New Home Sales Climb:
Sales of new homes rose in September after four straight monthly declines.
The Commerce Department said Wednesday that sales of new homes rose 5.7 percent last month to a seasonally adjusted annual rate of 313,000 homes. A big reason for the gain was that the median sales price fell 3.1 percent to $204,400. This is a great indicator that builders have identified that there is good demand in the first time home buyer segment. The number of new homes on the market was also unchanged at 163,000, a record low.
Home builders started projects in September at the fastest pace in 17 months, a hopeful sign for the economy. But most of the gain was driven by a surge in volatile apartment construction, a sign that many are choosing to rent rather than own a home.
Single-family home construction, which represents nearly 70 percent of homes built, rose slightly. March through August is typically the peak buying season, so an increase like this after the busy season is encouraging for the overall housing market.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) gained +5 basis points from last Friday to the prior Friday which moved mortgage rates sideways. We were trading better (lower rates) in the beginning of the week but reversed course and MBS moved lower (higher rates) after the parameters of the Greek/European debt bailout were released.
While it is certainly not a perfect plan, it did remove some uncertainty in the market place. This uncertainty was helping to keep mortgage rates lower because investors parked their funds in bonds until they found out what the actual plan for Europe was. Now that they know the plan, they have sold out of their positions in bonds and as a result rates have been pressured higher.
It is important to note that since the lowest rates on record (09/22/11) mortgage backed securities have dropped -281 basis points which have pushed mortgage rates higher. You are not going to see those great rates again. Rates will still be very attractive for awhile but they are trending upward.
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 Time Economic Release
31-Oct 9:45 Chicago Purchasing Managers’ Index
1-Nov 10:00 Construction Spending (MoM)
1-Nov 10:00 ISM Manufacturing
1-Nov 10:00 ISM Prices Paid
1-Nov 17:00 Total Vehicle Sales
2-Nov 7:00 MBA Mortgage Applications
2-Nov 8:15 ADP Employment Change
2-Nov 10:30 EIA Crude Oil Stocks change
2-Nov 12:30 Fed Interest Rate Decision
2-Nov 12:30 FOMC Minutes
2-Nov 14:15 Fed’s Press Conference
3-Nov 8:30 Continuing Jobless Claims
3-Nov 8:30 Initial Jobless Claims
3-Nov 8:30 Nonfarm Productivity
3-Nov 8:30 Unit Labor Costs
3-Nov 10:00 Factory Orders
3-Nov 10:00 ISM Non-Manufacturing
4-Nov 8:30 Average Hourly Earnings (MoM)
4-Nov 8:30 Average Hourly Earnings (YoY)
4-Nov 8:30 Average Weekly Hours
4-Nov 8:30 Nonfarm Payrolls
4-Nov 8:30 Unemployment Rate
Visit www.VIMortgage.com to apply for your Virgin Islands Mortgage with Schaffer Mortgage Corporation or Call 340-715-7744 St Thomas/St John or 340-778-4444 St Croix
New Home Sales Climb:
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