While historically low mortgage rates and attractive home prices are important to make the housing market attractive, it is actually how a consumers feels about the economy and their own situation that drives demand.
U.S. consumer sentiment rose to its highest level in more than four years in May as Americans stayed optimistic about the job market, while higher income households expected to see bigger wage increases, a survey released on Friday showed. The Thomson Reuters/University of Michigan’s final reading on the overall index on consumer sentiment rose to 79.3 from 76.4 in April, topping forecasts for 77.8 and an initial May reading of the same.
It was the highest level since October 2007.
Half of all consumers said the economy had improved during the past year, while buying plans for vehicles and household durables also improved. The gauge of buying plans rose to 132 from 126.
It looks like a strong season for housing now that we have strong consumer sentiment and historically low rates and excellent home prices.
What Happened to Rates Last Week?
Mortgage backed securities (MBS) lost -18 basis points from last Friday to the prior Friday which caused 30 year fixed mortgage rates to increase slightly.
The highest rates of the week were on Wednesday and the lowest rates of the week were on Tuesday.
MBS traded in a fairly tight range, supported by continued fears of Greece leaving the EU and over Spain’s banks.
We received more good news in the housing market with both Existing Home Sales and New Home Sales rising and beating market forecasts.
We had luke warm Durable Goods Orders but saw a spike in Consumer Sentiment.
We also saw some very strong demand for our 5 year and 7 year Treasury auctions.
What to Watch Out For This Week:
The following are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages.
