College football season is getting closer and one of the biggest rivalries in sports has moved on to the housing market as Columbus has cracked the top 10 housing market list according to Realtor.com. Columbus, home to Ohio State, came in at number 10.
But Ann Arbor, home of the University of Michigan, came in at number 9.
Realtor.com based the list on how quickly homes sell and how frequently listings are searched in those cities. Ann Arbor and Columbus were the only Midwest cities in the Top 10, which was dominated by California markets, led by No. 1 San Francisco.
The Top 20 hottest markets included three other Midwest cities: Lafayette and Fort Wayne, Ind.; and Sioux City, Iowa.
“The Midwest region is representative of the status of the broader U.S. recovery,” said Jonathan Smoke, chief economist of Realtor.com. “When Columbus, Ohio, is the 10th hottest market in the country, you know the Midwest – and the U.S. overall – is back and doing well.”
What Happened to Rates Last Week?
Mortgage backed securities (FNMA 3.00 MBS) gained +34 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move slightly lower from the prior week. It was our second straight week of improvement.
The two biggest event of the week was the big Jobs report on Friday.
Jobs, Jobs, Jobs: The media went bananas over the headline Non-Farm Payroll report that came in short of expectations (160K vs est of 200K). But long bonds (specifically mortgage backed securities) did not improve on that headline, instead they sold off (which is bad for rates).
That is because long bonds focused more on the Average Hourly Wages which increased 0.3% on a month-over-month basis and is up 2.5% on a year-over-year basis. The later was much stronger than expected and shows real wage inflation. While the Fed isn’t seeing their core PCE inflation of 2.0% yet, we are certainly seeing it in the jobs sector.
While the April NFP reading was lighter than expected (lead by a continued drop in mining and energy), it will be revised two more times and likely to revised upward. The average for the past three months is still above 200K.
The Unemployment Rate remained unchanged at 5.00% even though the participation rate dropped a tad.
ISM Non-Manufacturing: This is most important report of the day. The services sector showed some real strength with a reading of 55.7 which was a full point higher than market expectations. Anything above 50 is expansionary and this reading above 55 is robust for the 80% of our economy that it covers.
The Talking Fed:
S.F. Fed President John Williams said in an interview that he would support a rate hike in June if the economic data continued to show growth.
Atlanta Fed President Dennis Lockhart said: “Two rate hikes are certainly possible. We have enough (Fed policy) meetings remaining but it depends entirely on how the economy evolves,”.
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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