Chico Real Estate Market Update

Mortgage bond prices were slightly lower last week, which pushed mortgage interest rates higher. Rates were positive the beginning of the week following weaker than expected retail sales data but rose sharply following unfriendly data Thursday. Lower than expected weekly jobless claims started the negative trend. The figure was the lowest since 2008. A surge in the core producer price index also added pressure to rates. The core rose 0.4% in comparison to the expected 0.2% increase. Fortunately the core consumer price index was in line with expectations, which kept the rate increases in check. Debt trouble in Europe continued to dominate headline news, which also helped. Mortgage bonds ended the week worse by 1/8 of a discount point despite the volatility.

LOOKING AHEAD
Economic
Indicator Release
Date and Time Consensus
Estimate Analysis
2-year Treasury Note Auction Tuesday,
Feb. 21,
1:15 pm, et None Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Existing Home Sales Wednesday,
Feb. 22,
10:00 am, et 4.58m Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.
5-year Treasury Note Auction Wednesday,
Feb. 22,
1:15 pm, et None Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims Thursday,
Feb. 23,
8:30 am, et 345k Important. An indication of employment. Higher claims may result in lower rates.
7-year Treasury Note Auction Thursday,
Feb. 23,
1:15 pm, et None Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
U of Michigan Consumer Sentiment Friday,
Feb. 24,
10:00 am, et 72 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
New Home Sales Friday,
Feb. 24,
10:00 am, et 295k Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
EXISTING HOME SALES
The National Association of Realtors releases existing home sales data near the end of each month. The data is derived from a sampling of MLS data across the nation. The release shows the current sales rate for existing single-family, coops, and condos. A national figure and 4 regional figures are provided. The NAR Chief Economist indicated in February the current methodology used to calculate the benchmarks will be revised in the near future. There is no timetable for the revision.

The housing market is a critical component of the US economy. A house is usually one of the largest assets a consumer owns. Housing usually leads market recoveries. Unfortunately the housing industry remains in transition as the effects of massive foreclosures still weigh heavily. Most analysts agree that the housing market will remain wobbly for some time. The important thing to remember is that housing is a “local” issue. The maxim about housing being strongly tied to “location, location, location” still holds true. The overall housing market shows signs of trouble while there are areas that don’t follow the overall trend.

While the data usually isn’t a big market mover it still has the potential to result in some market volatility. The release usually includes remarks from the Chief Economist regarding prices, inventory, and interest rates.