Earlier in the week, Positive Economic data, such as the better than expected Jobs numbers, forced Mortgage Rates higher, as Bond Price continue to drop. The chart below shows how Bonds continue their down escalator pattern after peaking in price on November 18th, as noted in the chart below. Fed’s Lockhart says positive data justifies taper considerations. Lockhart says reasonable for market to expect Fed to wind down QE over coming year.
Mortgage Bond prices plunged early Friday morning after the better than expected November Jobs Data (203K vs 188K expected), but then rallied big throughout the session to close up 34bp to 103.75 and up 72bp from the session low. Stocks rallied on the positive news – the Dow closed at 16,020.20 up 198.69, the S&P 500 gained 20.06 to 1,805.09 while the Nasdaq rose by 29.35 points to 4,062.52. Oil was last seen at $97.71/barrel up 32 cents. Next week’s economic calendar is light, but the Treasury will be selling a total of $64B in Notes and Bonds. I recommend floating, not locking Mortgage Rates into the weekend.
Weekly Survey of Rates from the Mortgage Bankers Association
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.51 percent from 4.48 percent, with points increasing to 0.38 from 0.31 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.49 percent from 4.48 percent, with points increasing to 0.24 from 0.15 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 3.56 percent from 3.52 percent, with points increasing to 0.32 from 0.31 (including the origination fee) for 80 percent LTV loans.
Housing News
Are Home Sales Tanking
If you read some of the headlines about home sales over the last few weeks, you may believe that sales of houses in the U.S. are beginning to slow dramatically. There have been some that have used the recent Existing Home Sales Reports (EHSR) from the National Association of Realtors’ as proof of this supposition. We should be careful not to put too much credence in these reports of impeding doom.
It is true that the last EHSR revealed that sales were down 3.2% from the previous month. However, there are two crucial points that are not being addressed:
- Home Sales are up 6% over the same time last year.
- Part of the downturn in recent sales can be traced to the falling inventory of distressed property sales (foreclosures & short sales). Distressed homes accounted for 14% of October sales as compared to 25% in October 2012.
Bottom Line
Sales of non-distressed properties are increasing nicely. However, as the inventory of distressed properties continues to shrink, the number of overall properties sold may diminish over the next few months. This is a sign that we are entering a much healthier housing market.
Home Prices Rose by 12.5% from October 2012 to October 2013 and less than 1% Month over Month in October
CoreLogic(R) (NYSE: CLGX), a leading residential property information, analytics and services provider, today released its October CoreLogic Home Price Index (HPI(R) ) report. On a month-over-month basis, including distressed sales, home prices increased by only 0.2 percent in October 2013 compared to September 2013*. Year over year, home prices nationwide, including distressed sales, increased 12.5 percent in October 2013 compared to October 2012. This change represents the 20(th) consecutive monthly year-over-year increase in home prices nationally.
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October Home Sales Strongest in more than 33 Years
Sales of new U.S. single-family homes recorded their biggest increase in nearly 33-1/2 years in October, suggesting the housing market recovery remains intact despite higher mortgage rates. The Commerce Department said on Wednesday sales jumped 25.4 percent to a seasonally adjusted annual rate of 444,000 units. It also said new home sales fell 6.6 percent in September.
The release of both the September and October reports was delayed because of a 16-day partial shutdown of the government last month. Economists polled by Reuters had expected new home sales to set a 428,000-unit pace last month. Compared with October last year, new home sales were up 21.6 percent. The strong rise in new home sales, which are measured when contracts are signed, suggested higher mortgage rate had not derailed the housing market recovery.
Economic News
U.S. employers added 203,000 jobs in November, according to the Labor Department, with the unemployment rate at 7%. Economist were expecting the Bureau of Labor Statistics to report 180,000 new jobs created in November, down from an initially reported 204,000 in October.
Jobs- The private sector created 215,000 jobs in November. Economists expected ADP to report the private sector created 173,000 jobs, up from the 130,000 initially reported for October.
Employers plan to cut 45,314 jobs in November, down 0.9 percent from the previous month, according to a report from Challenger, Gray & Christmas.
The U.S. trade deficit narrowed to $40.6 billion in October. Economists had expected the trade deficit to narrow to $40 billion in October from $41.8 billion.
Jobless Claims – Weekly claims for state unemployment benefits fell to 298,000. Economists had expected initial claims to rise to 320,000.
U.S. gross domestic product (GDP) was up 3.6 percent in the third-quarter, compared with estimates of a 3 percent increase and compared with a prior reading of 2.8 percent.
Consumer Sentiment at 82.5 in early December, above the 75.1 expected.
The European Central Bank (ECB) left its benchmark interest rate unchanged at 0.25 percent after surprising markets with a rate cut last month.
The Bank of England maintains its key interest rate at 0.5 percent and leaves its asset purchase target unchanged at £375 billion.
Sources: CNBC, Bloomberg, Reuters, Housingwire, MMG, KCM, Wall St. Journal