Friday, August 23, 2013

Prices rise but not for long as interest rates climb ...

Home sales, prices rise – but for how long?

Couple stand next to a for-sale sign. © CorbisSales of existing homes rose in July to their highest level in three years, with year-over-year prices again showing double-digit increases.

The number of sales was 6.5% above June and 17.2% above the level in July 2012. If sales continue at the same pace, that would equal 5.39 million homes sold annually, according to figures from the National Association of Realtors.

Rising interest rates as well as rising prices are expected to tamp down both prices and the number of sales in coming months, as homes get less affordable. The shortage of homes for sale, particularly for first-time buyers, continues in many communities, too.

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"Mortgage interest rates are at the highest level in two years, pushing some buyers off the sidelines," Lawrence Yun, the NAR’s chief economist, said in a news release. "The initial rise in interest rates provided strong incentive for closing deals. However, further rate increases will diminish the pool of eligible buyers."

The national median home price, including single-family and condos, was $213,500. That’s 13.7%  above the national median price a year ago and only 7.3% below the peak of $230,400 in July 2006.

The number of homes for sale increased 5.6% from June, to 2.28 million, which is a 5.1-month supply at the current rate of sales. The number of homes for sale is 5% less than a year ago.

Distressed homes continued to make up a smaller percentage of sales, one of the factors that is driving up median prices, since foreclosures and short sales sell at a discount. In July, distressed homes were 15% of sales, down from 24% a year ago.

First-time buyers continued to play a smaller role in the market than they do in normal times, accounting for only 29% of sales, down from 34% a year ago. Investors made 16% of purchases, down from a peak of 22% in February.

All-cash sales continued to be a strong factor, making up 31% of the deals, up from 27% a year ago.

Looking at the numbers by region:

  • Northeast: Sales up 20.3% from July 2012, median price up 6.7%.

  • Midwest: Sales up 20.8% from July 2012, median price up 9.5%.

  • South: Sales up 16.6% from July 2012, median price up 13.6%.

  • West: Sales up 13.2% from July 2012,  median price up 19.2%.

    By Teresa at MSN Real Estate

Monday, August 12, 2013

The week ahead ...

Weekly Preview
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Bob Rosenbaum
The Rosenbaum Lending Group
Office: (703) 879-5200
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Monday, August 12, 2013
What Happened Last Week
Mortgage backed securities (MBS) gained +0 basis points from last Friday's close which caused 30 year fixed rates to move sideways. So, for the past two weeks, MBS have moved only +8BPS which have kept mortgage rates fairly steady.

Mortgage backed securities traded in a tight range and we avoided the major swings in pricing that we had in the prior week.

We had light week in terms of the number of economic releases that hit the market and reports that were released were a mixed-bag. ISM Services came in much stronger than expected (56.0 vs est of 53.0) but Wholesale Inventories disappointed (-0.2% vs est of +0.2%). Initial Weekly Jobless Claims were very close to market expectations (333K vs est of 336K).

So, the economic data didn't really drive our pricing last week. Instead it was Treasury auctions and Fed speak that were the major force in bond trades.

We had three major U.S. Treasury auctions with the market focusing on the 10 year note and 30 year bond.
Last week was all about the Fed and jobs. Both the 10 year and 30 year auctions came off weaker than their recent averages as measured by their bid-to-cover ratio but were still strong enough to keep MBS pricing up.

Talking Feds: We had six different speeches by different Federal Reserve members, but few of them were voting members. Essentially, they all said the same thing: 1) the Fed needs to cut back their monthly bond purchases of Treasuries and mortgage backed securities, 2) it will most likely happen in 2013, 3) they need to see more economic improvement from the second half of this year before they move to taper and 4) they would not give a specific date for the first taper.

The fact that there was no specific date for the Fed to begin tapering kept MBS at an elevated level which kept rates low.

What's on the agenda for this week?
Mortgage Rates Currently Trending: NEUTRAL
We have a big week for economic data...but it won't start until tomorrow. MBS are moving upward this morning on speculation over the German GDP data due out this week. We only have one economic report this afternoon with our U.S. Treasury budget, and we do not have any major U.S. Treasury auctions this week. The rest of the week is packed with data about inflation levels (PPI and CPI) - these are most likely going to continue to show very tame inflation levels on a month-over-month basis. Tuesday's Retail Sales report and Friday's Consumer Sentiment Index will be the biggest reports of the week.

Bottom Line: There may be some benefit to floating your interest rate and watching the market carefully. However, this is really a case by case decision and should be discussed with your Mortgage Professional. We are testing some technical resistance levels, and if we break above them it could benefit mortgage rates. If we bounce off of them though it could lead to rate deterioration very quickly. Monitor real time market data with your Mortgage Professional to stay a step ahead of lender reprices and to cash in on market gains that help mortgage rates.


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