Given the economic backdrop (high unemployment, etc.) we feel this move is close to a bottom. Trouble is, picking bottoms are like catching falling knifes, hard to do without some pain. Best bet for Austin mortgage borrowers is to use the float down option ("option to lower your interest rate one time") to guard against a reversal (rally).
Given that we are at the best levels in a month, your timing couldn’t be better in front of such a high profile release. We’ll preview the Employment Report early this afternoon.
Last week's big rush of housing news began on Monday with Existing Home Sales for September UP 10% from the month before. The annual rate hit 4.53 million. This was the second straight monthly gain after July's record low following the expiration of the tax credits. The national median price for existing homes is now at $171,700, down 2.4% from a year ago. Unsold inventory dropped 1.9% from the prior month to a 10.7 months' supply.
Call the market neutral/bearish with good support nearby. As we have preached all week, defense is your friend, Austin mortgage borrowers, and the exclusive float down option from Max Leaman is a no brainer.
Fannie Mae released a housing survey showing 70% of those polled in June and July feel now is a good time to buy a home. This is up from a 64% reading in January. At the same time, 83% of those people surveyed think it's a bad time to sell, which isn't such a terrible thing, since there's still plenty of inventory for buyers to choose from.
Given the auction paper to digest and the soft economic background, we expect the market to trade in a small range with a bullish bias, allowing for Austin mortgage pricing to be slightly better or worse from today’s levels over the next week or so.
Yesterday, post-release we saw a quick spike in our market (rally) and then the market backed off. FOMC made the statement to reinvest payments from MBS/Treasury into Treasury purchases, continuing to accommodate low interest rates.
Tuesday we had Pending Homes Sales, which after dropping 30% in May, fell just 2.6% in June, with the push to qualify for the tax credit no longer a factor. These figures indicate there should be a drop in Existing Home Sales come July and maybe again in August. But some analysts feel that after this post-tax-credit dip, housing will come back solidly, just like auto sales did after "cash for clunkers" expired last year.
Fed Governor Fisher (Texas) comments about no need for further asset purchases but with a slowing second half of the year in his forecast, low inflation and a weak economy seem to be in play. This follows the Fed thinking and projects a low Austin mortgage interest rate environment until sustainable employment growth materializes.
Last week May existing home sales came in UP 19.2% over a year ago. Nonetheless, after beating expectations three months in a row, monthly sales fell short of the gain expected, off 2.2%. But the months' supply of existing homes dropped from 8.4 to 8.3 months, as inventory slid to 3.89 million homes. And the median price is rebounding, UP 2.7% over last year. Finally, the April FHFA home price index was UP 0.8% for homes financed with conforming mortgages.
