This was a relatively quiet week in terms of economic news and data. We saw better than expected New Home Sales data versus weak Existing Home Sales data, although that weakness was due to lack of inventory. This led to a week of choppy trading, with the 10-year attempting to hit 1.50% but ultimately failing. Unless there is a surprise in the data or another unexpected event next week, we shouldn’t hit 1.50% and will continue to see choppy range bound trading.
Initial Jobless Claims
Initial Jobless Claims fell -39k to 547k from the prior week’s upwardly revised print of 586k (orig. 576k). This now puts the 4-week moving average of claims at 651k from a revised 678.8k in the prior week (orig. 683k). Looking back at the beginning of the year, initial claims stood at 965k and have nearly fallen by 50%. Continuing claims, which lag by a week, fell -34k to 3.674mln vs. the prior week’s revised print of 3.708mln (orig. 3.731mln).
Existing Home Sales
Existing Home Sales fell -3.7% in March to a seasonally adjusted rate of 6.01mln according to the NAR. This is now the slowest sales pace since August last year, and the second consecutive monthly decline. Looking YOY, sales were still +12.3% higher than March 2020. The supply of existing homes was just 1.07mln at the end of March, which represents a 2.1-month supply at the current sales pace. While sales are up YoY, the inventory number is down -28.2% from a year ago. Low prices continue to push prices higher as the median price of an existing home sold in March was $329,100, a +17.2% increase from March 2020. That is the highest price that is on record, at the fastest pace of appreciation.
New Home Sales
New Home Sales for March rose +20.7% at a seasonally adjusted rate of 1.021mln. This is now the highest rate since the summer months back in 2006 and is +66.8% higher vs. March 2020 at 612k. The median sales price of new houses sold last month was $330,800, with the average sales price at $397,800. The seasonally adjusted estimate of new houses for sale at the end of March was 307k, which represents a 3.6-month supply at the current sales pace. Broken out by region, sales in the South led at +40.2% MoM and up +90.1% YoY; Midwest rose +30.7% MoM and +78.4% YoY; Northeast was up +20% MoM and +108.7% YoY; West sales actually declined -30% MoM and down -2.0% YoY.
Weekly Mortgage Applications
The MBS Weekly Mortgage Applications index increased by +8.6% for the week ending April 16th. Purchase applications increased by +6.0% and were +57% higher than the same week last year. Refinance applications increased +10.0% and were -23% lower in the same week a year ago. “Mortgage rates dropped to their lowest levels in around two months, prompting a small resurgence in refinance activity after six weeks of declines. Borrowers acted on the decrease in rates for most loan types, with both conventional and government refinance applications showing gains,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The spring housing market also saw a boost from lower rates, with purchase applications – driven by a jump in conventional applications – increasing over 5 percent. MBA expects the purchase market to remain strong, with the recovering job market and supportive demographics fueling housing demand in the months ahead.” Added Kan, “The average loan size for purchase applications increased after a few weeks of declines, as fewer homes available for sale make for a competitive buying market that is accelerating home-price growth.”
Michael Davis
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