After starting the week with a run lower toward 5 percent, mortgage rates have reversed course.  It started mid-day Tuesday and the culprit is Basic Economics.  Here's why. Mortgage rates are based on the price of mortgage-backed bonds and -- like most things -- mortgage-backed bonds prices are based in Supply and Demand.  When bond supplies grow faster than the corresponding demand for them, bond prices tend to fall and when bond prices are down, bond yields are up. Meanwhile, this week, the U.S. Treasury is making its largest weekly auction in history.  $115 billion in new ...

For May, the Case-Shiller Index showed home values up in 15 of its 20 tracked U.S. markets.  It's the first time in nearly 3 years that the index showed such strength and a signal that home prices may be turning higher for good. According to a Case-Shiller Index spokesperson, "this could be a signal that home price declines are finally stabilizing." However, just because the Case-Shiller Index indicates home values are stabilizing, doesn't necessarily make it true.  Real estate is a local phenomenon and the Case-Shiller Index tracks just 20 U.S. cities.  Residents of every ...

Once again, the housing market is showing that its worst days may be over. According to the Census Bureau, the number of new homes sold in June leapt by 11 percent from the month prior.  It stands as the biggest one-month jump in 8 years. A "new home sale" is when a home in any stage of construction -- not yet started, under construction, or already completed -- goes under contract, often with a builder.  It's the opposite of an "existing home sale". In addition to surging sales, the monthly supply of new homes fell to its lowest level in 11 years. Because home values are based ...

Mortgage markets carved out a wide range last week, creating a mixed bag for mortgage rate shoppers.  Rates were much improved on Monday and Tuesday, much worse on Wednesday and Thursday, and idle for most of Friday.  Overall, mortgage rates improved slightly but don't expect the volatility to subside.  There is a ton of economic data scheduled for release this week -- at least one new data point per day, actually. Each could cause mortgage rates to rise or fall: Monday : New Home Sales Tuesday : Consumer Confidence Wednesday : The Fed's Beige Book Thursday : Initial ...

The national home supply is falling, down to its lowest levels since December 2008. In June, there was 9.4 months of supply, down from a year-ago level of 11.0 months.  It's one more sign that the housing market may be mending itself. Housing supply is an important metric because home values across every U.S. market are rooted in Supply and Demand.  When the supply of available homes outpaces buyer demand, home values tend to fall.  And, by contrast, when homes are relatively scarce, values tend to rise. We're still a long way from historical averages, but dwindling home ...

Home values around the country appear to be leveling. The Federal Housing Finance Agency's latest Home Price Index report shows values up by nearly 1 percent in May versus the month prior. Since peaking in April 2007, values remain off by 11 percent nationwide. The FHFA Home Price Index is an interesting metric.  Different from the Case-Shiller Index which collects data from just 20 U.S. markets, the Home Price Index reflects every U.S. home that backs a mortgage sold to Fannie Mae and Freddie Mac. In this sense, the FHFA Home Price Index is more "national" than the ...

Mortgage markets rallied Tuesday while Fed Chairman Ben Bernanke gave his semi-annual testimony to Congress. By the time the day was over, some conforming mortgage rates were down by as much as 0.250 percent. One of the leading causes for the market rally was Chairman Bernanke revealing an "exit strategy" from its massive market stimulus.  Until Tuesday, the Fed hadn't gone into much depth about means and methods by which it would unwind its interventions.  In addition to penning a widely-read Op-Ed piece in the Wall Street Journal Tuesday, Bernanke testified to Congress that the ...

Mortgage markets had an awful week last week as a combination of strong economic data and stand-out earnings results led investors into more risky investments.  The Dow Jones Industrial Average was up 7 percent. Mortgage rates, unfortunately, didn't fare as well.  As the first week since June in which mortgage rates rose, rates were up by a lot.  Mostly for three reasons. The week's first big mortgage rate bump came Tuesday, right after Goldman Sachs released its blowout quarterly numbers. As one of the world's largest financial firms, Goldman's strong showing hinted that the ...