There were several housing related reports that show that housing market continues to remain weak and home loan rates are still near record lows. Two reports, Housing Starts and Building Permits both came in meeting market expectations. However Existing Home Sales fell 0.9% (though it was near expectations), while New Home Sales fell 1.6% in February, which did not meet market expectations.
It is certain the Feds are taking notice and could perhaps cause the Feds to do another round of bond buying, called Quantitative Easing in order to prop up housing which certainly remains fragile. Remember as bonds improve, so do home loan rates.
It is also worth watching the global economic news with regards to the debt crisis in Europe, which is far from over. However there were tones of improvement which if it continues will cause investors to move some of their money out of the safety of bonds. Investors will be watching carefully both Europe and the Feds potential for Quantitative Easing which will definitely impact home loan rates.
This weeks economic activity begins on Monday’s Pending Home Sales report. Consumer Confidence and Consumer Sentiment will be released on Tuesday and Friday, respectively. These reports will be closely watched to determine how the consumer is holding up based on the recent positive economic news.
Friday we will get a lot of reports beginning with Personal Income and Spending, as well as the Chicago Manufacturing Report and the Core Personal Consumption Expenditures. This report will show us exactly where inflation is at. Remember, higher inflation pushes bond prices lower due to purchasing power loss that is associated with rising consumer prices. Lower bond prices generally react with higher home loan rates.
* Graph: Data source: Haver Analytics courtesy of www.bloomberg.com