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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (12614)	4/26/2004 12:33:58 PM
From: russwinter	Read Replies (1) \| Respond to of 110194

The ultra low interest rates in March brought down the homes for sale inventory to a quite reasonable level. The mortgage purchase index has barely dropped (4-9 was 432, 4-16 was 434) so far in April despite 50 bps higher rates.: Reuters U.S. Home Sales Rocket to Record in March Monday April 26, 10:39 am ET WASHINGTON (Reuters) - Sales of U.S. homes rocketed to a record high in March, defying expectations of slower home buying, as shoppers leaped for the chance to buy before mortgage interest rates rise, a government report showed on Monday. Sales of new homes jumped 8.9 percent to a seasonally adjusted annual 1.228 million annual pace in the month from a revised 1.128 million in February, the Commerce Department said. It was the biggest monthly surge since June of last year, when mortgage interest rates fell to the lowest levels since the early 1960s. A Reuters survey showed economists were expecting developers to move units at a slower 1.159 million pace in the month. Analysts said low rates drove buyer appetites in spite of appreciating home prices. "Mortgage interest rates were hugely supportive in the spring months and we're seeing that in these numbers," said Richard DeKaser, chief economist for National City Corp. Observers have expected the U.S. housing market to ease from record sales levels fueled by low mortgage interest rates in 2003. Home loan rates rose moderately at the end of last year, but fell again in early 2004 as slow jobs growth cast doubt on the solidity of the U.S. economic recovery. However, evidence of new hiring has eased worries about the strength of the economic recovery and raised the possibility the Federal Reserve may move short-term rates higher. The Fed funds rate is at a 1958 low of 1 percent after the central bank made 13 cuts in a row to pull the economy out of recession and nurture it past a series of shocks including the Sept. 11, 2001, attacks in New York and the Washington area. Mortgage finance giant Freddie Mac reported last week that the national average for the 30-year fixed rate mortgage rose to 5.94 percent, the highest level since December. "The bond market rally which carried into the spring pushed us down, with 30-year fixed rates down to mid-fives (percent range), and that is helping affordability even with the strong price increases we've seen," DeKaser said. The supply of homes available for sale at the current months' sales pace fell to 3.7 months, the lowest since last August. New home sales surged 19.3 percent in the South, the region with the greatest number of sales, to a record high 613,000 annual pace.