Contracts for pending sales of previously owned U.S. homes rose much faster than expected in November. This follows last week’s surprise gain in existing home sales. A pending home sale is when a contract has been signed between a buyer and a seller but the home has not yet closed.
The National Association of Realtors reported a rise of 3.5% in November, economists had expected an increase of only 2%. Once again, we are seeing a little stronger than expected demand which has been following a very clear pattern of strength over the past four months.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) gained +86 basis points from Monday’s open to Friday’s close causing 30 year fixed rates to decrease from the previous week. We had several very strong economic reports such as Initial Jobless claims and Chicago PMI. Normally, the strength in these economic reports would have pressured mortgage rates higher. But traders parked their funds into the safe and boring world of mortgage backed securities before the end of the year which helped mortgage rates temporarily.
