Bright Spots in Housing:
Is a perfect storm brewing for housing? Last week we saw record low fixed interest rates, an increase in home prices, an increase in housing starts, an increase in Home Builder Confidence and a decrease in housing inventory available for sale. This provides a much brighter picture in housing.
Home Prices Rise: According to the National Association of Realtors , the median home price rose 5 percent to $189,400 in June. Prices are rising because there are fewer homes for sale. The inventory of unsold homes fell to 2.39 million. It would take six and a half months to exhaust the supply at the current sales pace. That’s just above the six months that economists consider healthy. Also, Existing Home Sales saw a year-over-year increase of 4.5% even after a pull back in the month-over-month data.
A separate report from the Federal Reserve Wednesday found that home sales improved in all 12 of the bank’s districts in June and early July.
New Construction Improves: Builders broke ground last month on the most new homes and apartments in four years. And the number of new single-family homes, the bulk of the market, rose for the fourth straight month to the highest level since March 2010.
More Americans are showing interest in buying homes, boosting builder confidence. The National Association of Home Builders/Wells Fargo builder sentiment index jumped to 35 this month, its highest level in five years. Builders said they are seeing more traffic from prospective customers.
What Happened to Rates Last Week?
Mortgage backed securities (MBS) gained 39 basis points from last Friday to the prior Friday which caused 30 year fixed mortgage rates to move lower.
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.
We will be watching these reports closely for you and let you know if there are any big surprises: