Stocks and Mortgage Bonds are both higher so far this morning.
New Home Sales
New Home Sales, which measures signed contracts on new homes, rose 8.8% in March, which was stronger than estimates. There was a negative revision to last month, so when factoring that in, sales were really up about 5%...which is still great.
There were 477,000 new homes for sale at the end of March, which was up from 465,000 in February. At the current pace of sales, there is an 8.3 month’s supply, which is up down from 8.8. However, only 89,000 are completed, and when looking at the pace of sales vs homes that are completed (available supply), there is only a 1.53 months’ supply, down from 1.62 in February.
The median home price was reported at $430,700, which is up almost 6% from the previous report. The median home price is down 2% from last year, but that’s due to the mix of sales. The media this morning tried to say that the median home price is down because builders are reducing pricing – This is untrue as the median home price rose month over month and is only down year over year due to the mix of sales.
According to the NAHB 24% of builders cut home prices in March, which is down from 36% in December and 30% this time last year. We also got the data for April, which is trending lower to 22%. There is also some level of incentive, but this shows less price reductions are the trend and regaining pricing power.
Technical Analysis
Mortgage Bonds are continuing to stabilize and move slightly higher in their wide range between support at 98.867 and overhead resistance at 99.647. Bonds are now getting closer to resistance so we have to remain on guard for any reversals from that level.
The 10-year continues to edge lower and has a lot of room to improve to the downside until reaching support at 4.459%...so long as we can get past the auctions this week.
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