High Marks for the Housing Market
New Home Sales, Housing Starts and homebuilder sentiment all posted high marks recently.
Sales of new single-family homes in February hit a seven-month high, rising 6.1 percent from January, according to the Commerce Department. February sales also were 12.8 percent above February 2016.
Housing Starts also hit a four-month high, the Commerce Department reported, rising 3 percent from January to February and 6.2 percent from a year prior. Housing Starts measure when excavation begins on a new home. Starts on single-family homes rose to a near 10-year high. An improving economy and a strong labor market were a few key reasons for the gains.
Homebuilders are feeling pretty good about the market, the National Association of Home Builders reported. The Housing Market Index, a measure of homebuilder sentiment, jumped six points to the highest level in 12 years! The positive news should be a welcome sign to prospective homebuyers who have struggled with limited inventory and rising home prices throughout the country.
After starting 2017 at the fastest pace in almost a decade, Existing Home Sales slid in February though, according to the National Association of REALTORS®. Despite the slide, sales remain above February 2016 levels nationally and in all major regions.
A Simple Message on the Economy
Federal Reserve Chair Janet Yellen had one simple truth in March that was like music to Stock and Bond markets: "The simple message is the economy is doing well."
When the Fed expectedly raised its benchmark Federal Funds Rate 0.25 percent at its March 14-15 meeting, Stocks and Mortgage Bonds both improved following the news.
The Fed's tame read on inflation and its decision to maintain its balance sheet of existing Mortgage Bonds helped Bonds rally. Meanwhile, Stocks responded favorably to the news that the Fed is planning two additional hikes this year, eliminating some uncertainty.
The Fed Funds Rate is the rate at which banks lend money to each other overnight and it is not directly tied to long-term rates for purchase or refinance home loans. Instead, home loan rates are tied to Mortgage Bond market performance. Home loan rates can move lower when Mortgage Bonds improve and vice versa.
For those in the market for a new home or a refinance, home loan rates remain near historic lows. If you have any questions about home loan rates or loan products, please contact me. I'd be happy to help.