Sales of newly built homes rose in November according to the U.S. Census Bureau and Department of Housing and Urban Development (HUD).
New home sales increased by 1.3% from October for an seasonally adjusted annual rate of 719,000. Last year, this was much lower at 615,000, so this is a large annual gain.
The median sales price of new houses sold in November increased to $330,800. The average sales price increased to $388,200.
Supply is still tight though with only a 5.4 month supply of newly constructed homes on the market.
What Happened to Rates Last Week?
Mortgage backed securities (FNMA 3.500 MBS) lost -17 basis point (BPS) from last Friday’s close which caused fixed mortgage rates to move upward compared to the prior week.
Overview: We had a very solid week for economic data with real strength in labor and housing which pressured rates higher. Across the board, the major Central Banks (China, Japan, England) all left their key interest rates alone and did not announce any new policy.
GDP: The 3rd Quarter Gross Domestic Product was released (yet again) and it remained at its previously revised rate of growth of 2.1%.
Inflation Nation: The Fed’s key measure of inflation, the Personal Consumption Expenditures ex-Food and Energy on a YOY basis, came in at 1.6% vs est of 1.6%. But the headline PCE YOY was higher than expected – 1.5% vs est of 1.3%. Personal Income MOM was 0.5% vs est of 0.3% and Personal Spending came in at 0.4% vs est of 0.4%
Consumer Sentiment: The final reading for December’s UofM Consumer Sentiment Index was revised to 99.3 vs est of 99.2.
Taking it to the House: November Existing Home Sales set a couple of November records. The median home price was $271,300 which is the highest price on record and months of available inventory hit 3.7 months which is the lowest on record. The total unit sales hit 5.35M which was lighter than expectations of 5.44M, but there was simply not enough inventory to support further sales gains. Weekly Mortgage Applications pulled back by -5.0%. Refinances fell by -7.0% and Purchase Applications weakened by -2.0%. pulled back by -5.0%. Refinances fell by -7.0% and Purchase Applications weakened by -2.0%. November Building Permits were much better than expected (1.482M vs est of 1.410M). When you look at the SFR permits, they were up 0.8% to a rate of 918K units. New Housing Starts increased by 1.365M vs est of 1.345M. Again, SFR are looking better by gaining 2.4% for a rate of 938K units. increased by 1.365M vs est of 1.345M. Again, SFR are looking better by gaining 2.4% for a rate of 938K units. The December NAHB Sentiment Index reached a 20 year high with a reading of 76.
Jobs, Jobs, Jobs: Yet another very strong labor report. The October Job Openings and Labor Turnover Survey (JOLTS) once again showed well over 7M unfilled jobs and beat out market expectations (7.267M vs est of 7.018M).
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.
