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Housing market continues to show marked improvement

While the coronavirus's effects remain a concern, the housing market continues to show positive signs of recovery, according to realtor.com's weekly Housing Market Recovery Index.

Housing Wire's Julia Falcon reports that the index is set to 100 for the last week of January, and a value of 100 means the market has recovered to the pace seen that month. "Housing demand, home prices, the pace of sales and inventory are all positively climbing, although still lower than that January baseline," she says. "The Housing Recovery Index reached 95.8 nationwide for the week ending June 27 and 12 of the 50 largest markets are showing recovery, with the greatest occurring in Boston, San Francisco, Seattle, Denver, and Philadelphia."

The Northeast, which got hit earliest by COVID19 and thus may have seen the worst of it so far, surpassed the recovery benchmark this week, according to the report, which also said that Midwest economies lagged due to struggling economies while Sunbelt markets with worsening COVID-19 conditions are also struggling.

"Housing demand has bounced back as summer home-buying is in full-force. Improvement in the pace of sales remains highly dependent on cities' ability to successfully contain COVID cases and safely reopen their economies," the report said.

Meanwhile, prices for homes also moved further past the recovery threshold. "In the U.S., the overall weekly index value is calculated as a weighted composite of four indexed components, including 'housing demand,' based on realtor.com online search activity (10%); 'home prices' based on median list prices (30%); 'housing supply' based on new listings (30%); and 'pace of sales' based on median time on market (30%)," Falcon reports.

Source: Realtor | TBWS

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage Backed Securities (MBS) which are traded in real time, all day in the bond market.  This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events.  When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up.  Tracking these securities real-time is critical.  For more information about the rate market, contact me directly.  I’m among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are trending sideways this morning.  Last week the MBS market improved by +2 basis points.  This caused rates to move sideways on very low volatility. Rates will likely do the same this week.

This Week's Rate Forecast: Neutral

Three Things: These are the three areas with the greatest ability to move rates this week: 1) Coronavirus, 2) Stimulus, and 3) Domestic.

1) Coronavirus: The crushing impact of the Covid-19 on our economy continues. The markets realize that the potential for a "V" shaped and quick recovery is not realistic, with new daily records of cases rolling across the US. The main focus is that 29 states now have a positive test result of over 5%, under 5% is considered the demarcation for safety. As a result, travel plans are being canceled, and states are either pausing or even rolling back their openings. The weaker the economy and the more prolonged it is, the better long bonds.

2) Stimulus: The Senate is on a planned recess from July 3 to July 20. However, headline-grabbing statements from Senators while stumping in their home states will give the market some direction on the appetite for another round of stimulus checks, business loans, and support for the state's budget shortfalls.

3) Domestic: The week's biggest reports are Monday's ISM Non-Manufacturing, Thursday's Initial Jobless Claims, and Friday's PPI Ex Food and Energy.

Treasury Auctions this week:

• 07/07 3 year note
• 07/08 10 year note
• 07/09 30 year bond

The Fed: Here is this week's speaking schedule. 07/07 Raphael Bostic, Randal Quarles, Thomas Barkin, and Mary Daly.

This Week's Potential Volatility: Low

Rate volatility continues to be very low, and it will likely be the case once again this week. Short of something utterly unexpected in the news, expect rates to move sideways through the week.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Matt McGuire is a Mortgage Loan Originator with Edge Home Finance, specializing in residential home loans for real estate purchase and refinances. He enjoys making his clients happy while helping them achieve their dreams and goals. Matt has spent the last 10 years in the mortgage and banking industries, gaining valuable experience in loan origination, loan processing, underwriting, post-closing/loan servicing, and management. This unique blend of skills and knowledge helps Matt walk all of his customers through each step of the loan process with the care and guidance they deserve. Matt was born in Florida, is a proud Richfield Spartan, and currently resides in Lakeville with his wife, two dogs, and two cats. Matt is a huge sports fan and also enjoys traveling, fishing, and boating.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

Matt McGuire (NMLS 1535656) - A Member of Edge Home Finance Corporation (NMLS 891464)