Home Sales on the Rise
U.S. home resales rebounded in February as a persistent shortage of properties on the market pushed up prices.
The National Association of Realtors said on Monday that existing home sales rose 1.2 percent to an annual rate of 4.88 million units. January’s sales pace was unrevised at 4.82 million units.
The median home price rose again (the 36th straight time) to $202,600 which is a healthy +7.5% increase from February 2014. A 7.5% year-over-year gain is strong enough for a healthy housing market but not too hot that it would approach any type of bubble territory.
Apart from tight supply, sales were also constrained by harsh winter weather. Sales in the Northeast, which was slammed by disruptive weather for much of the winter, tumbled 6.5 percent last month. Sales in the Midwest were unchanged.
Sales rose 1.9 percent in the South and jumped 5.7 percent in the West (no Winter weather there).
Have you been on the sidelines wondering when to get back into the housing market or if you should purchase your first home? 36 straight months of price increases are making that home more expensive each month that you put it off. It also has demonstrated that a home is good investment with a solid track record of appreciation.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) gained +98 basis points (BPS) from last Friday’s close which caused mortgage rates to improve for the week.
The economic data took a back seat to the Federal Reserve as Janet Yellen and company delivered what the market considers are some very dovish comments.
There was something for everyone (hawkish/bearish or bullish/dovish) with the release of the latest policy statement from the Federal Reserve Open Market Committee (FOMC) and the following live press conference with Federal Reserve Chair Janet Yellen but clearly the bond market focused on the dovish comments.
Here is a quick breakdown: Hawkish: (at some point in modern history the Fed will raise rates…probably by September)
– Removal of the word “patient” – Fed stands ready to raise rates “after” the April meeting
– Fed doesn’t actually need 2% inflation before raising rates, they need to be “reasonably confident” on inflationary trending towards 2%.
Dovish: (you wake up in oz…its all in color and rates will never rise)
– Has changed their view on economic growth from “solid” down to “moderate”.
– Lowered their 2015 GDP growth from the range of 2.6%-3.0% down to the range of 2.3% to 2.7%
– Mentioned improved labor conditions as measured by the Unemployment Rate and a slight decrease in the massive participation rate. But is concerned about “sluggish” wage inflation.
– The stock market is not overvalued based upon “historical” valuation methods.
Both stocks and bonds had massive rallies after the Fed release.
What to Watch Out For This Week:
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|23-Mar||10:00 AM||Existing Home Sales||–||4.90M||4.82M|
|24-Mar||8:30 AM||Core CPI||–||0.10%||0.20%|
|24-Mar||9:00 AM||FHFA Housing Price Index||–||NA||0.80%|
|24-Mar||10:00 AM||New Home Sales||–||470K||481K|
|25-Mar||7:00 AM||MBA Mortgage Index||–||NA||-3.90%|
|25-Mar||8:30 AM||Durable Orders||–||0.50%||2.80%|
|25-Mar||8:30 AM||Durable Goods -ex transportation||–||0.30%||0.00%|
|25-Mar||10:30 AM||Crude Inventories||–||NA||9.622M|
|26-Mar||8:30 AM||Initial Claims||–||293K||291K|
|26-Mar||8:30 AM||Continuing Claims||–||2425K||2417K|
|26-Mar||10:30 AM||Natural Gas Inventories||–||NA||-45 bcf|
|27-Mar||8:30 AM||GDP – Third Estimate||–||2.40%||2.20%|
|27-Mar||8:30 AM||GDP Deflator – Third Estimate||–||0.10%||0.1|
|27-Mar||10:00 AM||Michigan Sentiment – Final||–||NA||91.2|
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.