As the housing sector picks up, mortgage rates remained relatively quiet this week. While the economic data came in close to the expected levels, the trade negotiations with China offered little decisive news.
Housing Sector Picks Up
As a result of this week’s significant economic data, the housing sector picked up. Sales of previously owned (existing) homes increased from September to October, rising 5% higher than a year ago. Analysts attribute this trend to lower mortgage rates. Also, national median existing-home prices increased 6% from a year ago.
Overall, many regions still face a lack of housing inventory. Conclusively, the number of homes for sale sit at just a 3.9-month supply nationally, well below the 6.0-month supply (a healthy balance).
Inventory Presents Obstacles as Housing Sector Picks Up
However, the latest reports contained signs that the pace of construction may be picking up, which could help ease tight inventory levels. In October, housing starts showed solid improvement from September and were 9% higher than a year ago.
Building permits, which are a leading indicator of future construction, posted even stronger monthly gains and were at the best level since May 2007. In addition, the NAHB housing index showed that home builder confidence remained around 70, far above the readings near 60 seen a year ago.
Fed Meeting Minutes Show Consistent Policy
Aside from the housing sector picking up, the latest Fed meeting minutes came out. Based on the October 30th meeting, the minutes showed consistency with recent Fed official comments. Thus, their publication caused little reaction.
In short, the minutes indicated that further changes in monetary policy will be unlikely as long as the economy performs roughly as expected with modest growth and inflation near the Fed’s target level. Officials highlighted uncertainty about the impact of trade tensions on global economic activity as a potential risk to the economic outlook.
Looking Ahead After the Housing Sector Picked Up
After the housing sector picked up, investors look towards Tuesday’s New Home Sales report. Beyond that, Wednesday hosts a plethora of reporting, including Core PCE, Durable Orders, Personal Income, and Pending Home Sales.
In addition, news about the trade negotiations with China or the impeachment inquiry holds influence over mortgage-backed securities. Mortgage markets close on Thursday and will close early on Friday for Thanksgiving.
As the housing sector picks up, prospective home buyers capitalize off the lower mortgage rates. Never miss an update with MBSQuoteline. To receive by-the-minute updates on mortgage-backed securities, try our platform free for 14 days.
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