Home Builders Optimistic this Spring

A survey of confidence among American home builders fell in April but remains optimistic headed into the spring, new data showed today.

The National Association of Home Builders said its housing-market index fell by three points to 68 in April. The index reached 71 in March, its strongest reading since June 2005.

In today’s report, the trade group’s chief economist, Robert Dietz, said “there is continued demand for new construction,” but “builders are facing several challenges” including “hefty regulatory costs and ongoing increases in building material prices.”

“Even with this month’s modest drop, builder confidence is on very firm ground, and builders are reporting strong interest among potential home buyers,” NAHB Chairman Granger MacDonald added in a statement.

All three of the index’s components reported losses in April but are maintaining healthy levels. The components gauging current sales conditions fell three points to 74, while the index charting sales expectations over the next six months dropped three points to 75. Lastly, the component measuring buyer traffic fell one point to 52.

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.50 MBS) gained +56 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move lower from the prior week.

We had a holiday-shortened week with really only three full trading sessions as the bond market closed early on Thursday.  The name of the game last week was Fear.

Geo-political events and concern drove cash into the safety of U.S. bonds last week and that swell of demand was the primary driver for pushing mortgage rates down.

France:  Presidential debates and polling data continue to show three front runners.  The problem is that two of those are very vocal about France leaving the European Union.  In short, investors overseas are unsure how the election will pan out and if there will be a “Frexit” similar to the “Brexit” which is ongoing with Great Brittan.  This would obviously cause a great deal of instability to the European union.

Russia: Tensions have been rising for months for a variety of reasons but the recent air strike by the U.S. on a Syrian air base has Russia sending more defensive missiles and ships to the region.

North Korea:  This impacts bonds on many fronts.  Certainly, the escalating “saber ratting” by the North Koreans and the seemingly endless missile tests are of concern but more so is the relationship between the U.S. and China as we try to press them to handle North Korea while at the same time, hammer out important trade agreements.

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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Taff Weinstein
Office: 832-794-2136
Cell: 832-794-2136

First Imperial Mortgage
3409 Morrison St
Houston, TX 77009
NMLS 225846


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