Mortgage bond prices finished the week higher which put downward pressure on rates. Rates were sharply higher early in the week ahead of the Fed meeting as analysts predicted an 80% chance of a rate hike in June. That sentiment reversed Wednesday afternoon in response to the Fed meeting. The tone was dovish and the consensus after the meeting was for only one rate hike this year most likely in the fall. Consumer prices were down 0.2% as expected. However, the core, which excludes volatile food and energy, rose 0.3% versus the expected 0.2% increase. Consumer sentiment was at 90 versus the expected 92.2 which was good for lower rates.
Mortgage interest rates finished the week better by approximately 3/8 to 1/2 of a discount point.
Existing Home Sales
The National Association of Realtors releases existing home sales data near the end of each month. The data is derived from a sampling of MLS data across the nation. The release shows the current sales rate for existing single-family, coops, and condos. A national figure and 4 regional figures are provided. The regions are broken into the West, Midwest, South, and Northeast.
The housing market is a critical component of the US economy. A house is usually one of the largest assets a consumer owns. Housing usually leads market recoveries. Housing market conditions vary considerably across the country. The last report showed sales at the highest rate in six months. Low inventories also resulted in higher prices. Low mortgage rates helped sales figures.
Unfortunately the housing industry remains in transition. Most analysts agree that the housing market will remain mixed for some time. The important thing to remember is that housing is a “local” issue. The maxim about housing being strongly tied to “location, location, location” still holds true. The overall housing market shows signs of rebound while there are areas that don’t follow the overall trend.
While the data usually isn’t a big market mover it still has the potential to result in some market volatility. Mortgage interest rates remain historically low. However, we saw continued volatility over the past few weeks. There is no guarantee that rates will remain low forever. Now is a great time to take advantage of rates at these levels. Floating in this environment is very risky.
|Economic Indicator||Release Date & Time||Consensus Estimate||Analysis|
|Existing Home Sales||Monday, March 21, 10:00 am, et||5.47M||Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.|
|FHFA House Price Index||Tuesday, March 22, 10:00 am, et||Up 0.3%||Moderately Important. A measure of single family house prices. Weakness may lead to lower rates.|
|New Home Sales||Wednesday, March 23, 10:00 am, et||497K||Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.|
|Weekly Jobless Claims||Thursday, March 24, 8:30 am, et||263K||Important. An indication of employment. Higher claims may result in lower rates.|
|Durable Goods Orders||Thursday, March 24, 8:30 am, et||Up 0.8%||Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates.|
|Q4 Revised GDP||Friday, March 25, 8:30 am, et||Up 1.0%||Important. The aggregate measure of US economic production. Weakness may lead to lower rates.|