Existing Home Sales are expected to rise again, placing upwards pressure on home prices. Traders brushed off Tuesday and Wednesday’s passage of the American Recovery and Reinvestment Act and the President’s mortgage relief plan, respectively.
It showed how unsure markets remain about the stimulus package and its probable impact on the economy.
As a result, mortgage markets worsened last week, albeit slightly. It marked the 4th week out of five in which mortgage rates rose.
However, there were a few notable new items for American homeowners and home buyers last week:
- The signed-into-law stimulus package includes a first-time home buyer tax credit
- Additional banks joined the “no foreclosure” movement
- Fannie Mae re-opened guidelines so that real estate investors can own and finance 10 properties, up from 4
Taken separately, these points aren’t especially noteworthy. Together, however, they’re very important.
In reducing the number of homes for sale while, in turn, spurring demand for them, last week’s policy shifts should provide key support against falling home values nationwide. More buyers competing for fewer homes tend to make prices go up, after all.
This week, we’ll see if buyers are responding. Two housing-related data points are released.
On Wednesday, it’s January’s Existing Homes Sales report. After soaring 6-plus percent in December, economists expect another big increase. This makes sense because falling prices make homes more affordable and banks are getting more efficient with selling foreclosed properties.
Then, on Thursday, the New Home Sales report hits the wires. It’s expected to show little or no change.
As for mortgage rates, expect the same unpredictability we’ve seen since the start of the year. As Wall Street comes to terms with the various stimulus plans and the fate of our nation’s largest financial companies, money will flow in and out of securities markets with fluidity and speed and that includes mortgage-backed bonds.
Rates should carve out a wide range this week. If you’re not currently floating, consider locking in to avoid the risk of higher monthly payments.