Housing Supply Decreases, Good for Housing:

In the latest release of the National Association of Realtors‘ Existing Home Sales report, there were some very interesting facts.  Even though they reported a month-over-month decrease of 2.6% in existing home sales, they revised February’s data upward. The NAR said even with March’s decline, the pace of sales in the first three months of the year marked the strongest first quarter since 2007.

But the real gem is the inventory data.  The nation’s glut of unsold homes is easing, as inventories fell to 2.37 million. Realtors in some markets have even reported shortages of housing stock. A decrease in the amount of homes on the market is always good for housing as it stabilizes and even drives prices upward.  Nationwide, the median price for a home resale rose to $163,800 in March, up 2.5 percent from a year earlier.

An improving labor market has realtors upbeat about sales prospects for the rest of the year.

Distressed home sales accounted for only 29 percent of resales, down from 34 percent in February, which is also a very positive trend.

What Happened to Rates Last Week?

Mortgage backed securities (MBS) gained +15 basis points from last Friday to the prior Friday which caused mortgage rates to move sideways.

The highest rates of the week were on Tuesday and the lowest rates of the week were on Friday.

MBS traded in a very narrow range all week as we had a light week in terms of the economic data that was released.

Retail Sales were much better than expected but Initial Jobless Claims and Existing Home Sales were worse than expected, there were no major Treasury auctions to guide the market last week.

Pending Home Sales Hit 19 Month High:

The number of Americans who signed contracts to buy homes in November rose to the highest level in a year and a half. The best reading on pending homes sales since a federal home-buying tax credit expired appeared to encourage traders on Wall Street.
The Realtors group said Thursday that its index of sales agreements jumped 7.3 percent last month to a reading of 100.1. A reading of 100 is considered healthy. The last time the index was that high was in April 2010, one month before the tax credit expired.

Contract signings usually indicate where the housing market is headed. There’s a one- to two-month lag between a signed contract and a completed deal.

Homes are the most affordable they’ve been in decades. Long-term mortgage rates are at historic lows and prices in most metro areas have tumbled since late 2006.

What Happened to Rates Last Week:

Mortgage backed securities (MBS) gained +95 basis points from last Friday to the prior Friday which moved mortgage rates lower.

We had much better than expected U.S. economic data.  Pending Home Sales, Consumer Confidence, and the Chicago PMI were all very strong.

Normally, these type of strong readings would cause bonds to sell off and your mortgage rates to rise.  But last week was a holiday shortened week that saw very low volumes.

Traders simply “parked” their funds into the safe-haven of bonds over the holiday week which increased demand for bonds and temporarily lowered mortgage rates.

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

Related articles

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

Pending Home Sales up 13%:

NAR 'DC'

Pending Home Sales are homes that have a purchase contract in place but have not yet closed. The National Association of Realtors released their data for August and it showed a year-over-year annual improvement of 13.1%.

When comparing August to July, pending home sales slipped but less than market forecasts. Economists expected Pending Home Sales to decrease month-over-month by -1.8%. The actual number was a little better at -1.2%. Hurricane Irene, which battered the Northeast at the end of the month, was likely a factor in the decline.

 

Three of four regions throughout the United States saw declines in the number of contracts to purchase previously owned homes. The Northeast region experienced the largest loss of 5.8 percent as a result of significant disruption by Hurricane Irene, according to NAR chief economist Lawrence Yun. Meanwhile, sales in Midwest and West also fell 3.7 percent and 2.4 percent, respectively. In contrast, a 2.6 percent gain in the South helped reduce the total loss of pending home sales in the month.

What Happened to Rates Last Week:

Mortgage backed securities (MBS) were unchanged from last Friday to the prior Friday but we stilled closed down -100  basis points from our best pricing levels in history on 09/22/11.

We had a very volatile week where mortgage rates escalated Monday through Wednesday and then rebounded by Friday.

What to Watch Out For This Week:

The following 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:

Date	Economic Event	Cons.	Previous
3-Oct	ISM Manufacturing Index	50.50%	50.60%
3-Oct	Construction Spending	-0.06%	-1.30%
3-Oct	Fed’s Lackert Speaks
4-Oct	Factory Orders	-0.10%	2.40%
4-Oct	Bernake Speaks
5-Oct	Challenger Job Cuts		47%
5-Oct	ADP Private Payroll Report	48K	91K
5-Oct	ISM Servicing Index	53	53.3
6-Oct	Initial Jobless Claims	401K	391K
6-Oct	Continuing Jobless Claims	3.7M	3.729M
7-Oct	Non-Farm Payrolls	63K	0K
7-Oct	Unemployment Rate	9.10%	9.10%
7-Oct	Wholesale Inventories	0.60%	0.80%
7-Oct	Consumer Credit	7.0B	12.0B

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.

Related articles

• Pending Home Sales Jump: (michaeltmcdevitt.wordpress.com)
• Employment Picture Brightens: (michaeltmcdevitt.wordpress.com)

Weekly Rate Watch & Housing Update: Existing Home Sales Up Strongly

Existing-home sales increased in August, even with ongoing tight credit and appraisal problems, along with regional disruptions created by Hurricane Irene, according to the National Association of Realtors®. Monthly gains were seen in all regions.

Total Existing Home Sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 7.7 percent to a seasonally adjusted annual rate of 5.03 million in August from an upwardly revised 4.67 million in July, and are 18.6 percent higher than the 4.24 million unit level in August 2010.

Investors accounted for 22 percent of purchase activity in August, up from 18 percent in July and 21 percent in August 2010. First-time buyers purchased 32 percent of homes in August, unchanged from July; they were 31 percent in August 2010.

All-cash sales accounted for 29 percent of transactions in August, unchanged from July; they were 28 percent in August 2010; investors account for the bulk of cash purchases.

Total housing inventory at the end of August fell 3.0 percent to 3.58 million existing homes available for sale, which represents an 8.5-month supply at the current sales pace, down from a 9.5-month supply in July.

Mortgage backed securities (MBS) gained 178 basis points last week which helped to move mortgage rates much lower from last Friday to the prior Friday. Mortgage rates moved lower in response to the Fed‘s announcement that they would move from purchasing shorter term Treasuries to buying longer term Treasuries. They also announced that they would purchase more mortgage backed securities with the principal that they are receiving on their current mortgage backed security holdings. The best interest rates were on Thursday afternoon.  On Friday, mortgage rates started to climb back up from their lows.

What to Watch Out For This Week:

The following 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:

Date	Time	Economic Event
26-Sep	10:00	New Home Sales (MoM)
26-Sep	10:00	S&P/Case-Shiller Home Price Indices (YoY)
27-Sep	9:00	Consumer Confidence
27-Sep	10:00	Richmond Fed Manufacturing Index
27-Sep	10:00	Fed’s Lockhart speech
27-Sep	12:30	MBA Mortgage Applications
28-Sep	7:00	Durable Goods Orders
28-Sep	8:30	Durable Goods Orders ex Transportation
28-Sep	8:30	EIA Crude Oil Stocks change
28-Sep	10:30	Continuing Jobless Claims
29-Sep	8:30	Gross Domestic Product Annualized
29-Sep	8:30	GDP Price Index
29-Sep	8:30	Initial Jobless Claims
29-Sep	8:30	Real Pers. Consumption Exp. (QoQ)
29-Sep	8:30	Pending Home Sales (MoM)
29-Sep	10:00	Core Pers. Expenditure – Price Index (MoM)
30-Sep	8:30	Core Pers. Expenditure – Prices Index (YoY)
30-Sep	8:30	Pers. Consumption Exp – Price Index (YoY)
30-Sep	8:30	Pers. Consumption Expenditures (MoM)
30-Sep	8:30	Personal Income (MoM)
30-Sep	8:30	Chicago Purchasing Managers’ Index
30-Sep	9:45	Reuters/MI Consumer Sentiment Index
30-Sep	9:55	Fed’s Bullard speech

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.

Related articles:

• Pending Home Sales Jump: (michaeltmcdevitt.wordpress.com)
• Existing Home Sales Continue Upward Climb: (michaeltmcdevitt.wordpress.com)
• Mortgage Delinquency Rates Decline: (michaeltmcdevitt.wordpress.com)

Fannie Mae: September Economics and Mortgage Market Analysis

Leading indicators for home sales point to subdued housing demand. Respondents to the Fannie Mae National Housing Survey indicate a continued shift of sentiment toward renting and away from ownership, at least in the near term. In the second quarter, 26 percent of Americans were worried about their job stability. When combined with the 9 percent of unemployed households, more than a third of the potential workforce was worried about their employment status – hardly a strong support for housing demand.

After rising for two consecutive months, pending home sales (contract signings of existing homes) fell in July, which bodes poorly for existing home sales in August and September. Pending home sales generally lead the existing home sales data by one or two months. However, the link between contract signings and closings has weakened lately such that the gains in pending home sales in recent months have not materialized into contract signings. Low appraisals compared to contract prices and concerns about the economy may have led to contract cancellations and delays. Also, some contracts have had to be cancelled because the potential buyers could not sell their current homes.

September Economic Developments
September Economic Forecast
September Housing Forecast

Home prices seen picking up in 2012:

Home prices are seen ticking up modestly in 2012, according to a Reuters poll released on Friday.

Existing home sales are expected to improve modestly. The forecasts from the poll are consistent with expectations the housing sector will continue to limp along in a weakened state for years to come.

A recovery in the housing market is dependent on improvement in the labor market and broader economy, analysts said.

“One of the big concerns is you’ve got a lot of homes where the mortgage holder is still underwater and most of those homeowners will continue to make payments,” said Brown.

“It gets to be a problem, however, if somebody loses their job, somebody gets sick, there’s a divorce or something where the home has to be sold.”

U.S. home prices — as measured by Standard & Poor’s/Case-Shiller 20-City Composite Home Price Index — will fall 3.8 percent for the year, before stabilizing and gaining 0.8 percent in 2012, according to the median forecast of 22 economists in the Reuters poll taken over the past week.

The expectations were improved from the previous Reuters housing poll in June, which forecast prices would fall 5.0 percent this year and rise just 0.5 percent next year.

The forecasts for the changes in the home price index for this year had a wide range, from a decline of 14.0 percent to a gain of 0.1 percent. The forecasts for 2012 had a smaller gap, from a decline of 6.0 percent to a gain of 4.0 percent.

Of 28 economists polled, 14 said that prices had either already hit bottom this year or would by the fourth quarter. Twelve respondents said prices won’t reach a trough until 2012, while one forecast 2013 and one expected it would take until 2014.

In the third quarter, the pace of existing home sales is expected to come in at a 4.78 million annualized rate and will edge up to 4.95 million in the fourth quarter. Sales of previously owned homes were at an annual rate of 4.67 million units in July, according to data from the National Association of Realtors.

Economists saw the rate of home sales coming in at 5.1 million for both the first and second quarter of next year.

“New foreclosures peaked in 2009, but the inventory of foreclosed homes will decline only slowly,” said David Berson, chief economist at mortgage insurer PMI Group.

Spring buying pushed home prices up for a third straight month in most major U.S. cities in June.

The Standard & Poor’s/Case-Shiller home-price index showed Tuesday that prices increased in June from May in 19 of the 20 cities tracked. Prices rose 3.6 percent in the April-June quarter from the previous quarter. Neither of those numbers is adjusted for seasonal factors.

What Happened to Rates Last Week:

Mortgage backed securities (MBS) gained +15 basis points last week which helped to move mortgage rates slightly lower from last Friday to the prior Friday.  Mortgage rates were pressured mid-week as the Trade Balance and Wholesale Inventory data was better than expected but we rebounded on Friday as the stock market had another triple digit loss amid continued concerns over a potential default by Greece and other European countries.