William Mesch
William Mesch Sedona Real Estate We Sell Homes - Licensed in State of Arizona

Aaron Brandt's Rant

New Home Sales at 2-Year High:
The Commerce Department reported that sales of newly built homes rose much faster than expected in April, rising to their highest levels in nearly two years.  Sales jumped 14.8 percent (month-over-month) to an annualized rate of 504,000 units in April.  This is the highest rate since May of 2008.

The year-over-year increase was in excess of 22 percent.  Certainly, the rush to sign a contract prior to the tax credit expiring has had an impact.  But there is something else that it less temporary that is also having an impact.  Consistently low 30 year fixed rates, an increase in consumer confidence, and a rise in non-farm payrolls are helping to fuel demand for housing.  And unlike the tax credit, these items will not expire but continue to move upward.

The report also showed that inventories of new homes for sale fell a record seven percent to 211,000 units in April.  That is the lowest level of inventories since October 1968!  Lower inventories will eventually lead to further price stabilization.

Consumer Sentiment Rises:

The Thomson Reuters/University of Michigan's report showed that consumer sentiment rose again in May.  The final May reading on the overall index was 73.6, up from April's reading of 72.2.

Consumer Spending drives 70 percent of our economy, so an increase in consumer sentiment readings could be good for economic growth in the near-term.  Also, both consumer sentiment and consumer confidence are significant drivers for housing demand.  Simply put, consumers are more likely to purchase a home if they feel more confident about their own financial outlook.

What Happened to Rates Last Week:


Mortgage backed securities (MBS) lost -69 basis points last week which caused 30 year fixed rates to increase for both government and conventional loans.  The prior week, they were at their best levels of 2010.  MBS pricing decreased (which causes mortgage rates to go up) due primarily to a rebound in the stock markets which pulled some money way from bonds.  We also saw some strong economic data such as the Chicago PMI, Consumer Sentiment and Initial Jobless Claims.  As the economy shows sign of expansion, it takes a toll on long bonds such as mortgage backed securities.  However, mortgage rates remained at fantastic levels.

What to Watch Out For This Week:
The following are the major economic reports that will hit the market this week.  They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages.  I will be watching these reports closely for you and let you know if there are any big surprises:

 

Date

 

 

ET

 

 

Release

 

 

For

 

 

1-Jun

 

 

10:00

 

 

Construction Spending

 

 

Apr

 

 

1-Jun

 

 

10:00

 

 

ISM Index

 

 

May

 

 

2-Jun

 

 

10:00

 

 

Pending Home Sales

 

 

Apr

 

 

2-Jun

 

 

10:30

 

 

Crude Inventories

 

 

29-May

 

 

2-Jun

 

 

14:00

 

 

Auto Sales

 

 

May

 

 

2-Jun

 

 

14:00

 

 

Truck Sales

 

 

May

 

 

3-Jun

 

 

8:15

 

 

ADP Employment Change

 

 

May

 

 

3-Jun

 

 

8:30

 

 

Productivity-Rev.

 

 

Q1

 

 

3-Jun

 

 

8:30

 

 

Unit Labor Costs

 

 

Q1

 

 

3-Jun

 

 

8:30

 

 

Initial Claims

 

 

29-May

 

 

3-Jun

 

 

8:30

 

 

Continuing Claims

 

 

29-May

 

 

3-Jun

 

 

10:00

 

 

Factory Orders

 

 

Apr

 

 

3-Jun

 

 

10:00

 

 

ISM Services

 

 

May

 

 

4-Jun

 

 

8:30

 

 

Nonfarm Payrolls

 

 

May

 

 

4-Jun

 

 

8:30

 

 

Unemployment Rate

 

 

May

 

 

4-Jun

 

 

8:30

 

 

Hourly Earnings

 

 

May

 

 

4-Jun

 

 

8:30

 

 

Average Workweek

 

 

May

 

 


As always, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.  Call anytime for an update: 928.301.3319.

 


Sedona Real Estate by Bill Mesch, Desert Dwellers Realty


Agent is Licensed to Sell Real Estate in the State of Arizona

Equal Housing Opportunity / REALTOR MLS

Desert Dwellers Realty, LLC
Sedona/Verde Valley Branch
2185 W. Trail Blazer Dr.
Cottonwood, AZ 86326

928 649-9888

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