Mortgage Market Guide: The Ups and Downs of Home Sales
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Mortgage Market Guide: The Ups and Downs of Home Sales
|In This Issue|
Last Week in Review: Home sales had their share of ups and downs in June.
Forecast for the Week: We’ll take the temperature on July job creation.
View: Make scheduling a snap with these apps.
Last Week in Review
New Home Sales were a bright spot, edging higher in June. The Commerce Department reported New Home Sales rose a modest 0.8 percent from May to an annual rate of 610,000 units, which was in line with estimates. From June 2016 to June 2017, New Home Sales rose 9.1 percent.
Existing Home Sales slipped, though, falling 1.8 percent from May to June to an annual rate of 5.52 million units, below the 5.58 million expected. The National Association of REALTORS® (NAR) said sales were up only 0.7 percent year over year, the second lowest reading of 2017. The NAR explained that the decline in sales is due in part to the ongoing theme: a low supply of homes for sale on the market. Total housing inventory was at a 4.3-month supply at the June sales pace and has fallen year over year for 25 consecutive months. Normal inventory levels are around six months.
Home price gains remain steady as demand for homes continues to outweigh supply in many key areas across the nation. The May S&P/Case-Shiller 20-City Index rose 5.7 percent year over year, in line with estimates and just below the 5.8 percent in April.
In other news, the first estimate of second quarter Gross Domestic Product (GDP) was solid, increasing at a rate of 2.6 percent, the Bureau of Economic Analysis reported. Consumer spending, which accounts for two-thirds of our nation’s economic activity, fueled the increase. First quarter GDP was revised lower, increasing 1.2 percent rather than the 1.4 previously reported.
Finally, the Federal Reserve released a rather dovish monetary policy statement following its Federal Open Market Committee meeting. As expected, the benchmark Federal Funds Rate remained unchanged. The Fed noted it expects inflation to remain tame for some time, which is typically good news for Mortgage Bonds and the home loan rates tied to them.
At this time, home loan rates remain just above historic lows.
Forecast for the Week
Here’s hoping July’s job growth was hot like June. We’ll find out on Friday.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.
To go one step further, a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.
As you can see in the chart below, Mortgage Bonds traded in a sideways pattern in recent days while home loan rates remain near historic lows.
Chart: Fannie Mae 3.5% Mortgage Bond (Friday Jul 28, 2017)
The Mortgage Market Guide View…
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Economic Calendar for the Week of July 31 – August 04
The Christian Penner Mortgage Team,
Buyer Referral Hotline : (561) 316-6800
Or You can click "Call Me" below to call Christian Penner directly using Google Voice
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