Existing Home Sales Climb, Inventories Fall:

FED REPO MBS

Sales of previously occupied homes (the largest segment of all home sales) increased by 11.3% on a year-over-year basis according to the National Association of Realtors. Sales did decrease 3% from the previous month which was close to market expectations.

Inventories declined 2% to 3.48 million units, representing 8.5 months of supply at current sales rates.

“It’s in a holding pattern. When it does break out, it will break out upward, but it hasn‘t broken out yet,“ said Lawrence Yun, chief economist of the NAR. A separate report from the Labor Department showed that rent of primary residences is up 2.1% on a year-on-year basis. In time, rising rents should help boost sales of homes, Yun said.

Distressed home sales fell from 31% to 30%. All Cash Sales held steady at 30% suggesting continued interest by investors, and first-time home buyers accounted for 32% of the sales.

This report certainly didn’t show the housing market taking off, but it did have some bright spots which is welcome news as we continue our slow climb out of the bottom.

What Happened to Rates Last Week:

Mortgage backed securities (MBS) gained +22 basis points from last Friday to the prior Friday which moved mortgage rates slightly downward.

The MBS markets had a very choppy week where we saw intra-day pricing swings of 20 to 40 basis points each trading day. The market largely ignored virtually all of the economic data that was released. This was due to all the markets focusing intensely on Europe as Germany, France, the European Central Bank, the IMF and others met all week long in an attempt to come up with a solution to their debt woes.

The markets reacted very quickly to any leaked reports out of those meetings which added to the volatility.

Be Blessed, Hustle Hard, Dream Big! MM

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• Existing Home Sales Continue Upward Climb: (michaeltmcdevitt.wordpress.com)

Mortgage Delinquency Rates Decline:

You would think by the barrage of negative news reports that just about every other home was going into foreclosure.  Certainly this is not the case. In fact, the housing market has stabilized in the past six months.  The latest report from the Mortgage Bankers Association shows that the percentage of homeowners that were behind at least one monthly payment fell from 9.1% in the third quarter to 8.2% in the fourth quarter.  Also, the 2010 delinquency rate fell from over 10% in the beginning of the year to 8.2% at the end of the year.

The 2% drop in mortgage delinquencies follows the recent drop in the Unemployment Rate and the steady increase in Existing Home Sales and Consumer Confidence.  These are significant signs that the housing market is closing in on a true market equilibrium.

What Happened to Rates Last Week:

Mortgage backed securities (MBS) gained +39 basis points last week which caused 30 year fixed rates to move lower after reaching their highest levels of 2011 in the prior week. The economic data such as PPI and CPI showed inflationary pressures that consumers pay  – which is usually bad for mortgage rates. But the geo-political concerns over continued tensions in the Middle East, specifically the news stories of the Iranian War Ships requesting access to the Suez Canal, caused traders to move their funds into the safety of bonds which temporarily helped mortgage rates.

 

Housing Starts Rise:

U.S. Housing starts rose more than expected in November. The Commerce Department said that housing starts rose 3.9 percent to a seasonally adjusted annual rate of 555,000 units.  They also revised October’s numbers upward to a 534,000 unit pace, it was originally reported at 519,000 units.

Ground breaking for new homes last month was lifted by a 6.9 percent rise in single-family home construction which continues to shows strength.  The multi-family sector continues to struggle and fell 9.1 percent.

What Happened to Rates Last Week:

Mortgage backed securities (MBS) gained +12 basis points last week causing 30 year fixed rates to move sideways from the previous week.  This was the first week out of the last seven where pricing improved.  However, it was a bumpy ride.  MBS reached their worst levels on Wednesday which drove 30 year fixed rates to their highest levels since last May.  We clawed our way back as the 10 year Treasury started to rally on very light volumes which skewed the rally somewhat.