Despite facing significant market volatility, mortgage bond prices remained almost unchanged by the end of the week. There was a considerable amount of selling at the start of the week as investors anticipated the expected Fed rate hike. As anticipated, the Fed raised rates by 25 basis points, resulting in a bounce-back in trading activities later in the week.
Mixed data was reported in the housing market as existing home sales grew by 14.5% compared to the 5% increase, while consumer sentiment was reported at 63.4 compared to the expected 67, and weekly jobless claims were 191K vs. 193K. New home sales totaled 640K vs. the expected 650K. Durable goods orders, however, fell 1%, missing the expected 0.6% increase. Mortgage interest rates improved by approximately 1/8 of a discount point by the close of the week.
There was a notable uptake in purchase mortgage applications, which increased by 2% the previous week. This increase can be attributed to the fall in average contract interest rates. The refinance applications also saw a rise of 5%. Nevertheless, market experts expect that the Fed will have to decrease rates by July. In terms of employment, there was an unexpected decrease in unemployment applications for the second week, indicating that the job market remains stable.
In February, there was a significant increase in existing home sales by 14.5%, marking the first monthly gain in 12 months. This surge was the largest since July 2020. The median price of an existing home sold during this period was $363K, which represents a slight annual drop of 0.2% nationally. Interestingly, this was the first price decrease in more than ten years.
