Fannie housing index says it’s a good time to buy

 Real Estate Market  Comments Off on Fannie housing index says it’s a good time to buy
Oct 312018
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Fannie Mae’s housing index fell slightly last month, but it remains on trend, suggesting the housing market continues to strengthen slowly. The good-time-to-buy component of the index rebounded strongly last month, gaining 5 points. Apparently, the strong economy has buoyed homebuyer sentiment enough to overcome rising interest rates. However, the component still is significantly lower than earlier in the year and is down year-over-year.

The good-time-to-sell component remained flat last month; however, it’s still trending higher and is well within reach of its recent all-time high.

Surprisingly, the components that measure personal finances both fell last month. The net share of respondents who said their income is significantly higher than last year fell by 4 points, and the net share who feel confident about job security fell 1 point. However, this last component is strongly positive (+79%), so the decrease probably isn’t meaningful. The right track/wrong track component widened to 21 points in favor of the economy being on the right track, and that could explain the strength of the good-time-to-buy component.

Neither the home price nor mortgage rate component of the index showed any surprises. Respondents still overwhelming expect home prices and mortgage rates to rise in the next year, and the net share expecting a rise increased for both components last month.

A funny thing happened on the way to higher interest rates

 Interest Rates, Residential Mortgage  Comments Off on A funny thing happened on the way to higher interest rates
Oct 292018
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

A funny thing happened on the way to higher interest rates.

The sell-off in the equities market last week put a pause on rising interest rates as all of that cash from stock sales needed somewhere to go, and some of it found its way into the bond market. The pause was a welcome respite, but it still leaves mortgage rates near 7-year highs. But with all the turmoil in equities, the question is why aren’t rate doing better?

Market sentiment of late seems to have focused on two things: continued strength in the US economy and continued monetary tightening from the Federal Reserve. Both support higher interest rates, and with rising inflation metrics this summer, most investors were betting rates would move even higher.

But this week, the punch wore off, and investors realized higher rates might dampen US economic growth. At least, that’s what the talking heads said. Personally, I’m not convinced it was just higher rates that caused the market turmoil. Investors have been piling on the side of higher rates for months now, and with the relaxation of global uncertainties last month, I think investors grew complacent about the risks to the global economy. But the world is still a scary place. Some of those uncertainties have reared their heads again, which balanced the scales – at least momentarily.

This coming week is a big one for US economic data. Strong data could stoke rates higher again. The inflation scare from this summer has subsided a bit, but I suspect all eyes will be on this Friday’s jobs report, especially the wage component. Unless we get a big surprise earlier in the week, I’m betting markets will keep rates in a narrow range waiting for Friday.