Home Prices Rise for Fourth Straight Month:
Home prices rose for the fourth month in a row in May, suggesting the recovery in the housing market continued to gain traction.
The S&P/Case-Shiller composite index of 20 metropolitan areas gained 0.9 percent in May from April on a seasonally adjusted basis, topping economists' expectations for a 0.5 percent gain.
On a non-seasonally adjusted basis, prices fared even better, jumping 2.2 percent. Compared to a year ago, price declines moderated to slip 0.7 percent, the smallest drop since the last time year-over-year prices rose in September 2010.
The housing market, which collapsed during the 2007-2009 recession, has been a relative bright spot in the economy this year. Mortgage rates continue to hover near all-time lows, Consumer Confidence is up and many Realtors are reporting a shortage of supply as home inventory levels continue to fall. All of these factors point towards some positive momentum in the housing sector.
What Happened to Rates Last Week?
Mortgage backed securities (MBS) lost -7 basis points from last Friday to the prior Friday which caused 30 year fixed mortgage rates to move higher.
We had our highest mortgage rates on Friday and our lowest on Thursday.
It was the week of inaction as both the U.S. Federal Reserve and European Central Bank announced no new measures to support their respective economies.
We did have a major reversal from Thursday morning to to Friday morning.
Thursday morning mortgage backed securities shot up (giving you lower mortgage rates which move in the opposite direction) on market speculation that the President of the European Central Bank would announce some new programs such as more bond purchasing from troubled countries like Spain and Italy. However, he delivered a big goose egg and did not announce any new programs at that time. This caused MBS to reverse course and sell off (causing mortgage rates to rise). (Any seemingly insignificant data can move rates these days-Hal)
MBS sold off further on Friday's Non-Farm Payroll data. While the Unemployment rate tick upward from 8.2% to 8.3%, the Non-Farm Payroll data showed that the private sector grew at a much better than expected 163K. This much better than expected U.S. economic news caused mortgage rates to rise on inflation concerns.
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Embrace Home Loans
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Fairfax, VA 22030