The Housing Market Update

WR StarkeyHousing Starts Best in Over Four Years: 

The rebound in U.S. home building accelerated in December, capping the best year for the industry since 2008 and adding to signs that residential real estate is contributing to economic growth. 

According to Commerce Department data, New Home Starts climbed 12.1 percent last month to a 954,000 annual rate, which exceeded all forecasts of economists.  Spurred by record-low mortgage rates, home construction will probably keep making headway in 2013 as it recovers from the worst slump since the Great Depression.

Housing starts remain short of the 2.07 million in 2005 at the peak of the boom, which was three-decade high. They averaged 1.74 million a year from 2000 through 2004. All four regions of the country showed a gain in starts last month, led by a 24.7 percent surge in the Midwest. Construction of single-family houses climbed 8.1 percent in December from the prior month, to the highest level since June 2008. Work on multifamily homes jumped 20.3 percent.

What Happened to Rates Last Week?

We had a "see-saw" week.  Mortgage rates improved early in the on the very tame PPI and CPI data which was very bond friendly.  But MBS sold off (causing mortgage rates to rise) on the lower than expected Initial Weekly Jobless Claims and the block-buster New Home Starts.  MBS rebounded (causing mortgage rates to drop)  Friday on the much weaker than expected Consumer Sentiment report.

Even with Friday's rebound, MBS have dropped a total of -74 basis points from the close of trading on 12/31/12.  This means that mortgage rates have steadily risen so far in 2013.

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.


Date

Time (ET)

Economic Release

Actual

Market Expects

Prior

22-Jan

10:00 AM

Existing Home Sales

-

5.10M

5.04M

23-Jan

7:00 AM

MBA Mortgage Index

-

NA

15.20%

23-Jan

7:00 AM

MBA Mortgage Purchase Index

-

NA

NA

23-Jan

9:00 AM

FHFA Housing Price Index

-

NA

0.50%

24-Jan

8:30 AM

Initial Claims

-

355K

335K

24-Jan

8:30 AM

Continuing Claims

-

3200K

3214K

24-Jan

10:00 AM

Leading Indicators

-

0.50%

-0.20%

24-Jan

10:30 AM

Natural Gas Inventories

-

NA

-148 bcf

24-Jan

11:00 AM

Crude Inventories

-

NA

-0.951M

25-Jan

10:00 AM

New Home Sales

-

387K

377K

I will be watching these reports closely for you and let you know if there are any big surprises: 

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. 

Steve Akin
Starkey Mortgage 
214-987-9999
sakin@wrstarkey.com 

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