The Housing Market Update

 


Housing Recovery 

 

 

Home Price Index Gains 5.5%

The S&P/Case-Shiller 20-city composite posted that home prices were 5.5% higher than during the same period in the prior year, for the strongest year-over-year growth since August 2006, with increases in 19 of 20 cities.

Housing is clearly recovering, with positive trends for new- and existing-home sales. However, prices remain 30% below a bubble peak in 2006, according to Case-Shiller data.  That means that there is still an excellent opportunity to select your next home while home prices still have room to move upward.

Case Shiller Home Price Indicies

What Happened to Rates Last Week? 

Over the past two weeks, MBS have pulled back  -99 basis points which have driven mortgage rates higher.  We had our highest mortgage rates on Wednesday and our lowest rates on Friday morning (briefly).

We had a big week for economic data.  The first look at the 4th quarter GDP was very disappointing, showing our first economic contraction (-0.1%) since 2009.  This negative economic news was bond-friendly and helped to improve mortgage rates.  But the market quickly shrugged off the news as traders discounted the report believing that the government pulled back on spending due to the looming fiscal cliff and that the number would be revised upward in the future.

The Unemployment Rate moved upward from 7.8% to 7.9% but offsetting that was very positive upward revisions to November and December Non-Farm Payrolls.  Initially, this news did pressure MBS but it gave way to very positive manufacturing data.  ISM Manufacturing jumped up from 50.7 to 53.1.  Also, Consumer Sentiment was much better than expected rising from 72.9 to 73.8.  The combination of these two reports sank MBS pricing and caused mortgage rates to rise.

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

4-Feb

10:00 AM

Factory Orders

-

2.40%

0.00%

5-Feb

10:00 AM

ISM Services

-

55.6

56.1

6-Feb

7:00 AM

MBA Mortgage Index

-

NA

-8.10%

6-Feb

10:30 AM

Crude Inventories

-

NA

5.947M

7-Feb

8:30 AM

Initial Claims

-

360K

368K

7-Feb

8:30 AM

Continuing Claims

-

3200K

3198K

7-Feb

8:30 AM

Productivity-Prel

-

-1.20%

2.90%

7-Feb

8:30 AM

Unit Labor Costs

-

2.40%

-1.90%

7-Feb

10:30 AM

Natural Gas Inventories

-

NA

-194 bcf

7-Feb

3:00 PM

Consumer Credit

-

$11.9B

$16.0B

8-Feb

8:30 AM

Trade Balance

-

-$45.4B

-$48.7B

8-Feb

10:00 AM

Wholesale Inventories

-

0.30%

0.60%

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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