I received this economic summary from Jonathan Rouse, Mortgage Loan Officer at Bank of America. There is some good information here and wanted to share.

Last Week in Review

New Home Sales for March plunged by 14.5 percent from February to an annual rate of 384,000 units. This was far below the 455,000 expected and the lowest level since July of last year. New Home Sales in March were down 13.3 percent from the same period last year. Existing Home Sales for March didn’t fare much better as they declined by 0.2 percent from February to an annual rate of 4.59 million, just below expectations. This was the slowest pace since July 2012.

In other housing news to note, the Federal Housing Finance Agency (FHFA) reported that its February Home Price Index (HPI) rose by 6.9 percent from the same period last year. This was the weakest reading in 13 months.

What does this mean for home loan rates? Typically good news helps stocks improve at the expense of bonds, including mortgage bonds (the type of bonds on which home loan rates are based). However, bonds and home loan rates were able to benefit last week from the increased tensions between Russia and the Ukraine. This caused investors to move their money into the safe haven of bonds, helping mortgage bonds and home loan rates improve.

Whether these improvements continue could be contingent on several potentially market-moving items in the coming week, including the Jobs Report for April and the Fed’s next meeting of the Federal Open Market Committee. Remember that the Fed is now purchasing $30 billion in Treasuries and $25 billion in mortgage bonds to help stimulate the economy and housing market. This is down from the original $85 billion per month that the Fed had been purchasing. It will be important to see if the Fed announces additional tapering of these purchases at its upcoming meeting.

Forecast for the Week

This week’s economic reports will touch on a large sector of the economy, with several key reports to note.

• Economic data kicked off on Monday with Pending Home Sales for March, followed by the S&P Case-Shiller Home Price Index for February on Tuesday.
• Tuesday also featured Consumer Confidence for April.
• In the manufacturing sector, look for Chicago PMI on Wednesday and the ISM Index on Thursday.
• Also on Wednesday, the first reading of Gross Domestic Product for the first quarter of 2014 will be released.
• Thursday brings Personal Income, Personal Spending and Personal Consumption Expenditures, the Fed’s favorite measure of inflation. Weekly Initial Jobless Claims will also be delivered as usual.
• That leads us to Friday when one of the most closely-watched economic reports will be released—the Jobs Report for April, which features Non-farm Payrolls and the Unemployment Rate.

In addition, the Fed’s next regularly-scheduled meeting of the Federal Open Market Committee begins on Tuesday, with the Policy Statement being delivered Wednesday. It will be important to see if the Fed announces additional tapering to its bond buying program—and how bonds and home loan rates react.

As you can see in the chart below and as mentioned above, Existing Home Sales have been declining. Many will be watching all the housing reports closely to see if this trend continues.

In the news this week (April 28 - May 2, 2014)