimate||–||2.00%||2.00%|
|28-Aug||10:00 AM||Pending Home Sales||–||0.50%||-1.10%|
|28-Aug||10:30 AM||Natural Gas Inventories||–||NA||88 bcf|
|29-Aug||8:30 AM||Personal Income||–||0.30%||0.40%|
|29-Aug||8:30 AM||Personal Spending||–||0.10%||0.40%|
|29-Aug||8:30 AM||PCE Prices – Core||–||0.10%||0.10%|
|29-Aug||9:45 AM||Chicago PMI||–||54.8||52.6|
|29-Aug||9:55 AM||Michigan Sentiment – Final||–||80||79.2|
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.