Last week's housing market data centered on Standard & Poor's S&P/Case-Shiller Home Price Index. This showed home prices UP in July for the fourth month in a row, but the pace of their gain had slowed from prior months. With the expiration of the government's home buyer tax incentives, some observers wonder if the S&P/Case-Shiller will keep moving up. The composite 20-city index, a broad measure of U.S. home prices, showed a 3.2% increase year over year, the sixth month in a row it posted an annual gain.
The economic environment for Austin mortgage rates was little changed this week. Weaker than expected economic data and continued low inflation supported low Austin mortgage rates, and investor demand for bonds remained high. As a result, Austin mortgage rates again ended the week a little lower.
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.
Global economic news influenced United States mortgage markets this week. While the domestic data released during the week was mixed, an improved economic outlook in many other countries was unfavorable for bond markets. As a result, Austin mortgage rates ended the week a little higher.
This week, uncertainty about the pace of the economic recovery caused investors to shift to relatively safer assets, including government insured mortgage-backed securities (MBS). Also positive for mortgage markets, the economic data released this week showed that inflation remains extremely low. As a result, mortgage rates declined during the week, reaching the lowest levels of the year.
Bond prices rose yesterday as stocks suffered another beating. The Dow and bond yields both closed at their lowest levels in a month. Stocks were reacting, in part, to President Obama's renewed focus on reigning in big banks.
Overall, we like the market if for no other reason that investor fear will keep a bid in treasuries which in turn will support mortgage backed securities
Overall, we like the market if for no other reason that investor fear will keep a bid in treasuries which in turn will support mortgage backed securities. Just remember that directional changes can be like playing “crack the whip.” Most probably outcome will be a triangle formation on the 10 year note chart, keeping mortgage pricing in a fairly tight range until the new year.
While daily volatility was high this week, Austin mortgage rates ended just slightly lower than last week. The primary factors influencing Austin mortgage rates were offsetting. The economic growth data released this week was stronger than expected, but inflation remained low. While the first two Treasury auctions produced impressive results, the final one was relatively weak.
If you were holding your breath, it’s ok to exhale. [...]