Mortgage markets improved last week on a bevy of economic and geopolitical news. Conforming mortgage rates in Chicago improved, falling to their lowest levels of 2011.
It's a welcome development for home buyers and rate shoppers nationwide. Mortgage rates were expected to rise throughout most of this year.
There were four big stories that contributed to falling rates last week.
The first was the news that Osama bin Laden was killed. The news was announced over the weekend, and by the time markets opened Monday morning, the price of oil was already falling. Falling oil prices reduce inflationary pressures on the economy and because inflation contributes to rising mortgage rates, the absence of inflation helps them to fall.
This news carried markets to Thursday morning. That's when the Department of Labor announced that Initial Jobless Claims had suddenly and unexpectedly surged to an 8-month high. Last week's report featured the biggest one-week jump in claims in more than 2 years.
This, too, pushed mortgage rates lower, casting doubt on the strength of the U.S. economic recovery.
Then, Friday morning, those doubts were cast aside. When the government released its Non-Farm Payrolls report for April, it showed job creation topping 200,000 for the third straight month. We would have expected mortgage rates to rise on news like this, but they didn't.
Rates fell instead -- mostly because the strength of the U.S. jobs report rendered mortgage-backed bonds more attractive to global investors.
The last story, though, is the one worth watching long-term.
Late-Friday, in response to its growing debt issues, it was reported that Greece may withdraw from the Eurozone. An outcome such as this is unlikely, however, the possibility was enough to spark a flight-to-quality that benefited U.S. mortgage rates. Conforming and FHA rates ended Friday lower, reaching their best levels since December.
This week, there isn't much economic news set for release so the above stories will continue to influence markets and rates. Geopolitics can change quickly, though, so if you're floating a mortgage rate and waiting for the bottom, don't wait too long. Markets can reverse in a snap.
If you see a rate you like, the safest move is to lock it.
After posting an all-time low in February, New Home Sales rebounded strongly last month.
Based on joint research from the Census Bureau and HUD, 300,000 new, single-family homes were sold on a seasonally-adjusted, annualized basis in March. It's an 11 percent improvement from February, and right in-line with the 6-month average.
The supply of available new homes improved, too, in March, falling by close to a full month.
At the current pace of sales, the entire new home housing stock would be sold in 7.3 months. This is the second-best reading in a year, a statistic partially-supported by the relatively small number of new homes on the market.
There are now just 183,000 new homes available for sale across Orland Park and the country. That's the smallest reading since the Census Bureau started to keep New Home Sales records beginning in 1995.
However, it should be noted that the March New Home Sales data is suspect. The reading's margin of error exceeds it actual measurement by almost double. It's possible that sales volume fell in March instead of rising, therefore. The Census Bureau says as much in its footnotes:
The change [in new home sales] is not statistically significant; that is, it is uncertain whether there was an increase or decrease [in March 2011].
We won't know for certain until future data revisions are made.
If you're a home buyer in Beverly , though, and want to stay ahead of the market, you won't want to take chances. If the Census Bureau finds its data to be accurate after revisions are made, new home prices will already have started to rise.
You may get your best home value by buying sooner rather than later.
Mortgage markets improved slightly through last week's holiday-shortened trading sessions. Better-than-expected housing data led mortgage rates higher Tuesday and Wednesday, but rates retreated Thursday morning in advance of Good Friday.
Markets were closed Thursday afternoon and Friday. They re-open this morning.
Conforming mortgage rates in Illinois ended last week unchanged overall. It's a strange outcome considering that Standard & Poor's issued a downgrade on U.S. debt Monday.
In most instances, a debt downgrade would lead investors away from a particular group of securities -- in this case, a group that includes mortgage-backed bonds. However, Wall Street reacted in the opposite.
When S&P issued its opinion, however, mortgage bonds rallied.
Some say this is because the downgrade will force Congress to address a rising debt-load; others think a downgrade slows growth which, in turn, slows down inflation. Both scenarios are considered a positive for mortgage bonds. Hence, mortgage rates fell.
This week, momentum could reverse. In addition to a slew of housing and economic data including New Home Sales, Pending Home Sales, and Consumer Confidence data, the Federal Open Market Committee is meeting for the third time this year. And this month, the FOMC is meeting a little differently.
Usually, when the FOMC gets together, it adjourns and releases a press statement to the markets at 2:15 PM ET. This month, though, the FOMC will release its statement at 12:30 PM ET, and then Fed Chairman Ben Bernanke will hold a press briefing at 2:15 PM ET to address the aforementioned statement. He's expected to add growth forecasts to the official FOMC release, among other items.
Whenever the FOMC meets, mortgage rates can be volatile. This week, with the new press briefing format, that volatility is even more likely.
If you're floating a mortgage rate or wondering whether to lock, mortgage rates will be at their "calmest" levels of the week Monday and Tuesday. Once Wednesday hits, and the FOMC statements begin, expect for rates to change.
Homebuilder confidence is falling -- a good sign for buyers of newly-built homes in and around Mount Greenwood.
According to the National Association of Homebuilders, the Housing Market Index slipped one point to 16 in April. It's the 5th time in 6 months that the index read 16 -- a figure exactly in line with the 1-year average, but still considered "poor". The Housing Market Index reports on a scale of 1-100.
Values of 50 or better representing "favorable conditions". Values below 50 are considered "unfavorable".
It's been 5 years since the Housing Market Index read north of 50.
As an index, the HMI is actually a composite of three separate surveys, the results of which can be as telling as the final, compiled results. The surveys focus on specific aspects about a homebuilder's business, and use the broader responses to gauge overall market "sentiment".
The 3 questions are:
In April, interestingly, home builders felt market conditions were worse across the board, but still cited higher buyer foot traffic. This may be the result of a combination of rising mortgage rates and falling home values. Both tend to be bad for builders, and both tend to spur home buyers into action.
As a home buyer this spring, therefore, use the HMI data to your advantage. When home builders feel less confident on housing, buyers can often exact better concessions and/or upgrades during the negotiation process.
And, so long as mortgage rates continue to rise, that pressure on builders should build.
Foreclosure activity is much slower this year than last.
According to foreclosure-tracking firm RealtyTrac, the number of national foreclosure filings plunged 35 percent in March 2011 as compared to March 2010, a statistic that reflects a more healthy housing market and more robust outlook for 2011.
A "Foreclosure filing" is defined as any of the following : a default notice, a scheduled auction, or a bank repossessions. Foreclosures filings were down in all but 8 states last month.
Activity remains concentrated, too. More than half of all bank repossessions can be tied to just a handful of states.
In March, 6 states accounted for 51% of activity.
At the other end of the spectrum is Vermont. With just 5 repossessions for all of March, Vermont accounted for 0.008% of repossessions nationwide.
Distressed homes remain in high demand among today's home buyers, accounting for almost 40% of all home resales. It's no wonder, either. Distresses home typically sell at a steep, 15 percent discount as compared to non-distressed properties.
Buying foreclosures can be a great "deal". However, make sure you've done your homework.
Buying homes from banks is different from buying a homes from "people". Contracts and negotiations are different, and homes are often sold with defects.
If you plan to buy a Oak Lawn foreclosure, therefore, make you you speak with a licensed real estate professional before submitting a bid. You can research a home online and learn a lot of the process, but when it's time to purchase, put an experienced agent on your side.
ActiveRain Corp. is not responsible for the accuracy of the site's content (which is written by members of the ActiveRain Real Estate Network) and does not endorse the views of the real estate agents, mortgage brokers, and others listed here.
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