Consumers drive the housing market. So when we see improvement in consumer behavior, it paints a prettier picture for housing.
Retail Sales rose more than expected in October to post their largest gain in seven months. The Commerce Department reported that total Retail Sales increased 1.2% which is the biggest increase since March. They also upwardly revised last month's data.
This report follows the much better than expected Consumer Sentiment report published by Reuters/University of Michigan. They reported that their preliminary consumer sentiment index jumped to a reading of 69.3 in November compared to 67.7 the month prior, putting in on track to be the best results since June. The release beat out analysts´expectations of 69.0.
Both of these reports show that consumers are back on track and coupled with very low mortgage rates could lead to more demand in housing.
That said, count on increased interest rate volatility as the economy improves.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) lost -147 basis points last week causing 30 year fixed rates to increase from the previous week. The sell-off in mortgage backed securities started with much weaker than anticipated demand for the U.S. 10 year and 30 year Treasury auction. We had our second straight week of positive economic data with stronger than expected Initial Jobless Claims, Consumer Sentiment and Wholesale Inventories which also pressured MBS pricing.
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
15-Nov 8:30 Retail Sales Oct
15-Nov 8:30 Retail Sales ex-auto Oct
15-Nov 8:30 Empire Manufacturing Index Nov
15-Nov 10:00 Business Inventories Sep
16-Nov 8:30 PPI Oct
16-Nov 8:30 Core PPI Oct
16-Nov 9:00 Net Long-Term TIC Flows Aug
16-Nov 9:15 Industrial Production Oct
16-Nov 9:15 Capacity Utilization Oct
16-Nov 10:00 NAHB Market Housing Index Nov
17-Nov 7:00 MBA Mortgage Applications 12-Nov
17-Nov 8:30 CPI Oct
17-Nov 8:30 Core CPI Oct
17-Nov 8:30 Housing Starts Oct
17-Nov 8:30 Building Permits Oct
17-Nov 10:30 Crude Inventories 13-Nov
18-Nov 8:30 Initial Claims 13-Nov
18-Nov 8:30 Continuing Claims 6-Nov
18-Nov 10:00 Leading Indicators Oct
18-Nov 10:00 Philadelphia Fed Nov
Today's picture is from the HAR website. Consider this exhibit A supporting the need to become an FHA expert, and know our FNMA Homepath / Homepath Renovation / and Homestyle Renovation products.
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