Home Sales Spike to Best Level in 18 Months
Existing-home sales jumped in March to their highest annual rate in 18 months, while unsold inventory showed needed improvement, according to the National Association of Realtors®. Led by the Midwest, all major regions experienced strong sales gains in March and are above their year-over-year sales pace.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 6.1 percent to a seasonally adjusted annual rate of 5.19 million in March from 4.89 million in February—the highest annual rate since September 2013 (also 5.19 million). Sales have increased year-over-year for six consecutive months and are now 10.4 percent above a year ago, the highest annual increase since August 2013 (10.7 percent). March’s sales increase was the largest monthly increase since December 2010 (6.2 percent).
Lawrence Yun, NAR chief economist, says the housing market appears to be off to an encouraging start this spring. “After a quiet start to the year, sales activity picked up greatly throughout the country in March,” he said. “The combination of low interest rates and the ongoing stability in the job market is improving buyer confidence and finally releasing some of the sizable pent-up demand that accumulated in recent years.”
Total housing inventory at the end of March climbed 5.3 percent to 2.00 million existing homes available for sale, and is now 2.0 percent above a year ago (1.96 million). Unsold inventory is at a 4.6-month supply at the current sales pace, down from 4.7 months in February.
The median existing-home price for all housing types in March was $212,100, which is 7.8 percent above March 2014. This marks the 37th consecutive month of year-over-year price gains and the largest since February 2014 (8.8 percent).
“The modest rise in housing supply at the end of the month despite the strong growth in sales is a welcoming sign,” adds Yun. “For sales to build upon their current pace, homeowners will increasingly need to be confident in their ability to sell their home while having enough time and choices to upgrade or downsize. More listings and new home construction are still needed to tame price growth and provide more opportunity for first-time buyers to enter the market.”
The percent share of first-time buyers was 30 percent in March, marking the third time since last March that the first-time buyer share was at or above 30 percent. First-time buyers represented 29 percent of all buyers last month; they were 30 percent in March 2014.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) lost -10 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 (again).
We had a very light week for domestic economic data. The biggest report of the week was Friday’s Durable Goods Orders and it certainly caused MBS to end the week with some positive momentum. The headline reading was a blockbuster with a huge 4.00% gain when the market was expecting only a +0.5% gain. A big reading like this is positive for the economy and negative for bonds right? Well….no because that is not the whole story. Ex Transport…this number was terrible. Dropping -0.2% when the market expected +0.4%. And to make that number even weaker..that was a -0.2% drop from a downwardly revised February (was -0.6% was lowered to -1.3% – that’s twice as worse!). So actually, this was a weak report and MBS rallied as a result.
Internationally, continued concern over a potential default by Greece to the IMF and ECB, and the first wave of Chinese corporate defaults kept foreign cash flowing into U.S. based bonds which kept our rates low.
What to Watch Out For This Week:
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|28-Apr||9:00 AM||Case-Shiller 20-city Index||–||4.70%||4.60%|
|28-Apr||10:00 AM||Consumer Confidence||–||102.2||101.3|
|29-Apr||7:00 AM||MBA Mortgage Index||–||NA||2.30%|
|29-Apr||8:30 AM||Chain Deflator-Adv.||–||0.50%||0.10%|
|29-Apr||10:00 AM||Pending Home Sales||–||1.60%||3.10%|
|29-Apr||10:30 AM||Crude Inventories||–||NA||5.315M|
|29-Apr||2:00 PM||FOMC Rate Decision||–||0.25%||0.25%|
|30-Apr||8:30 AM||Initial Claims||–||290K||295K|
|30-Apr||8:30 AM||Continuing Claims||–||2318K||2325K|
|30-Apr||8:30 AM||Personal Income||–||0.20%||0.40%|
|30-Apr||8:30 AM||Personal Spending||–||0.50%||0.10%|
|30-Apr||8:30 AM||PCE Prices – Core||–||0.20%||0.10%|
|30-Apr||8:30 AM||Employment Cost Index||–||0.60%||0.60%|
|30-Apr||9:45 AM||Chicago PMI||–||50||46.3|
|30-Apr||10:30 AM||Natural Gas Inventories||–||NA||90 bcf|
|1-May||10:00 AM||ISM Index||–||52||51.5|
|1-May||10:00 AM||Construction Spending||–||0.40%||-0.10%|
|1-May||10:00 AM||Michigan Sentiment – Final||–||96||95.9|
|1-May||5:00 PM||Auto Sales||–||NA||5.4M|
|1-May||5:00 PM||Truck Sales||–||NA||8.2M|
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.