Mortgage California Blog

Mortgage Market Weekly Commentary

March 19th, 2017

This week brings us the release of only three monthly economic reports for the markets to digest. Only one of them is considered to be very important to mortgage rates and it comes at the end of the week. The first couple days have nothing of importance in terms of relevant economic data, so we could see the week start off slowly.

The first report will come late Wednesday morning when February’s Existing Home Sales report is posted by the National Association of Realtors. It will give us a measurement of housing sector strength and mortgage credit demand. It is expected to reveal a decline in home resales, meaning the housing sector softened last month. Ideally, bond traders would prefer to see a large decline in sales, pointing towards a rapidly weakening housing sector. Bad news would be a sizable increase in sales, indicating that the housing sector is gaining momentum. That could be troublesome for the bond market and mortgage rates because housing strength makes broader economic growth more likely.

Thursday’s monthly report is February’s New Home Sales figures. The Commerce Department is expected to announce a small increase in sales of newly constructed homes. This report tracks a much smaller percentage of home sales than Wednesday’s Existing Home Sales report covers, so it should have a much weaker influence on the markets and mortgage pricing. A large increase in sales would be negative for the bond market and mortgage pricing because it would point towards economic strength.

February’s Durable Goods Orders will be released Friday at 8:30 AM ET. This Commerce Department report gives us a measurement of manufacturing sector strength by tracking new orders for big-ticket items, or products that are expected to last three or more years such as electronics, appliances and airplanes. This data is known to be volatile from month to month but is still considered to be of fairly high importance to the markets. Analysts are expecting it to show an increase in new orders of approximately 1.3%. A larger increase in orders would be considered negative for bonds as it would indicate strength in the manufacturing sector and could lead to higher mortgage rates Friday morning. Since these orders are volatile, it will take a wider variance from forecasts for it to move mortgage rates than other data requires.

We do have a large number of Fed member speaking engagements scheduled this week. These often are a non-factor for mortgage rates, but do carry the potential to come into play. If their speeches give us any significant surprises, particularly about monetary policy issues, the markets will react. This is particularly true during weeks of little economic data or other events to drive bond trading.

Overall, there is good reason to believe that we could have a calmer week for mortgage rates than the past couple have been. Friday has the most important report, so is the best candidate for most important day. However, the markets could get active at any time, so it would be prudent to maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.

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