Monday Market Update – 11/25/2019

Buckle Up, Things Could Get Bumpy Next Week

The average 30-year mortgage decreased from 4.03% to 3.99% week over week, bringing rates 118 bp or about 1 1/8% lower than this time last year—make sure you read that again…that is 1.125% lower than a year ago.

So, YES, it is GREAT time to buy a home. Get pre-approved so that you can act quickly should the home of your dreams come on the market.

However, mortgage bonds are being squeezed and will likely breakout one way or another, especially with the action-packed news week ahead starting Monday. Here’s what’s going to be reported on: Manufacturing and Construction Spending, Motor Vehicle Sales, Employment and Jobless Claims, Trade Deficit and Factory Orders, Non-Farm Payroll, Unemployment, Average Hourly Wages, Consumer Sentiment, Wholesale Inventories and Consumer Credit. In short, we should have an incredibly broad set of data regarding our overall economic condition come Friday afternoon. Expect some volatility in interest rates.

A Personal Message

This a month that should have us considering that for which we are all thankful. My lovely wife and her family are known for reminders about “shoulds”. They, rightfully, say: “Should on your own head.” However, being thankful shouldn’t be an obligation but rather an exercise in remembering gratitude. I know in my life; I am forever forgetting the great things that have happened. Instead I tend to focus on what has yet to become. Gratitude for what has passed is a blessing and one that needs to be exercised—at least for me. So, in no particular order, here are some things that I am thankful for this year:

Our home, my health, a strong marriage, a wonderful family, amazing friends, fellowship, good support and business partners, great mentors and coaches.

How about yourself? I’m hopeful that you have all the same things and much more. Need a place to go on Thanksgiving? Our home is open to all. Send me an email. No one should spend the holiday alone, unless they want to.

Product of the Week


Our Peak loan program allows the purchase of a home up to $1.5M with only 5% down*. Additionally, the loan terms can be extended up to 40 years, with the first 10 being interest- only payments. 

The Peak 2nd Lien program allows the option to access the equity in a current home (up to 95% combined LTV) and use it toward home improvement, debt consolidation, or as a source of down payment on a second home.

*Please visit our Disclosures page for more details for all loan types.

Your Weekly Technical Review Begins here:

The major stock market indices ended the week slightly lower but set some fresh all-time closing highs on Tuesday. Mortgage Bonds traded sideways, ending the week near unchanged levels. The theme of the week was strong housing data, with solid new construction figures and Existing Home Sales.

The NAHB (National Association of Home Builders) released their Housing Market Index, which fell 1 point in November to 70. While this was just beneath market expectations of 71, the previous reading for October was an 18-month high, and with the breakeven being 50, builders are highly confident. The internals were mixed as the Current Sales fell 2 points to 70, Future Outlook was up by 1 point to 77, and Buyer Traffic was down by 1 point, but still remained above 50 at 53.

Housing Starts were up 3.8% for the month of October to the second-best number since 2007. Year over year Starts were up 8.5%. More importantly, Single-family homes, which are really the life blood of the housing market, were up 2.0%.

Permits, which are a good forward-looking indicator of starts, were up 5.0% to a 12-year high. Single Family Permits were up 3.2%. Year over year permits are up a very strong 14.1%.

The Existing Home Sales report for October, which measures closings in that month and likely represents buyers shopping for homes in August and September, increased 1.9%. This is right around a 17-month high and at a very strong level. Sales increased year over year from 4% to 4.6%.

The Median Home Price was reported at $270,900, up 6.2% year over year. Total inventory at the end of August was down 4.3% year over year. At the current pace of sales, there is a 3.9-month supply, down from 4.1 months last month. This also speaks to the strength of the housing market – Even with prices up and inventory down, sales are still at very solid levels.

The one negative in the report was that First-Time Home buyers represented 31% of sales, down from last month’s 33%. Cash Transactions accounted for 19%, up from 17% last month, while Investors accounted for 14%. Distressed sales accounted for 2% in October, which was unchanged from September.

The Mortgage Bankers Association reported that overall Mortgage Application volume was down 2.2%. Applications to purchase a home were up 7.0% for the week and are up 7.3% from this time last year. Refinances were down 8.0% but are still up 152% year over year. The Refinance share of mortgage activity decreased from 61.9% to 59.5%. ARM’s made up 4.6% of all applications while 13.0% of loans were FHA.

The average 30-year mortgage increased from 4.03% to 3.99% week over week, bringing rates 118 bp or about 1 1/8% lower than this time last year.

The MBA also released their Builder Application Survey, which showed that applications on new homes were up 9% in October when compared to September and 31.5% year over year. Joel Kan from the MBA said, “The new home sales market continues to be strong, reinforced by October’s increase in applications for new home purchases. At an annual pace of 791,000 units, our estimate of new sales has reached its highest level since the inception of our survey in 2012.”

Economic Calendar – for the Week of November 25th, 2019

Date Time ET Event /Report /Statistic For Market Expects Prior
Nov 26 09:00 Case Shiller HPI Sept N/A -0.2%
Nov 26 09:00 FHFA House Price Index Sept N/A 4.6%  
Nov 26 Nov 13 10:00 New Home Sales Oct 707K 701K
Nov 27 Nov 13 07:00 Mortgage Applications 11/22 N/A -2.2%
Nov 27 Nov 27 08:30 GDP Q3(a) N/A 1.9%
Nov 27 Nov 13 08:30 Initial Jobless Claims 11/23 219K 227K
Nov 27 Nov 13 08:30 Durable Goods Nov -0.7% -1.1%
Nov 27 Nov 27 Nov 27 10:00 08:30 10:00 Personal Consumption Expenditures (PCE) Core PCE Pending Home Sales Oct Oct Oct 1.3% 1.7%   1.3% 1.7% 108.7

Mortgage Rate Forecast with Chart – UMBS 30-Year 3.0% Coupon Bond

Mortgage Bonds are trading in a clear downtrend that started in the beginning of September. By lining up the tops of the candles below, you can see the direction Bonds have been trading, as a whole, over the past few months. The good news is that Bonds are trading just above a strong triple floor of support, created by the 50, 100, and 25-day Moving Averages. These levels should provide strong support and may prevent Bonds from moving lower. Bonds are being squeezed and will likely breakout one way or another, especially with the action-packed news week ahead – Expect some volatility next week.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.