February Existing Home Sales Beat Forecasts

The National Association of Realtors released their report of the sales of previously owned homes.  Compared to a year ago, Existing Home Sales increased an impressive 7.0 percent.  At 5.02 million units, they beat the market expectations of 5.0 million units.  Month over month sales decreased 0.6 percent.

Other interesting news from the report: First time home buyers made up 42 percent of sales and all-cash purchases accounted for 26 percent. The sector that had been hit the hardest, condominiums and co-ops actually rose 4.8 percent – finally showing some demand in that sector.

Positive Economic News Pressures Rates

The U.S. Census Bureau reported that Durable Goods Orders (excluding the volatile transportation sector) increased by 0.9 percent.  This was a 120 percent increase from the prior period.  As orders for Durable Goods increase, it leads to substantial capital investment and is a precursor to stronger economic growth.

Initial Jobless Claims fell for the fourth consecutive week and came in below an important level.  They finally broke through the 450,000 level at 442,000.  All eyes will be on the Friday release of the Unemployment data.  Many economists feel that we have the potential to see actual job creation in the non-farm payroll sector.

Mortgage rates naturally rise when the economy expands. Since the economic data above was positive it helped to push mortgage rates higher.

Warning: The Federal Reserve Bank of New York will end their $1.25 trillion Agency mortgage backed security purchase program this Wednesday!  This will remove the single largest purchaser of Fannie, Freddie, and Ginnie mortgage backed securities in the market.  How will this impact rates?  Contact me and I will keep you in the loop – but this will certainly lead to some volatility this week.

What Happened to Rates Last Week?

Mortgage backed securities (MBS) lost -62 basis points last week which caused 30 year fixed rates to increase for both government and conventional loans.  Our worst mortgage rates were on Wednesday after we dropped -90 basis points in just one day.  We saw further erosion on Thursday but made a small come back on Friday.