Existing homes for sale rose 4.1% to 1.52 million, but were still down 9.5% vs. a year earlier. Tight supplies are limiting sales, NAR said. Home prices were up 5.8% vs. a year earlier.The report gauges actual home sale closings, not contract signings. So the data likely don’t reflect the sharp rise in mortgage rates in 2018.
However, demand for loans to buy homes fell 6% in the week ended Feb. 16, following a 6% drop in the prior week, the Mortgage Bankers Association said. Overall mortgage applications slid 6.6%. The average 30-year fixed-rate mortgage rose 7 basis points to 4.64%, the highest since January 2014. Year-over-year, purchase loan applications rose 3%, down a percentage point.
Treasury yields have been rising amid strong global economic growth and a double dose of fiscal stimulus via Trump tax cuts and a sharp rise in federal government spending. Solid hiring and improving wage growth, along with a wave of millennials having families, support housing demand despite the rise in still-low mortgage rates.
Last week, the Commerce Department reported stronger-than-expected housing starts for January.
The IBD-Building-Residential/Commercial group was 2017’s top performer out of 197 industries tracked by IBD. A surprise profit miss by NVR Inc. (NVR) triggered a sharp sell-off among homebuilders, providing an early warning ahead of the stock market correction. Earnings by D.R. Horton (DHI), KB Home (KBH) and others failed to stop the group retreat until the market began rallying.
The SPDR S&P Homebuilders (XHB) ETF found support at its 200-day moving average during the correction, much like the S&P 500, and has been rising since. The XHB ETF is up 0.7% intraday on the stock market today.
Meanwhile, the Federal Reserve will release minutes from its January policy meeting at 2 p.m. ET. Investors will be looking for any hints that policymakers are leaning toward four rate hikes in 2018. The market currently has priced in three hikes.