Home Builder Sentiment shoots upward
While Existing Home Sales have been doing very well, its been the New Construction segment that has yet to see the same take off. But that may be changing soon.
Spring is finding home builders in a sunnier mood as sales appear to be blooming.
Sentiment among the nation’s home builders rose four points in April to a level of 56, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
The Index measures builder perceptions of current single family homes sales, sales expectations for the next six months, and it rates buyer traffic. The component measuring future sales rose five points to its highest level of the year. Sales expectations in the next six months jumped five points to 64, and the index measuring buyer traffic rose four points to 41.
Any number over 50 indicates that more builders view conditions as good.
“As the spring buying season gets underway, home builders are confident that current low interest rates and continued job growth will draw consumers to the market,” said National Association of Home Builders Chairman Tom Woods.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) gained +42 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move sideways from the prior the week.
Our benchmark FNMA 3.0 May coupon traded in a very narrow range and was unable to close above a very important technical level located at the 102.63 price point. We saw great support for MBS (which kept rates low) due to growing concern over a potential Grexit.
It was another week of mixed domestic economic data. While several of the reports were lighter than market expectations, they still showed economic growth. For example, the biggest report of the week was Retail Sales. The closely watched ex-Auto data showed a gain of 0.4% but that was less than the consensus estimates of 0.7%. There was no threat of inflation in the short term as both PPI and CPI had very low month over month readings.
On the housing front, the National Association of Home Builder’s Sentiment Index shot up to 56 which is a very strong reading. Both Housing Starts and Building Permits were a tad lighter than market expectations in March, but the February readings for both was revised upward.
The Consumer Sentiment Index had a very strong reading (95.9) for April which provided downward pressure on Rates.
We got a fairly upbeat report out of the Federal Reserve with the release of their Beige Book. 71 times. That is the number of times that the word “weather” was used in this report that put together individual reports from each of the 12 districts. What that could mean is that our own weak 1st QTR GDP data (when it comes out) can now largely be ignored by the Fed as a “one off” and not part of a larger trend.
The overall theme in the beige book was that:
– Our Economy expanded in most regions from mid-Feb to mid-March.
– Higher Retail Sales reported by the majority of regional Fed banks.
– Labor Markets were stable and showed modest improvement.
– Noted modest upward wage and priced pressures.
What to Watch Out For This Week:
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|22-Apr||7:00 AM||MBA Mortgage Index||–||NA||-2.30%|
|22-Apr||9:00 AM||FHFA Housing Price Index||–||NA||0.30%|
|22-Apr||10:00 AM||Existing Home Sales||–||5.07M||4.88M|
|22-Apr||10:30 AM||Crude Inventories||–||NA||1.294M|
|23-Apr||8:30 AM||Initial Claims||–||288K||294K|
|23-Apr||8:30 AM||Continuing Claims||–||2380K||2268K|
|23-Apr||10:00 AM||New Home Sales||–||517K||539K|
|23-Apr||10:30 AM||Natural Gas Inventories||–||NA||63 bcf|
|24-Apr||8:30 AM||Durable Orders||–||0.50%||-1.40%|
|24-Apr||8:30 AM||Durable Goods -ex transportation||–||0.50%||-0.60%|
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.