Home Sales Hit Best Levels This Year, Home Prices Rise Again
Existing Home Sales (the largest part of the housing market) made more gains in September to hit their highest annual pace for the year, according to the National Association of Realtors.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 2.4 percent to a seasonally adjusted annual rate of 5.17 million in September from 5.05 million in August. Sales are now at their highest pace of 2014.
The median existing-home price for all housing types in September was $209,700, which is 5.6 percent above September 2013. This marks the 31st consecutive month of year-over-year price gains.
Properties typically stayed on the market in September longer (56 days) than last month (53 days) and a year ago (50 days). Short sales were on the market for a median of 116 days in September, while foreclosures sold in 59 days and non-distressed homes typically took 55 days. Thirty-five percent of homes sold in September were on the market for less than a month.
Regionally, September existing-home sales in the Northeast climbed 1.5 percent to an annual rate of 680,000, but remain 1.4 percent below a year ago. The median price in the Northeast was $249,800, which is 4.8 percent higher than a year ago.
In the Midwest, existing-home sales declined 5.6 percent to an annual level of 1.17 million in September, and remain 4.9 percent below September 2013. The median price in the Midwest was $165,100, up 4.9 percent from a year ago.
Existing-home sales in the South increased 5.0 percent to an annual rate of 2.12 million in September, and are now 1.4 percent above September 2013. The median price in the South was $180,900, up 5.1 percent from a year ago.
Existing-home sales in the West jumped 7.1 percent to an annual rate of 1.20 million in September, but remain 4.0 percent below a year ago. The median price in the West was $294,200, which is 4.0 percent above September 2013.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) lost -15 basis points (BPS) from last Friday’s close which caused 30 year fixed mortgage rates to move sideways from the prior week. We saw our best rateson Monday and our worst rates on Thursday.
From a technical perspective, MBS broke the streak of five straight weeks of gains and closed back below our 10 day moving average for the first time since September 19th. The significance of that? It was at that point that we started our 5 week rally. And now this may signify a reversal over the coming weeks.
We had a fairly tame week for long-bond trades. Even though the stock market had several days of trades that either increased or decreased by 100 points each day, the MBS market was largely unimpacted by this with very small daily changes in pricing.
On the housing front, Existing Home Sales (the largest segment of the real estate market) was much stronger than expected (5.17M units vs est of 5.10M) and New Home Sales (the smallest segment of the real estate market) were a tad lighter than expected (467K vs est 470K).
CPI was very tame and showed no threat of inflation in the near term and Initial Weekly Jobless Claims hit their best levels (4 week moving avg) since 2000. Leading Economic Indicators beat forecasts with a reading of 0.8 vs est of 0.7.
Overall it was a tame week for the U.S. data, and while Europe continues to be a big wild card, it continued to provide support for MBS but was no longer able to provide upward momentum. The biggest stories out of Europe were that the ECB began purchasing covered bonds, 11 banks failed the recent round of stress-tests, and manufacturing data showed some modest improvement. So, instead of just constant bad news out of Europe (a primary factor in your recent low rates) we started to get some bad AND good news out of Europe.
What to Watch Out For This Week:
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|27-Oct||10:00 AM||Pending Home Sales||–||0.50%||-1.00%|
|28-Oct||8:30 AM||Durable Orders||–||0.70%||-18.40%|
|28-Oct||8:30 AM||Durable Goods -ex transportation||–||0.50%||0.40%|
|28-Oct||9:00 AM||Case-Shiller 20-city Index||–||5.50%||6.70%|
|28-Oct||10:00 AM||Consumer Confidence||–||87.2||86|
|29-Oct||7:00 AM||MBA Mortgage Index||–||NA||NA|
|29-Oct||10:30 AM||Crude Inventories||–||NA||7.111M|
|29-Oct||2:00 PM||FOMC Rate Decision||–||0.25%||0.25%|
|30-Oct||8:30 AM||Initial Claims||–||284K||283K|
|30-Oct||8:30 AM||Continuing Claims||–||2375K||2351K|
|30-Oct||8:30 AM||Chain Deflator-Adv.||–||1.50%||2.10%|
|30-Oct||10:30 AM||Natural Gas Inventories||–||NA||94 bcf|
|31-Oct||8:30 AM||Personal Income||–||0.30%||0.30%|
|31-Oct||8:30 AM||Personal Spending||–||0.10%||0.50%|
|31-Oct||8:30 AM||PCE Prices – Core||–||0.10%||0.10%|
|31-Oct||8:30 AM||Employment Cost Index||–||0.50%||0.70%|
|31-Oct||9:45 AM||Chicago PMI||–||60||60.5|
|31-Oct||9:55 AM||Michigan Sentiment – Final||–||86.4||86.4|
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.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.