Pending home sales rebounded strongly in January, according to the National Association of Realtors®. All four major regions saw growth last month, including the largest surge in the South.
Source: National Association of Realtors
What Happened to Rates Last Week?
Mortgage backed securities (FNMA 4.00 MBS) lost -33 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move higher compared to the previous week.
GDP: We finally got the Preliminary (will be revised several times) GDP report for the 4th QTR which was delayed due to the government shutdown and it came in much better than expected with a solid growth rate of 2.6% vs estimates in the 1.8% to 2.3% range. 4th QTR 2017 to 4th QTR 2018 is now 3.1% and the calendar year is at 2.9%. Either way you slice it, its a solid 3.0% growth rate for 2018.
Inflation Nation: The Fed's primary measure of inflation was released and it remained just a smidge below their 2% target rate with a reading of 1.9%. The December Personal Income was more than double the market estimates (1.0% vs est of 0.4%). Personal Spending for December was -0.5% vs est of 0.3%. No one believes that number as it coincides with the same department that released the awful Retail Sales report for that same period which has been proven to be wrong by every possible metric available.
Taking it to the House: Weekly Mortgage Applications increased by 5.3%. Purchase applications were up 6.0% and Refinances were up 5.0%. January Pending Home Sales were much better than expected with a nice gain of 4.6% vs est of only 0.4%.
The Talking Fed: Fed Chair Powell gave his semi-annual monetary report to the Senate and House committees on Tuesday and Wednesday. There were really no surprises as the Fed Chair basically reminded everyone that we are at or near full employment and are at nor near their target interest rate and that the economy is growing at a moderate pace. The only two points that he made that were interesting (but did not move bond prices) were:
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.