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Archive for existing home sales report

Friday October 24, 2008

Mortgage bonds move below 200 day average.

It is really amazing how much the global money markets are intertwined.  Overnight, Japan’s stock market plummeted after lower than expected earnings were reported for Samsung and Sony.  That ripple effect moved over to Britain’s markets where the economy shrank for the first time since 1992, signaling a confirmed recession.  The combination of the foreign markets having a really bad day led the Dow Futures to halt trading before the open this morning.  Halting trading on Dow Futures is extremely rare, and a sure sign of volitility.

In normal market conditions, a selloff in stocks would mean money was moving into bonds, and would typically signal a good day for mortgage rates.  Today, however, because of the continued liquidity issues with the market, the rush seems to be towards cash for safety.  Mortgage bonds moved below the 200 day moving average which is generally a sign of long term trends.  If you have an active mortgage file that has not yet been locked, it would be prudent to do so today ahead of uncertain volitility and worsening rates.

Some good news came out today.  Existing homes sales soared to a 13 month high signaling a boost in the real estate market.  And, Oil was trading as low at $64 per barrel.  This is due in large part to the strenghening dollar as compared to other global currencies.  But, when you are at the pump getting gas for $1 less than 3 months ago, few people care why, they are just glad to see it.

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Pending Sales Reach Highest Levels Since July 2007

Pending sales report shows buyers may be finding the bottom in Real Estate

The Pending Home Sales Report, an index to reflect homes that are under contract but not yet closed, has risen to the highest level since last summer (up 7.4% over the previous month).  Does this mean we have hit bottom?  No one will know that until we have the advantage of hindsight and are able to see it on the charts.

But, one fact remains true.  Prices can only come down so far before those on the sidelines can no longer stand around and watch.  With nationwide housing prices at levels of 2003, it begs the question, how much farther down can we go?  Obviously there are other economic factors at play, and the economy is complicated and a little scary right now.  But, the foundation for the current down turn was the over-inflated real estate market, and clearing out the existing inventory is crutial to starting a broad recovery.  Another important reminder to sellers is that the majority of homes being sold are actually foreclosures.  If you have a home you would like to sell, but don’t need to sell, now is still not the time.

Stay tuned for more updates, and check out the latest mortgage rates at SteveRussellOnline.com.

Existing Home Sales Better Than Expected

Does today’s existing home sales report mean that we have finally hit bottom?

Existing home  sales for July came in at 5.0 million ahead of estimates at 4.9 million.  Despite this seemingly positive news, stocks are down today fueled by uncertainty with Fannie and Freddie, and traders are moving money into mortgage bonds searching for more security.

Mortgage bonds are currently up slightly today, and we can continue to watch bonds to determine where mortgage rates are going to go in the next 24 hours.  Over the last few days of trading last week, mortgage bonds broke through both the 25 day and the 50 day moving averages.  This could be a positive trend longer term if they can hold these levels.  Currently, bonds are trading in a sideways channel between the 50 day and 100 day moving average.  Today is probably a good day to float your rate pending any major movement.  If stocks start to recover, it would be prudent to lock your mortgage rate to hedge against pending corrections in the futures market.

A Good Day For The Mortgage Market

Bad news for Stocks means good news for Bonds.

After several days of the bond market getting severely pummelled, they are making a comeback today on some pretty nasty economic news.  First, jobless claims jumped to 406,000 last week.  This is much worse than expected, and the highest rate since March 2008.  Additionally, existing home sales were down, and inventory for existing homes was up.  Both of these combine to show that the economy and the housing market has yet to hit bottom (although I still believe that we are close).

On the stock market, Ford Motor Co. reported a loss of nearly $9 billion for the 2nd quarter.  This combined with a major bullish run on stocks over the last week has led investors taking profits and putting them over into bonds.  At the time of this post, mortgage bonds are up 34 basis points on the day.  They have moved decisively through one level of upside resistance, and are currently holding at a 2nd level of resistance.

This will help to recover some of the recent losses, but it may still be a good time to lock based on continued volitility in the markets before closing.

Thursday June 26, 2008

Mortgage Bonds have likely hit the ceiling today.

The FED came out with the results of their meeting yesterday, and as expected they did not move rates from their existing level of 2%.  This comes on the heels of 7 straight rate reductions in as many meetings.  There is increasing opinion that the next meeting will likely bring a rate hike with it to help strengthen the dollar and thwart off the rise in oil prices.

Mortgage bonds are trading slightly higher today, but they are up against a top side resistance level.  With the state of the stock market, and an upward correction looming, it is unlikely that mortgage bonds will break through that level of resistance.  In addition, since we already know that typically what is good for stocks is bad for bonds, if there is a rally in stocks in the coming days, you can place your bets on the fact that bonds will go through a sell off.  This means that mortgage rates will rise and it would be a good idea to lock in soon (or at least be prepared to lock in) to protect yourself from upward movement.

Existing Home Sales for May cam in at 4.9 million, in line with estimates.  This is a good sign for real estate because it shows some stability even though the market in general is slower than in recent past.  It is also an affirmation that regardless of the doom and gloom you may hear in the media, people are still buying houses.

Here in Pensacola Florida, even though we are statistically the poorest county in the state, we had the highest increase in average sales for the first quarter of 2008 out of 19 metropolitan areas surveyed.  We are also holding steady at 350 to 400 sales per month.  Not where we would like it to be, but not too shabby either.