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Mar 23 2018
HomeBridge Financial Services
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Existing Home Sales Bounce Back

“Third time’s the charm.” (The BellRays) Despite low inventories of homes for sale on the market, existing home sales bounced back in February after two straight months of declines.

February existing home sales rose 3 percent from January to an annual rate of 5.54 million, above the 5.42 million expected, the National Association of REALTORS® (NAR) reported. Gains were seen in the South and West with declines in the Northeast and Midwest. Sales were up 1.1 percent from a year ago. Unsold inventory is at a 3.4-month supply, well below the 6-month supply that is seen as normal.

Sales of new homes had the opposite result in February, falling for the third straight month. New home sales edged lower by 0.6 percent from January to an annualized rate of 618,000, just below expectations, the Commerce Department reported. Sales increases were seen in the Northeast and South, with declines in the Midwest and West. New home sales were up 0.5 percent from February 2017 to February 2018. And there was good news regarding inventory. There was a 5.9-month supply of new homes for sale on the market, which is near the 6-month supply seen as normal.

The Fed also made headlines in the latest week. As expected, the Fed raised its benchmark federal funds rate 0.25 percent, bringing the new target rate range to between 1.5 and 1.75 percent. The Fed acknowledged inflation remains low, but it is expected to rise in the coming months as tax cuts further stimulate the economy.

If inflation does begin to rise, an increase in home loan rates could follow. Inflation reduces the value of fixed investments like mortgage bonds, and home loan rates are tied to mortgage bonds. However, many factors impact the direction of the markets, including possible tariffs, trade wars and the direction of other economic reports. I’ll continue to monitor all of these developments closely.

In the meantime, home loan rates remain historically attractive.

The Fed and investors will be watching closely Thursday to see if there are any hints that inflation is on the rise. The bond markets will close early on Thursday at 2:00 p.m. ET while stocks are open normal hours. U.S. financial markets will be closed for Good Friday on March 30.

  • Economic data kicks off on Tuesday with the release of Consumer Confidence.
  • The final reading on Q4 2017 Gross Domestic Product will be delivered on Wednesday along with Pending Home Sales.
  • Thursday brings news on inflation with Personal Consumption Expenditures. Plus, Personal Income, Personal Spending and weekly Initial Jobless Claims will also be released.

If you or someone you know has any questions about home loan rates or products, please reach out. I’d be happy to help.