Brentwood TN Real Estate
Mortgage bond prices fell last week driving mortgage interest rates substantially higher. The economic data released during the week was mixed. Unfortunately, the Producer Price Index (PPI) report's headline number was twice as high as expected igniting inflationary fears. Stocks bounced up and down, which resulted in continued whipsaw trading in mortgage bonds.
For the week, interest rates on government and conventional loans rose by about 1/2% in interest rate.
The durable goods orders data to be released Wednesday will be the most important event this week. The remaining releases may result in market volatility more so than usual since this is the last full week of data heading into the next Fed meeting.
Economic Indicator Release Date Time Consensus Estimate Analysis
5-year Treasury Note Auction Tuesday, April 22, 2008 None Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Existing Home Sales Wednesday, April 23, 2008 Down 1.6% Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.
Durable Goods Orders Thursday, April 24, 2008 Up 0.1% Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
New Home Sales Thursday, April 24, 2008 Down 0.8% Important. An indication of economic strength and credit demand. A decrease may lead to lower rates.
U of Michigan Consumer Sentiment Friday, April 25, 2008 64.2 Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.
New Home Sales
New Home Sales data is compiled monthly by the Department of Commerce's Census Bureau and is gathered from builders throughout the country. The data represents new home sales for the nation as well as four areas of the country: the Northeast, the Midwest, the South, and the West. Information on the average price of a home, the number of homes for sale, and the supply of unsold homes are also provided. The data is an important indicator because it shows any strength or weakness in the housing sector. The housing sector data is valuable because when consumer spending changes, it appears in this sector first. Consequently, a chain reaction typically occurs. A slowdown in new home sales tends to lead to a slowdown in housing starts, which will continue to affect other indicators possibly resulting in a recession, as has been the recent concern of most everyone.
New Home Sales data is often volatile and difficult to predict. Most analysts look at a three-month average in order to see any trends in the growth rate. Surges in the release are often greeted with little more than an average reaction in the bond market. However, the data remains significant in showing the condition of the housing sector of the economy. The housing sector had been a bright spot of the economy in years past but as of late has been a major disappointment. The tightening of the credit markets has really put a damper on housing in general.
If interest rates rise, further weakness could be placed on new home sales. However, if interest rates remain steady, new home sales may be able to stabilize.
The risks of floating far outweigh the potential benefits. Therefore, a cautious approach is necessary to protect against short-term movements in mortgage interest rates. Now is a great time to take advantage of mortgage interest rates at their relatively favorable levels.*Information courtesy Tonya Esquibel WR Starkey Mortgage, Franklin TN*
Brentwood TN Real Estate