Home Prices Jump, Time on Market Falls:
The median home price jumped 13.5% from this time last year to $214,200. This marks 16 consecutive months of year-over-year price increases, which last occurred from February 2005 to May 2006.
The National Association of Realtors released their Existing Home Sales report for June this morning and it also showed that sales of previously owned homes increased 15.2% from June 2012. On a month-over-month basis, sales slipped 1.2%.
Time on market decreases: The median time on market for all homes was 37 days in June, down from 41 days in May, and is 47 percent faster than the 70 days on market in June 2012. Forty-seven percent of all homes sold in June were on the market for less than a month.
First-time buyers accounted for 29 percent of purchases in June, compared with 28 percent in May and 32 percent in June 2012.
With homes on the market for fewer days and home prices increasing, now is the time to buy your next home before interest rates and home prices increase further.
Last Week's Mortgage Rate Recap
Last week Mortgage Backed Securities (MBS) gained +131 basis points from last Friday's close which caused 30 year fixed rates to move lower. This marks the second straight week of over +100 BPS gains in the benchmark mortgage backed security and therefore, lower mortgage rates.
We started the week off with a rally as MBS climbed off of their lows after Retail Sales came in much lower than market expectations. Bonds generally rally (better rates for you) on weaker economic data.
But it was another week that focused on Fed Chairman Ben Bernanke. Bernanke testified before the House and Senate last week as part of his semi-annual monetary policy report. As we have been discussing for some time, traders are very focused on the timing of when the Federal Reserve will begin to reduce the amount of monthly Treasury and MBS bond purchases. MBS rallied as traders speculated that Bernanke's most recent comments pointed to the Fed waiting longer to "taper" their monthly purchases. The prior speculation was that this tapering would begin in September.
The change in trader sentiment is due to Bernanke's comments that tapering will occur once the economic data (with particular focus on the labor market) shows enough of an improvement and traders currently do not perceive that there is enough economic improvement yet and so, their projections on the timing of the tapering is shifting for later down the road. Of course, this sentiment among traders could change next week.
This Week's Mortgage Rates Forecast
Mortgage Rates Currently Trending: NEUTRAL
This week the economic data takes center stage as traders look to see if the economy is slowing and if the Fed will have to hold back on tapering off of QE3. Monday, Tuesday, and Friday are slower news days this week with the lion's share of the economic releases occurring on Wednesday and Thursday - so look for the most volatility in the middle of the week. It should be noted that this is the first week that will not feature Bernanke in the economic reports. The biggest reports of the week will be the Initial Jobless Claims and Durable Goods Orders, both on Thursday, and could be market movers.
BOTTOM LINE: Things are neutral to start the week, but the opportunity for fireworks exists on Wednesday and Thursday. Be sure to stay tuned to live 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. Be prepared for any negative market performance that could push mortgage rates higher.