Confidence in Housing Near All-Time High
The Fannie Mae Home Purchase Sentiment Index® (HPSI) increased 3.7 points in May to 92.0, just shy of the survey high set last May.
A 13-percentage point increase in the “Good Time to Buy” component drove the index higher. The net share of respondents expecting home prices to go up and mortgage rates to go down over the next 12 months also increased by 5 and 3 percentage points, respectively.
“Another sharp rebound in the ‘Good Time to Buy’ component lifted the HPSI nearer its survey high set during last year’s homebuying season, though several uncertainties remain,” said Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae. “While consumers’ more favorable mortgage rate outlook suggests continued support for housing affordability, potential homebuyers still face supply constraints.
What Happened to Rates Last Week?
|Mortgage backed securities (FNMA 4.00 MBS) gained +13 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to remain at very low levels.|
Overview: We had another round of “solid” domestic economic data with good readings in manufacturing and services. The Fed’s Beige Book was actually a smidge more upbeat than the last one. But we had a big miss in Friday’s Non Farm Payroll data although the Unemployment Rate remained near an all-time historical low with another reading of 3.6%. The driving factor in global interest rates was not economic data though, it was geo-political. British Prime Minister Theresa May stepped down on Friday and the markets continued to be concerned over a lenghty trade battle with China as well as looming tariffs with Mexico. This uncertainty caused a continued desire to park money into long bonds which continues to push mortgage rates far below where they otherwise would be.
Jobs, Jobs, Jobs: It’s Big Jobs Friday! You can read the official BLS report here.
ISM Services: The May reading was very robust, coming in at 56.9 vs est of 55.4. Any reading above 50.0 is expansionary and readings in the upper 50’s are very strong.
The Talking Fed: We got their latest Beige Book that is prepared in advance of their next FOMC Meeting this June. You can read the official Beige Book HERE.
Here are some key takeaways:
What to Watch Out For This Week:
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.