The Existing Home Sales report (homes that have been previously occupied) is hot off the press. The National Association of Realtors released the data this morning for the largest segment of our housing market.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, came in at an annual rate of 5.08 million in February which is 2.2 percent higher than a year ago.
Job growth and low rates continue to fuel the housing market but a severe lack of inventory is making it difficult to move at a faster pace and was the primary reason that the month-over-month reading fell.
The median existing-home price for all housing types in February was $210,800, up 4.4 percent from February 2015 ($201,900). February’s price increase marks the 48th consecutive month of year-over-year gains.
Total housing inventory at the end of February increased 3.3 percent to 1.88 million existing homes available for sale, but is still 1.1 percent lower than a year ago (1.90 million). Unsold inventory is at a 4.4-month supply at the current sales pace, up from 4.0 months in January.
All-cash sales were 25 percent of transactions in February, down from 26 percent both in January and a year ago. Individual investors, who account for many cash sales, purchased 18 percent of homes in February (17 percent in January), matching the highest share since April 2014. Sixty-four percent of investors paid cash in February.
What Happened to Rates Last Week?
Mortgage backed securities (FNMA 3.00 MBS) gained +59 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move lower and basically reversed the -60BPS loss from the prior week.
Net of the see-saw of the last two weeks (-60, +59), MBS are down -52BPS for the month of March. MBS had a volatile week with a 103 BPS swing between our intra-week lows and our intra-week highs.
MBS were trending lower (higher rates) until Wednesday’s FOMC meeting.
It was Central Bank Palooza last week and their collectively timid responses to global economic forces helped our long bonds to improve for the week as international investors bought our debt as the least-worst place to put their money.
The vote was 9-1 with the lone vote wanting to raise rates. The following is their official policy statement:https://www.federalreserve.gov/newsevents/press/monetary/20160316a.htm
The Not So Data Dependent Fed: In the policy statement and in Yellen’s comments, they made it clear that that they are less concerned with domestic data and more concerned with China, Oil and global financial stability. Reading between the lines…it once again appears that other foreign Central Banks (China, Japan) and even OPEC can dictate our own policies in the near term.
They did note that Inflation has picked up but remains well below their target rate and might not break above 2% for 2 or 3 years (unless oil spikes). They reaffirmed that they will raise rate at a very gradual pace. They do acknowledge strong job gains. They did upgrade their concerns over global developments and that they continue to pose risk to our economy. The Fed is not considering nor going to implement any negative interest rate policies.
|What to Watch Out For This Week: