Housing: Better Hurry Because It’s Going Fast. Stocks are lower and Mortgage Bonds are slightly higher so far this morning. Existing Home Sales, which measures closings on existing homes, were up 0.7% in December, which was stronger than expectations of a 2% drop. Sales are up 22% year over year.
There were only 1.08M homes for sale, down from 1.28M homes in November. This is a record low level of inventory. There is only a 1.9 month supply, which is also a record low. Homes were only on the market for 21 days on average. Foot traffic was up 24% year over year.
The Median home price was $309,800, up 12.9% year over year. Diana Olick from CNBC must be listening to our updates, because she clarified that it’s due to the mix of sales. Sales on the low end were down 15%, while homes above $1M were up 90%. This drags the median home price higher.
First Time Home Buyers dropped slightly from 32% to 31%, even with the stiff competition for homes on the lower end. Make sure to market to them and explain they don’t need 20% down. Cash buyers decreased from 20% to 19%, but still remains at a high level. The only way to beat a cash buyer is to offer more – Use the Bid Over Ask tool on MBS Highway to help your customers decide if it is a good decision.
Next week is loaded with housing data – The Case Shiller and FHFA House Price Index appreciation reports, New Home Sales and Pending Home Sales will all be released. Additionally, GDP and the Fed’s favored measure of inflation, Personal Consumption Expenditures (PCE), will be reported. Lastly, the Fed will meet and release their statement on Wednesday.
Mortgage Bonds are still trading in the middle of the range between support at the 103.053 Fibonacci level and the 100-day Moving Average ceiling. Yesterday’s candle was a Doji, which is a day of indecision. Typically, the direction of the following day will dictate market direction.
The Bulls are trying to take control this morning, but we will see how it plays out. The 10-year is once again testing an important floor at 1.07%. If this level is broken, yields will move lower. The S&P 500 is moving lower today and the candle formation looks to be an evening star pattern, if it were to close, as it is now. If that occurs, Stocks could continue to move lower to the benefit of Bonds.
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