New Home Sales Pop
|New Home Sales were much stronger than market expectations and consensus forecasts.
February sales jumped to an 11-month high as new home sales hit 667,000 units on an annualized pace, this was 4.9% higher than January’s pace and 0.6% from this time a year ago.
At the current sales rate, it would take 6.1 months to exhaust the available supply of homes. Over many decades, 6 months of supply has been the amount that’s generally considered a sign of a market evenly balanced between supply and demand. Inventory dropped 0.6 percent from revised January figures to 340,000, and rose 13.3 percent from a year earlier.
The median price of a home sold during the month was $315,300, which is up 3.8% from January. The Average Sales Price moved up to 379,000.
Lower mortgage rates, low employment and solid wage growth are all factors that are driving up sales for both Existing and New Homes.
What Happened to Rates Last Week?
|Mortgage backed securities (FNMA 4.00 MBS) lost just -2 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move sideways compared to the previous week, keeping the lowest rates of 2019 alive and well.
Overview: Mortgage rates remained at or near their lowest levels of 2019 as concerns over multiple failed votes on Brexit continued to keep money pouring into the safe-haven of U.S. bonds. That added demand for our debt pushes rates lower. We had very tame inflationary data (PCE) but very strong manufacturing, GDP and consumer sentiment which would normally be a factor in pushing rates higher.
Inflation Nation: The Fed’s Key measure of inflation, PCE (Personal Consumption Expenditures) YOY (Year-over-Year) Core (Ex-Food and Energy) was lighter than expected, coming in at 1.8% vs est of 1.9%. However, the prior month was revised upward from 1.9% to 2.0%, so really it was a match. The Headline PCE YOY matched expectations with a 1.4% increase and the prior month moved up from 1.7% to 1.8%. We had a big miss on Personal Spending which showed MOM increase of only 0.1% vs est of 0.3% and Personal Income hit 0.2% vs est of 0.3%
Manufacturing: The March reading for the bell-weather Chicago PMI was lighter than expected (58.7 vs est of 61.0). However, ANY reading above 55 is VERY robust growth.
Consumer Sentiment: The final reading of the University of Michigan’s Consumer Sentiment Index for March was revised upward from 97.8 to 98.4 which is the strongest reading since October.
GDP: We got the final revision to the 4th QTR GDP and it was revised lower from 2.6% to 2.2%, however 2.2% is exactly what the market was expecting. As the BEA notes, measured from the fourth quarter of 2017 to the fourth quarter of 2018, real GDP increased 3.0 percent during the period. That compared with to an increase of 2.5 percent during 2017.
|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.