Spring has officially sprung, but the spring housing market started about a month ago, according to most real estate agents. With the supply of homes for sale not even close to demand, competition has been fierce, and that is changing the rules of the real estate road. Yes, it’s a seller’s market, but not all homes sell quickly, especially if they’re not priced right and if the timing isn’t right.
When is the best time to sell? That depends on whom you ask.
“It’s early May, and the reason is because inventory being so tight, a lot of homebuyers are having to put in multiple offers. That is extending the length of the homebuying season, such that a lot of times later on in the season people are more eager to buy the house because they have been frustrated with earlier offers, and they are paying a little bit more money,” said Stan Humphries, chief economist at Zillow Group.
There are 9 percent fewer homes this buying season compared with a year ago, so listing in early May results in you selling your house about 18 days faster and for about 1 percent more than you would get otherwise, according to Zillow.
In other words, Zillow expects a buyer-desperation factor come May that will result in buyers paying more. Back in 2011 and 2012, when there was less buyer competition, March was best for sellers. Zillow then looked at the last two years, when competition was hotter and found May was better in 18 of the largest 25 metropolitan housing markets.
“In most markets right now we are seeing the conventional way of buying to have shifted really to staging for multiple offers, which is a huge shift from where we were just three-four years ago,” Humphries said.
What Happened to Rates Last Week?
Mortgage backed securities (FNMA 3.00 MBS) lost -29 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move higher from the prior week.
So far for the month of March, our benchmark FNMA 3.0 April coupon is down -81 basis points which is the direct driver for our higher rates this month.
We had a holiday-shortened trading session in the long-bond market with Friday’s close for Good Friday.
GDP: 4th QTR GDP ( 3rd release) came in at 1.4% vs est of 1.0%. This is a much stronger revision than expected as four tenths on an economy our size is huge.
Manufacturing: With all of the better than expected regional manufacturing reports, its a disappointment that Durable Goods Orders were so weak. The Headline number for Feb was -2.8% vs est of -2.9% – so a little better than expectations (really less-worse), but when strip out the big volatile Transportation sector, it was much weaker than expected (-1.0% vs est of -0.2%). Plus, January’s robust readings were revised lower.
Jobs, Jobs, Jobs: Initial Weekly Claims were a smidge lower than expectations (265K vs est of 268K). The more closely watched 4 week moving average dropped below 260K(259.75) which is an extremely low trend line and a positive for the labor market and our economy.
The Talking Fed:
We had several speeches last week and even though most of them were from non-voting members, the overall theme was that sentiment among the Federal Reserve Presidents seems much more “hawkish” (rate tightening) that previously thought.
Chicago Fed President Charles Evans said in a speech in Chicago that he sees strong economic growth and that the Fed is in a “wait and see” course and should act once they see the economy on a “path” to 2% inflation. MBS sold off on this for two reasons: 1) He is usually considered very “dovish” but these were “hawkish” comments and 2) The specification of a “path towards 2%” inflation is not the same as seeing 2% inflation, i.e. the Fed can act sooner.
St. Louis Fed President James Bullard said “The relatively minor downgrades… suggest that the next rate increase may not be far off provided that the economy evolves as expected,” as he has switched to a more hawkish tone from last month.
Philadelphia Fed President Patrick Harker, said that while he supported March’s decision by his colleagues to leave policy unchanged, “there is a strong case that we need to continue to raise rates.”
“I think we need to get on with it,” said Harker, and “This economy is really quite resilient to a lot of the headwinds (including the strong dollar), so if that continues I would be supportive of another 25 basis point rise.”
What to Watch Out For This Week:
The above 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. I will be watching these reports closely for you and let you know if there are any big surprises.
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.
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