October 19, 2012

Rates Rebound After Slower Existing Home Sales

October 19, 2012

Rates Rebound After Slower Existing Home Sales

Rates are down about .125%, recapturing about half of the .25% spike that happened in the four trading days before today. Mortgage bonds (MBS) had been selling and today are doing much better. Rates rise when bonds prices drop on selling and vice versa. Two key benchmarks lenders use to price consumer rates are both up: FNMA 30yr 3% coupon +39 basis points and FNMA 30yr 3.5% coupon +30 basis points. The MBS rally and rate drop is partly aided by:

– A sharp stock selloff on weaker earnings (S&P down 19, Dow down 162)

– A European summit that agreed to centralize authority over the Eurozone’s 6000 banks by the end of next year but failed to discuss further aid for Spain

– Weaker existing home sales for September. More below.

Existing Home Sales  (September 2012)
– Existing Home Sales were 4,750,000 (seasonally adjusted, annualized)

– Down 1.7% month/month but up 11.0% year/year

– Measures closed deals on existing single family homes, townhomes, condos, co-ops

– Median existing-home price for all housing types $183,900, up 11.3% year/year

– Foreclosures (13%) and short sales (11%) were 24% of September sales, up from 22% percent in August, and they were 30% in September 2011.

– Foreclosures sold for 21% below market value in August, short sales were discounted 13%.

– Total inventory fell 3.3% to 2.32m existing homes available for sale, a 5.9-month supply at current sales pace, down from a 6.0-month supply in August. Listed inventory is 20.0% below a year ago when there was an 8.1-month supply.

– First-time buyers accounted for 32% of purchasers in September vs. 31% in August and 32% in September 2011.

– All-cash sales were 28% percent of transactions in September, up from 27% percent in August and 30% in September 2011.

– Investors purchased 18% of homes in September, unchanged from August and they were 19% in September 2011.

Full NAR report on September existing home sales