Strong Economy and Eager Buyers Drive Up High-end Sales
Zillow looked at over 350 local metropolitan markets and found that the number of for-sale listings rose in 68 percent of the bottom price-tier of these markets compared to a year ago. In the top tier, however, listings rose in over 82 percent of the markets. Nationwide, inventory is up about 16 percent in all tiers from a year ago.
Realtors say the red hot stock market is driving high-end home sales, but the heat is also being stoked by something far more fundamental. There are simply more high-end homes for sale.
Dallas, Atlanta, Phoenix and Nashville have at least two times more homes for sale in the top tier than the bottom tier, according to a new report from Zillow. And they are selling.
“Depending on their finances, it’s likely that individual buyers in the same market might be having completely different home buying experiences,” said Stan Humphries, chief economist at Zillow. “Even as conditions improve for buyers overall, it remains a tough row to hoe for first-time buyers and lower-income buyers, especially compared to their more well-off contemporaries.”
What Happened to Rates Last Week:
Mortgage backed securities (MBS) gained +28 basis points (BPS) from last Friday’s close which caused 30 year fixed mortgage rates to move slightly lower from the prior week. We had our best pricing on Friday and our worst pricing on Wednesday.
We had some very solid readings with our domestic economic data, but once again it was the central banks that drove the long-bond market.
The picture brightened on the housing front with improvements in the Home Builders Sentiment, Building Permits, and Existing Home Sales. Inflation is not a factor with low readings in both PPI and CPI, lead by lower gas prices. Sentiment for future growth continues to move upward with better than expected readings in the Leading Economic Indicators and The Philly Fed survey.
After trading sideways all week, MBS moved back into positive territory on Friday after two moves by Central Bankers. The People’s Bank of China (PBOC) unexpectedly cut their key interest rate for the first time since 2012. The one-year lending rate was reduced by 0.4 percentage point to 5.6 percent, while the one-year deposit rate was lowered by 0.25 percentage point to 2.75 percent. European Central Bank: President Mario Draghi threw the door wide open on Friday for more dramatic action to rescue the euro zone economy, saying “excessively low” inflation had to be raised quickly by whatever means necessary. Draghi said there was now no sign of economic improvement in the months ahead and that the ECB would expand and step up its program to pump more money into the currency bloc if its current measures fell short of lifting inflation.
What to Watch Out For This Week:
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|25-Nov||8:30 AM||GDP – Second Estimate||–||3.30%||3.50%|
|25-Nov||8:30 AM||GDP Deflator – Second Estimate||–||1.30%||1.30%|
|25-Nov||9:00 AM||Case-Shiller 20-city Index||–||4.60%||5.60%|
|25-Nov||9:00 AM||FHFA Housing Price Index||–||NA||0.50%|
|25-Nov||10:00 AM||Consumer Confidence||–||96||94.5|
|26-Nov||7:00 AM||MBA Mortgage Index||–||NA||4.90%|
|26-Nov||8:30 AM||Initial Claims||–||286K||291K|
|26-Nov||8:30 AM||Continuing Claims||–||2373K||2330K|
|26-Nov||8:30 AM||Durable Orders||–||-0.70%||-1.30%|
|26-Nov||8:30 AM||Durable Goods -ex transportation||–||0.50%||-0.20%|
|26-Nov||8:30 AM||Personal Income||–||0.40%||0.20%|
|26-Nov||8:30 AM||Personal Spending||–||0.30%||-0.20%|
|26-Nov||8:30 AM||PCE Prices – Core||–||0.10%||0.10%|
|26-Nov||9:45 AM||Chicago PMI||–||63||66.2|
|26-Nov||9:55 AM||Michigan Sentiment – Final||–||89.9||89.4|
|26-Nov||10:00 AM||New Home Sales||–||469K||467K|
|26-Nov||10:00 AM||Pending Home Sales||–||0.80%||0.30%|
|26-Nov||10:30 AM||Crude Inventories||–||NA||2.608M|
|26-Nov||12:00 PM||Natural Gas Inventories||–||NA||-17 bcf
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.