Home Sales Rise

Overview: With a lack of major economic data over the past week, it was a relatively quiet period for mortgage markets. The spotlight was mostly on the housing sector, and home sales posted positive results in the latest reports. Mortgage rates ended the week a little higher.

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In February, sales of existing homes, which account for roughly 85% of the total market, unexpectedly rose 5% from January. Despite the gains, though, sales still were slightly lower than a year ago. The median existing-home price of $398,400 was up 4% from last year at this time, which marked a record high for the month of February. Inventory levels remain low, standing at just a 3.5-month supply nationally, far below the 6-month supply that is typical in a balanced market. The trend is positive, however, as inventories were 17% higher than a year ago.

The latest results were similar for the segment containing newly constructed homes. In February, new-home sales, which account for the remaining 15% of the market, rose moderately from January. The median new-home price of $414,500 was down 2% from a year ago. While existing-home sales measure actual closings during the month, new-home sales are based on contracts signed, making them a leading indicator of future housing market activity.

The monthly report on consumer confidence published by the Conference Board caused increased investor concerns about slowing economic growth. The most recent reading showed a steep drop to 92.9, below the consensus forecast and the fourth straight monthly decline. More troubling, the measure for future expectations plunged to just 65.2, the lowest reading in 12 years and well below the 80 level, which is viewed as a possible signal for a future recession. Increased pessimism about future job prospects and income were two of the primary factors for the weakness this month.

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Existing-Home Sales (millions)

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Week Ahead

March 28

Personal Income and Outlays

Personal Consumption Expenditures (PCE) Price Index

April 1

Institute for Supply Management (ISM) Manufacturing Index

April 3

ISM Services Index

U.S. International Trade in Goods and Services

April 4

Employment Report