Atlanta Real Estate Blog

Mortgage bond prices rose last week pushing mortgage interest rates lower.  The US Treasury auctions went well with relatively strong foreign demand for most issues.  The gains came as the Fed continued to pour billions into mortgage bonds in an effort to keep rates low to stabilize the housing sector of the economy.  The data was mixed as weekly jobless claims came in better than expected and the Fed "BeigeBook" indicated inflation remained in check.  For the week interest rates fell by about 3/8 of a discount point.

The consumer price index will be the most important data this week.  If inflation indications are tame, rates will likely hold steady or improve. However, if inflation increases look for mortgage interest rates to spike higher.  (Homebuyers should prepare to lock rates or buy quickly to enjoy the current low sales prices and lower mortgage rates.   Homesellers should sell now to capture qualified buyers who can close quickly while homes are more affordable.)

Business Inventories

The report on business inventories basically gives a broader look at the durable goods,factory orders, and retail sales reports.  Not only is this report an important part of the investment component of the GDP, but it also provides additional evidence about the economy in the upcoming months.  Changes in business inventories slow as the economy approaches a peak, and rise as the economy approaches the trough of a recession.  Therefore the change in business inventories is a leading indicator of GDP.  The data for this report, which are published by the Department of Commerce's Census Bureau, comes from a monthly survey of inventories, orders, and manufacturers' shipments, in addition to the merchant wholesalers and retail trade surveys.

Not a great amount of attention is typically paid to this report due to the fact that much of the data is already available and surprises are rare. The only new information in this report is retail inventories.  However, in this environment every piece of data has the potential to cause some volatility.

There still remains some uncertainty about the future of mortgage interest rates.  Taking advantage of the recent improvements in rates makes sense.

Tags: mortgage interest rates, business inventories, Producer Price Index, Housing Starts, Consumer Price Index, inflation, weekly jobless claims, GDP, Census Bureau, homebuyers, homesellers, home sellers, homeowners, current low sales prices, lower mortgage rates, affordable homes prices, durable goods, retail trade, lock rates, ATLShortSales.com