7/28/09

Good morning. The New Home Sales number was up yesterday: by 11%, the biggest jump in eight years. This is good news despite the the fact that the median price decreased 12% in the last year. Nationwide, it would take 8.8 months to sell all homes at the current sales pace, the lowest level since October 2007. We got through the 20-yr TIPS auction yesterday, but today have $42 billion of 2-yr notes to sell later today. Obviously this supply pressure is not helping mortgage rates & prices, and yesterday things got a little worse.
For news today we’ll see Consumer Confidence and the Case/Shiller Home Price Index, and of course the auction. From what I have heard, no one expects rates to move up too much or down too much, so aside from a little intra-week volatility, perhaps mortgage rates will be at these levels for quite some time. Currently mortgage security prices are a tad better.