The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, rose 1.2% to 108.5 in November. Year-over-year contract signings jumped 7.4%. An index of 100 is equal to the level of contract activity in 2001.
“Despite the insufficient level of inventory, pending home contracts still increased in November,” said Lawrence Yun, NAR’s chief economist, noting that housing inventory has been in decline for six straight months dating back to June 2019. “The favorable conditions are expected throughout 2020 as well, but supply is not yet meeting the healthy demand.”
“Sale prices continue to rise, but I am hopeful that we will see price appreciation slow in 2020,” said Yun. “Builder confidence levels are high, so we just need housing supply to match and more home construction to take place in the coming year.”
The regional indices had mixed results in November. The Northeast PHSI slid 0.1% to 96.3 in November, 2.6% higher than a year ago. In the Midwest, the index rose 1.0% to 102.5 last month, 5.0% higher than in November 2018.
Pending home sales in the South decreased 0.2% to an index of 125.0 in November, a 7.7% increase from last November. The index in the West grew 5.5% in November 2019 to 98.4, an increase of 14.0% from a year ago.
What Happened to Rates Last Week?
Mortgage backed securities (FNMA 3.500 MBS) gained +18 basis point (BPS) from last Friday's close which caused fixed mortgage rates to move slightly lower compared to the prior week.
Overview: We had a holiday-shortened week with very little economic data to absorb and very few traders to absorb it. As usual, we saw a very small improvement in rates due to a compressed trading calendar as many traders simply "parked" some cash into the safe-haven of long bonds while they checked out for the week.
Taking it to the House: Weekly Mortgage Applications fell by -5.3%. Both Purchase Applications and Refinance Applications dropped by 5.0%. November New Home Sales showed an annual gain of 17% from this time last year (719K vs 615K). On a MOM basis it was up 1.3%.
Jobs, Jobs, Jobs: Initial Weekly Jobless Claims were lower than expected, 222K vs est of 224K. The more closely watched 4 week moving average is now 228K.
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.