Mixed Performance. Data Hurt. Auction Helped. Little Changed

Mixed Performance. Data Hurt. Auction Helped. Little Changed

In the bigger picture, bonds found resistance before 10yr yields managed to break below 4.19, but remained well under the 4.32% ceiling after yesterday’s weakness.  Today began slightly stronger, but shifted weaker after the Durable Goods data.  The home team rallied after the 1pm Treasury auction came out on the strong side and trading levels trickled just barely into positive territory.  Wednesday is the quietest day of the week for econ data, but also the last day of Treasury auctions and the last full trading day of the month/quarter.  Translation: data driven volatility is unlikely, but random volatility surrounding the auctions and month-end trading could make things interesting.

Econ Data / Events

Durable Goods

1.4 vs 1.1 f’cast, -6.9 prev

Market Movement Recap

08:52 AM Slightly stronger overnight and now a hair weaker after data.  MBS down 2 ticks (.06) and 10yr up 0.8bps at 4.257

11:26 AM MBS outperforming, down only 1 tick (.03).  10yr unchanged from last update.

01:09 PM Stronger after 5yr auction.  MBS up 2 ticks (.06) and 10yr down 1.1bps at 4.238

03:32 PM Hanging out near strongest levels.  MBS and 10yr at same levels as last update.

Mortgage Rates Barely Budge For 2nd Straight Day

After moving back under 7% last week (conventional, 30yr fixed, top tier scenario), mortgage rates have been increasingly unlikely to move.  Today was the 2nd day in a row with essentially no change for the average lender. Rates are driven by bonds and bonds are waiting on the most relevant economic data to offer a comment on the path of inflation and the economy in general.  If inflation falls a bit more or if the economy shows marked signs of weakening, it would tip the scales in favor of lower rates. Most of the data in question will be released next week.  This week is sparse by comparison.  Today’s data was mixed and it wasn’t highly consequential in the first place.  Tomorrow is essentially data-free.  Thursday brings several reports, but again, nothing substantial.  With Friday being a holiday, the takeaway is that volatility is a much more relevant risk next week.  

New Home Sales Decline Slightly, Prices Too

Sales of newly constructed homes were virtually unchanged in February. The 662,000 seasonally adjusted annual units recorded in during the month was down by 2,000 units or 0.3 percent from the rate in January. This did, however, put sales 5.9 percent higher than they were in February 2023. The report from the U.S. Census Bureau and the Department of Housing and Urban Development estimated that, before adjustment, sales for the month totaled 60,000 units compared to 57,000 the previous month and 56,000 in February of last year. Thus far this year, sales of new homes are up 4.4 percent over the same period in 2023 at 117,000 units. The median price of houses sold during the reporting period was $400,500 and the average price was $485,000. In February 2023 the relative prices were $433,300 and $499,100. At the end of February there were an estimated 451,000 new homes available for sale. This is a projected 8.4-month supply at the current sales pace and is unchanged from the inventory level one year earlier. Robert Dietz, economist for the National Association of Home Builders noted, “Completed and ready-to-occupy inventory has increased 23 percent over the last year, rising to 85,000 homes. Homes advertised for sale but not started construction have increased almost 18 percent over the last year to 106,000. In contrast, homes available for sale that are under construction have declined 2 percent to 272,000.”

More Outperformance as Treasuries Fret Over Auctions

Welcome to day 4 of our unofficial 9 day weekend with limited data and volatility ahead of an actual 3.5 day weekend.  Is data truly limited if we have Durable Goods?  Perhaps not entirely…  There was a small but noticeable reaction this morning to the stronger result (1.4 vs 1.1). 

But because bonds were only slightly stronger overnight, the slip to modest weakness ends up making things look pretty flat in the bigger picture. 

MBS continue outperforming Treasuries as the latter are being a bit more defensive during the auction cycle.

Servicing, POS, Marketing, Internal Audit Products; Increase in Mortgage Debt; Webinars and Training

As conjecture swirls about the economic impact of the collapse of the bridge in Baltimore, did you ever notice that when you put the two words “The” and “IRS” together it spells “Theirs”? Taxes are something we all deal with, and here in Louisville, KY, at the TMC event, one of the major discussion topics is the monthly burden on homeowners. Taxes and insurance are two pieces of the cost pie. Another is the debt load of higher rates. What do Maryland, Nevada, Hawaii, Texas, Arizona, California, Massachusetts, New York, Maine, and Alaska have in common? They’ve seen the largest increase in mortgage debt. There are some creative possibilities, however, and today’s Mortgages with Millennials at 10AM PT as they delve into alternative paths to achieving homeownership, focusing on the concept of co-buying (with two of the top experts in co-buying: Jonathan Lawless, Head of Homeownership for Bilt Rewards, and Niles Lichtenstein, CEO of Nestment). And here’s a piece on affordable housing solutions if you’d like to do a deep dive on the subject. (Found here, this week’s podcasts are sponsored by Stavvy. Stavvy offers a flexible and fully customizable loss mitigation solution. Servicers can easily adapt to regulatory updates and market conditions, providing a seamless, customer-centric digital experience. Today’s has an interview with Stavvy’s Shane Hartzler on the biggest challenges facing servicers today and the biggest benefits from leveraging technology.) Lender and Broker Services, Products, and Software