Yesterday morning NAR announced that Pending Existing Home Sales increased by 6% in April, its third gain in a row. A sample of 20% of transactions showed that sales were up 30% in the Northeast, up nicely in the West and Midwest, down a shade in the South. And compared to a year ago, sales were up 25%. Remember that these numbers measure housing sales contract activity – a signed contract is not counted as an actual existing home sale until the deal closes. A sale is listed as “pending” when a contract to purchase an existing home (single-family, condos, and co-ops) has been signed but the transaction has not closed. Combine that with the current demand for home loans falling and you have…confusion. But if the supply of mortgages is down, and demand is strong, look for mortgages to do well.
Regardless, rates moved higher, and prices worsened, after this number came out. Fortunately mortgages tightened, meaning that they did not do as poorly, but MBS volumes were still reported as “lower than normal”. Keep in mind that although current rates are in the high 4’s, most trading volume occurs in MBS’s made up of 5.25-6.125% mortgages – those are more liquid and easily tradable. The U.S. 30-year Treasury bond fell to a full point loss and 10-yr Notes were down about .75 in price and up to 3.34% in yield.
-Rob Chrisman
