Signs of a cooling in the housing recovery continued to pile
up with the release of the Housing Market Index (HMI) today. The index
dropped sharply to 46 in early February from 56 in January. Expectations
from economists had been for this index to remain firm. While
harsher than usual weather was again thought to be a contributing factor, it is
increasingly difficult to explain away recent data with this rationale.
As we’ve written earlier in this blog, both Existing Home
Sales (EHS) and New Home Sales (NHS) both saw weakness in recent months.
In addition, at January month-end, Pending Home Sales (PHS) also fell strongly
(-8.7%) to its lowest level since October 2011. Of particular note,
PHS in the western part of the US, where harsh weather would not have been a
contributing factor, has dropped 16% year-over-year.
The cooling in the housing market, in light of ongoing price
strength and low inventories, can be expected to be constructive to mortgage
spreads in the secondary market.
Tradex Global Advisory Services, LLC
investorrelations@thetradexgroup.com
203-863-1500
@Tradex_Global
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