Real Estate Home Sales and Interest Rate Market Update

The narrow trading range in the bond and mortgage markets continues today; yesterday the 10 year note yield fell 2 bps, this morning up 2 bps to start. 30 yr MBS price yesterday was unchanged on the day, this morning down 8 bps. US and Europe stock markets starting better this morning as the US market did yesterday before succumbing to selling in the afternoon. The last two weeks have been directed by how equity markets trade each day; stock market better interest rate price lower. While financial markets move back and forth there has been little change in interest rates of any serious consequence in the treasury market but MBSs are trading weaker than the 10 yr note as investors continue to assess the changes in the mortgage industry fomenting from Washington. Investors unclear of the impact of varying proposals circulating, and the fear of increasing rates hangs heavily.

The G-7 countries meeting at the Hague essentially kicked Russia out of the group of the strongest and most developed economies; the US, Britain, China, Japan, Canada, Germany and France---it used to be the G-8. The prior scheduled G-8 meeting in Sochi this summer has been moved to Brussels with Russia not invited. Russian banks now talking about a recession in the country because of the sanctions saying the Russian economy will shrink for at least two quarters as penalties for annexing Crimea rattle markets, curb investment and raise the cost of borrowing. Lots of arrows being fired now between Russia and the G-7 countries, but as long as Russia does not invade Ukraine with troops, given how markets have reacted so far, there is little concern.

Two key reports at 10:00; Feb new home sales were expected down 4.0% to 440K units, as reported sales were down 3.3% but at 440K units because Jan was revised from 458K to 445K. The report was essentially on target and the lowest level in five months; the median sales price of a new house decreased 1.2% from February 2013, to reach $261,800. The supply of homes at the current sales rate climbed to 5.2 months from 5 months in the prior month. There were 189,000 new houses on the market at the end of February, the most since December 2010.  It was the biggest year-to-year decline since June 2012.   March consumer confidence from The Conference Board was forecast at 78.4 from 78.3 in Feb, the index increased to 82.3, the highest confidence since January 2008.

No change in the technicals; still in a narrow range on the 10 while MBSs under a little more selling pressure. The near term outlook remains mostly neutral, not bullish but not bearish either.  That being said I see little reason for rates to decrease and more reason for them to increase. I would suggest locking your loan unless you need more time (30+days) to close.