Real Estate & Interest Rate Market update

A lot going on early today. The early activity had the stock futures better and the 10 yr and MBS prices slightly lower.  Deflation has been one of Mario Draghi’s biggest worries recently; if it continues it will be a serious drag on its economy---and another impediment to global growth.

At 8:30 March housing starts were up 2.8% against estimates of +6.0%; at 946K units compared to 965K expected. March building permits also weaker than expected, -2.5% against -0.8%; at 990K units compared to 1014K units expected. Feb starts were revised better, from 907K units to 920K units offsetting some of the percentage decline in March. Work on single-family properties climbed 6% to a 635,000 rate in March from 599,000 the prior month. Construction of multifamily projects such as condominiums and apartment buildings fell 3.1% to an annual rate of 311,000.

The Brick Wall continues to stop any rallies in the long end of the yield curve. The 10 yr cannot break through, no matter the momentary news with Russia/Ukraine and any other safety idea the 10 will not capitulate and move below it at 2.60%. Yesterday when Ukraine sent troops to re-take an air field the 10 briefly fell to 2.61% before ending the session at 2.62%, this morning the 10 at 2.66%; today a column of military vehicles flying a Russian flag and carrying dozens of armed fighters drove into eastern Ukraine.  MBS prices and rates will not improve much from the present levels as long as treasuries continue to resist key levels. The Russia/Ukraine situation isn’t as much of an influence as the movement in the equity markets. As long as the key indexes continue to improve the rate markets will not decline in rate or increase in price. 

There is typically a pull back in rates before a federal holiday and I expect tomorrow to be no different. If you have the opportunity to lock your interest rate I would suggest doing so.