Financing Homes in Lake Tahoe and Truckee since 1992.

Lake Tahoe Mortgage Rate Trends- August 31, 2015

Monday’s bond market has opened in positive territory as stocks open the week in selling mode. The major stock indexes are showing sizable losses during early trading, pushing the Dow lower by 170 points and the Nasdaq down 43 points. The bond market is currently up 11/32 (2.14%), but due to weakness in trading late Friday, this morning’s mortgage rates should remain close to Friday’s early pricing.

There is nothing of importance set for release today, but the rest of the week brings us the release of six reports that may influence mortgage rates. Two of those six are considered to be highly important to the markets. Adding to the significance of these reports is the fact that they will be the last versions before the FOMC meeting next month that some believe may bring the Fed’s first rate hike since the financial crisis and recession.

The first release of the week will come from the Institute for Supply Management (ISM), who will post their manufacturing index for August at 10:00 AM ET tomorrow. This index measures manufacturer sentiment and is expected to show a reading of 52.6, which would be a slight decline from July’s reading of 52.7. A reading below 50 is considered a recessionary sign because it means that more surveyed manufacturers felt business worsened during the month than those who felt it had improved. A larger decline in the index would likely lead to an improvement in mortgage rates tomorrow as it would hint at manufacturing sector weakness.

Overall, we will probably see noticeable movement in rates several days this week. The most active day will likely be Friday due to the significance of the monthly Employment report, but tomorrow’s ISM report is also a key report for mortgage rates. Wednesday has a full day of releases, so we need to be careful with it too. Please maintain contact with your mortgage professional if still floating an interest rate as we should see a pretty volatile week in the financial and mortgage markets.

Lake Tahoe Mortgage Rate Trends- August 30, 2015

This week brings us the release of six reports that may influence mortgage rates, with two of them considered to be highly important. Adding to the significance of these reports is the fact that they will be the last versions before the FOMC meeting next month that some believe may bring Fed’s first rate hike since the financial crisis and recession.

The first release of the week will come from the Institute for Supply Management (ISM), who will post their manufacturing index for August at 10:00 AM ET Tuesday. This index measures manufacturer sentiment and is expected to show a reading of 52.6, which would be a slight decline from July’s reading of 52.7. A reading below 50 is considered a recessionary sign because it means that more surveyed manufacturers felt business worsened during the month than those who felt it had improved. A larger decline in the index would likely lead to an improvement in mortgage rates Tuesday as it would hint at manufacturing sector weakness.

Wednesday has three monthly or quarterly releases, but none of them is considered to be highly important. The first is the ADP Employment report before the markets open Wednesday morning, which has the potential to cause some movement in the markets if it shows much stronger or weaker numbers. This report tracks changes in private-sector jobs of the company’s clients that use them for payroll processing. I don’t have much faith in the data but the markets do react to it, so we watch it. It is expected to show 201,000 new private-sector jobs were added last month.

The second is the revised 2nd Quarter Productivity numbers, which measures employee productivity in the workplace. Strong levels of productivity allow the economy to expand without inflation concerns. Forecasts are currently calling for a 1.4% upward revision, meaning productivity was better than previously thought from April through June. This would technically be good news for the bond market and mortgage rates, but this data is considered to be only moderately important to the markets. Therefore, it will take a sizable variance from 2.7% for this report to affect mortgage rates. Favorable news would be a sizable increase in productivity.

The third report of the day Wednesday will come from the Commerce Department, who will post July’s Factory Orders data at 10:00 AM ET. This manufacturing sector report is similar to last week’s Durable Goods Orders release, but also includes orders for non-durable goods. It can impact the bond market enough to change mortgage rates if it varies from forecasts by a wide margin. Analysts are forecasting an increase of 0.9% in new orders, meaning manufacturing activity strengthened last month. This would be bad news for the bond market and mortgage pricing, but I believe we will need to see a large decline for this report to create a noticeable improvement in rates.

In addition to those reports, the Federal Reserve will release its Beige Book report at 2:00 PM ET Wednesday. This report details current economic conditions in the U.S. by Federal Reserve regions. It is believed to be a key source of data when the Fed meets for their FOMC meetings and is usually released approximately two weeks prior to each meeting. If it reveals any significant surprises or changes from the previous release, we may see movement in the markets and mortgage pricing as analysts adjust their theories on the Fed’s likelihood of raising short-term interest rates when they meet September 16 and 17.

Thursday has nothing of importance set for release. However, the biggest news of the week and arguably the most important that we see each month comes early Friday morning. The Labor Department will post the unemployment rate, number of new jobs added or lost and average hourly earnings for August at 8:30 AM ET Friday. The ideal scenario for the bond market and mortgage rates is rising unemployment, a drop in payrolls and earnings to fall slightly. Analysts are expecting to see that the unemployment rate slipped 0.1% to 5.2% and that 217,000 jobs were added during the month. Weaker than expected readings would signal softer employment sector growth than predicted and would be very good news for bonds and mortgage rates Friday. However, if we get noticeably stronger than expected numbers, mortgage rates will probably spike higher.

Overall, we will probably see noticeable movement in rates several days this week. The most active day will likely be Friday due to the significance of the monthly Employment report, but Tuesday’s ISM report is also a key report for mortgage rates. Wednesday has a full day of releases, so we need to be careful with it too. The best candidate for calmest day may be tomorrow, but I would proceed cautiously there also. Please maintain contact with your mortgage professional if still floating an interest rate as we should see a pretty volatile week in the financial and mortgage markets.

Lake Tahoe Mortgage Rate Trends- August 27, 2015

Thursday’s bond market has opened fairly flat despite much stronger than expected economic news and another round of early stock gains. The major stock indexes are adding to yesterday’s rally that pushed the Dow up 619 points. So far this morning, the Dow has gained 161 points while the Nasdaq is up 59 points. The bond market is currently unchanged from yesterday’s close (2.18%), but we should still see an increase of approximately .125 of a discount point in this morning’s mortgage rates due to weakness late yesterday.

Yesterday’s 5-year Treasury Note auction did not go too well. The benchmarks we use to gauge investor demand showed average to below average interest from investors. That helped push bond prices lower and yields higher during afternoon trading, causing some lenders to make upward revisions to mortgage rates. The lackluster reception prevents us from getting too optimistic about today’s 7-year Note sale. Results will be posted at 1:00 PM, so any reaction will come during early afternoon trading again. A strong interest in the securities generally has a positive impact on the broader bond market and leads to slightly lower mortgage pricing.

The big news of the morning was the first revision to the 2nd Quarter Gross Domestic Product (GDP) that showed the economy actually grew at a pretty rapid 3.7% annual pace. That was a sizable increase from the previous estimate of 2.3% and stronger than forecasts of 3.1%. This means that the economy was much stronger during the April, May and June months than many had thought. Because stocks are more appealing to investors during better economic times and bonds tend to thrive during weaker, the news is clearly negative for the bond market and mortgage rates.

Last week’s unemployment figures were also be posted at 8:30 AM ET, revealing 271,000 new claims for unemployment benefits. This was lower than the 275,000 that was expected and a decline from the previous week’s 277,000. That makes the data bad news for bonds and mortgage rates, but this is a minor report and the variance was not significant. Therefore, it has had a limited impact on today’s trading.

Tomorrow has two pieces of economic data set to be posted. July’s Personal Income and Outlays report is the first at 8:30 AM ET. This data will give us a measure of consumer ability to spend and current spending habits. Rising income means consumers have more money to spend. It is expected to show an increase of 0.4% in income and a 0.4% increase in spending. Since consumer spending makes up over two-thirds of the U.S. economy, weaker than expected numbers would be considered good news for the bond market and mortgage pricing.

The second report of the morning will be the University of Michigan’s revised Index of Consumer Sentiment for August. This sentiment index helps us track consumer willingness to spend similarly to Tuesday’s CCI. It is expected to show little change from August’s preliminary reading of 92.9. If it revises lower, consumers were less confident about their personal financial situations than previously thought. This would be good news for the bond market and mortgage rates because waning confidence usually means that consumers are less likely to make large purchases in the near future. The lower the reading the better the news it is for mortgage rates and shoppers.

Lake Tahoe Mortgage Rate Trends- August 26, 2015

Wednesday’s bond market has opened in negative territory again following stronger than expected manufacturing data and another round of early sizable stock gains. Stocks are up big again during early trading as they were yesterday before closing in negative ground. The Dow is currently up 247 points while the Nasdaq is showing a 77 point gain. The bond market is currently down 12/32 (2.12), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.

The Commerce Department announced at 8:30 AM ET that July’s Durable Goods Orders rose 2.0% when analysts were expecting to see a 0.6% decline. A secondary reading that excludes more volatile transportation-related orders rose 0.6% when forecasts were calling for 0.4%. These readings point toward a strengthening manufacturing sector, making the data bad news for bonds and mortgage rates.

We also have the first of this week’s two Treasury auctions today that may affect bond trading and mortgage rates. Today’s sale is for 5-year Treasury Notes, followed by 7-year Notes tomorrow. These aren’t the most important auctions we have, but they do carry enough significance to affect the broader bond market and possibly mortgage rates if there was a particularly weak or strong level of interest from investors. Results will be posted at 1:00 PM ET, so any reaction will come during early afternoon trading. A strong demand could help boost bond prices and slightly lower mortgage rates later today.

Tomorrow has two pieces of data scheduled for release. We start with the first revision to the 2nd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. The GDP is the total of all goods and services produced in the U.S. and is considered to be the best measurement of economic growth or contraction. This reading is the second of three that we see each quarter. Last month’s preliminary reading revealed that the economy grew at an annual rate of 2.3%. Tomorrow’s revision is expected to show that the GDP actually rose 3.1%, meaning the economy was stronger than previously thought from April through June. A much smaller than expected reading should help lower mortgage rates, especially if the inflation portion of the release does not get revised higher. There will be a final revision issued next month, but it probably will have little impact on mortgage rates since traders will be more interested in the current quarter’s activity.

Last week’s unemployment figures will also be posted at 8:30 AM ET tomorrow. They are expected to show that 275,000 new claims for unemployment benefits were filed last week. This would be a slight decline from the previous week’s 277,000 initial filings. The larger the number of new claims, the better the news it is for bonds and mortgage rates because rising claims hint at a softening employment sector.

We also need to watch stocks and overseas markets as they will still be highly influential on trading here. Eyes are focused on China’s markets and economy, so anything out of there will be of strong interest when the markets open tomorrow.

Lake Tahoe Mortgage Rate Trends- August 25, 2015

Tuesday’s bond market has opened well in negative territory as stocks reverse a good part of yesterday’s losses. The major stock indexes are rebounding from the massive sell-off of the previous few days, but are still well below where they were early last week. The Dow is currently up 303 points while the Nasdaq has gained 131 points. The bond market is currently down 23/32 (2.09%), which should push this morning’s mortgage rates higher by approximately .125 – .250 of a discount point if comparing to Monday’s morning pricing.

July’s New Home Sales data was posted at 8:30 AM ET this morning. The Commerce Department announced that sales of newly constructed homes rose 5.4% last month. This was a little softer than analysts were expecting to see, indicating the new home portion of the housing sector may not be as strong as thought. However, this was a minor variance from forecasts in a report that usually does not draw too much attention. Therefore, its impact on today’s trading has been almost non-existent.

Late this morning, the Conference Board released their Consumer Confidence Index (CCI) for August. It came in much higher than forecasts, meaning surveyed consumers felt better about their employment and overall financial situations than predicted. The 101.5 greatly exceeded the 92.6 that was expected, making the data bad news for the bond and mortgage markets. Although, today’s bond trading has been focused on stock movement and activities overseas, not this morning’s data.

July’s Durable Goods Orders will be released by the Commerce Department at 8:30 Am ET tomorrow morning, giving us an important measurement of manufacturing sector strength. This report tracks orders at U.S. factories for big-ticket items, or products that are expected to last three or more years such as appliances, electronics and airplanes. Analysts are expecting to see a decline of 0.6% in new orders, indicating manufacturing sector weakness. This data is known to be quite volatile from month to month, so a decline of this size doesn’t raise too much concern about the economy. However, a decent sized decline is good news for the bond market and mortgage rates as it means manufacturing activity is likely softening. A secondary reading the excludes more volatile transportation-related orders is expected to rise 0.4%. The softer the reading, the better the news it is for the bond and mortgage markets.

Also tomorrow is the first of this week’s two Treasury auctions that may affect bond trading and mortgage rates. There are auctions several days, but the two relevant ones are tomorrow’s 5-year Note and Thursday’s 7-year Note sales. Results of these will be posted at 1:00 PM ET each day. If investor interest is strong in the auctions, we can expect the broader bond market to rally and mortgage rates to move lower. However, lackluster demand could lead to bond selling and higher mortgage rates tomorrow and Thursday afternoons.

We also will be watching stocks and overseas markets for mortgage rates direction. If the major stock indexes continue to climb, we should see more pressure on bonds and upward changes to mortgage rates. On the other hand, if they spiral downward again, mortgage rates should move a little lower.

Lake Tahoe Mortgage Rate Trends- August 24, 2015

Monday’s bond market has opened in positive territory, entirely a result of this morning’s stock sell-off that is being fueled by massive losses in overseas markets last night. The Dow is currently down a whopping 642 points while the Nasdaq is down 112 points. The bond market is currently up 16/32 (1.99%), which should improve this morning’s mortgage rates only .125 – .250 of a discount point.

The global stock sell-off was fueled mostly from China’s economic concerns and significant drop in stocks there last night. Even though today’s 642 point drop in the Dow is concerning, it actually is well off the earlier loss of almost 1,100 points that we saw when the markets first opened. Still, it will be interesting to see where we close the day. Unfortunately, I believe the rest of the day may not be so bond friendly.

There is nothing of importance scheduled today in terms of economic data or other domestic events that traditionally affect bond trading and mortgage rates. We are reacting solely to stock movement this morning. The rest of the week brings us the release of six pieces of relevant data in addition to two Treasury auctions and the annual Jackson Hole Fed conference. There are at least two events or reports scheduled every day of the week except today. Only one of the reports can be considered very important. However, with so much going on we still could see an active week in the financial and mortgage markets.

July’s New Home Sales data is the first report of the week, coming tomorrow morning at 10:00 AM ET. This report will give us another indication of housing sector strength and mortgage credit demand, but tracks only a small portion of all home sales. The majority of U.S. home sales were covered in last week’s Existing Home Sales report. It usually doesn’t have much of an impact on bond prices or mortgage rates unless it varies greatly from forecasts. Current forecasts are calling for an increase in sales of newly constructed homes from June to July. A larger increase in sales would indicate housing sector strength, making the data negative for mortgage rates.

The Conference Board will post their Consumer Confidence Index (CCI) for August at 10:00 AM ET tomorrow also. This index measures consumer sentiment about their personal financial situations, which helps us measure consumer willingness to spend. If consumers are feeling more confident in their own finances and employment, they are more apt to make a large purchase in the near future, fueling economic growth. A decline in confidence would indicate that surveyed consumers probably will not be buying something big in the immediate future. That would be a sign of economic weakness and should drive bond prices higher, leading to lower mortgage rates Tuesday. It is expected to show a reading of 92.6, which would be an increase from July’s 90.9. The lower the reading, the better the news it is for bonds and mortgage rates.

Overall, we are seeing our stock markets continue their negative reaction to China’s move and concerns about overseas economic growth. This bodes well for mortgage shoppers because stock weakness often causes funds to be shifted into bonds as a safe-haven. However, the improvement in bonds and mortgage pricing is not proportionate to the size of our stock losses over the past week. We are currently down approximately 1,700 points in the Dow since last Monday’s closing level after this morning’s 642 point loss. Despite today’s stock selling, we are seeing an improvement in mortgage pricing that is a typical move, on a day that is far from typical. This leads me to believe that bonds have run out of steam and that some traders may feel this stock selling is only temporary. Accordingly, I am holding the conservative stance towards rate and strongly recommend you maintain contact with your mortgage professional if still floating an interest rate.

Lake Tahoe Mortgage Rate Trends- August 23, 2015

This week brings us the release of six pieces of economic data that may influence mortgage rates in addition to two Treasury auctions and the annual Jackson Hole Fed conference. There is nothing of importance set for tomorrow, but there are at least two events or reports scheduled every other day of the week. Only one of the reports can be considered very important. However, with so much going on we still could see an active week in the financial and mortgage markets.

July’s New Home Sales data is the first report of the week, coming Tuesday morning at 10:00 AM ET. This report will give us another indication of housing sector strength and mortgage credit demand, but tracks only a small portion of all home sales. The majority of U.S. home sales were covered in last week’s Existing Home Sales report. It usually doesn’t have much of an impact on bond prices or mortgage rates unless it varies greatly from forecasts. Current forecasts are calling for an increase in sales of newly constructed homes from June to July. A larger increase in sales would indicate housing sector strength, making the data negative for mortgage rates.

The Conference Board will post their Consumer Confidence Index (CCI) for August at 10:00 AM ET Tuesday also. This index measures consumer sentiment about their personal financial situations, which helps us measure consumer willingness to spend. If consumers are feeling more confident in their own finances and employment, they are more apt to make a large purchase in the near future, fueling economic growth. A decline in confidence would indicate that surveyed consumers probably will not be buying something big in the immediate future. That would be a sign of economic weakness and should drive bond prices higher, leading to lower mortgage rates Tuesday. It is expected to show a reading of 92.6, which would be an increase from July’s 90.9. The lower the reading, the better the news it is for bonds and mortgage rates.

July’s Durable Goods Orders will be released by the Commerce Department early Wednesday morning, giving us an important measure of manufacturing sector strength. This report tracks orders at U.S. factories for big-ticket items, or products that are expected to last three or more years such as appliances, electronics and airplanes. Analysts are expecting to see a decline of 0.8% in new orders, indicating manufacturing sector weakness. This data is known to be quite volatile from month to month, so a decline of this size doesn’t raise too much concern about the economy. However, a decent sized decline is good news for the bond market and mortgage rates as it means manufacturing activity is likely softening. A secondary reading the excludes more volatile transportation-related orders is expected to rise 0.5%. The softer the reading, the better the news it is for the bond and mortgage markets.

Thursday’s only monthly or quarterly data is the first revision to the 2nd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. The GDP is the total of all goods and services produced in the U.S. and is considered to be the best measurement of economic growth or contraction. This reading is the second of three that we see each quarter. Last month’s preliminary reading revealed that the economy grew at an annual rate of 2.3%. Thursday’s revision is expected to show that the GDP actually rose 3.1%, meaning the economy was stronger than previously thought from April through June. A smaller than expected reading should help lower mortgage rates, especially if the inflation portion of the release does not get revised higher. There will be a final revision issued next month, but it probably will have little impact on mortgage rates since traders will be more interested in the current quarter’s activity.

Friday is a multi-release day with two pieces of economic data set to be posted. July’s Personal Income and Outlays report is the first at 8:30 AM ET. This data will give us a measure of consumer ability to spend and current spending habits. Rising income means consumers have more money to spend. It is expected to show an increase of 0.3% in income and a 0.4% increase in spending. Since consumer spending makes up over two-thirds of the U.S. economy, weaker than expected numbers would be considered good news for the bond market and mortgage pricing.

The second report of the morning will be the University of Michigan’s revised Index of Consumer Sentiment for August. This sentiment index helps us track consumer willingness to spend similarly to Tuesday’s CCI. It is expected to show little change from August’s preliminary reading of 92.9. If it revises lower, consumers were less confident about their personal financial situations than previously thought. This would be good news for the bond market and mortgage rates because waning confidence usually means that consumers are less likely to make large purchases in the near future. As with the CCI index, the lower the reading the better the news for mortgage shoppers.

There are a couple of Treasury auctions that may affect bond trading and mortgage rates this week. There are auctions several days, but the two relevant ones are Wednesday’s 5-year Note and Thursday’s 7-year Note sales. Results of these will be posted at 1:00 PM ET each day. If investor interest is strong in the auctions, we can expect the broader bond market to rally and mortgage rates to move lower. However, lackluster demand could lead to bond selling and higher mortgage rates Wednesday and Thursday afternoons.

Also worth noting is the annual central banker conference in Jackson Hole, Wyoming. There have been major events to come out of this event in the past while others have been non-factors. Federal Reserve Chair Janet Yellen is not scheduled to speak this year. The conference runs Thursday through Saturday, so we could still see the markets react to something from this event. Any impact on trading or mortgage rates will happen Thursday or Friday.

Overall, I am expecting to see the most movement in rates Wednesday, although Tuesday could be a fairly active day also. We need to watch the stock markets for rate direction only as their significant selling helped bonds to rally last week. Generally speaking, stock strength often hurts the bond market while stock losses make bonds more appealing to investors. Despite the lack of what we consider key economic data, we should still see plenty of movement rates this week. Therefore, please proceed cautiously and keep an eye on the markets if still floating an interest rate.

Lake Tahoe Mortgage Rate Trends- August 20, 2015

Thursday’s bond market has opened in positive territory, extending yesterday afternoon’s rally. The stock markets are showing hefty losses during early trading with the Dow down 226 points and the Nasdaq down 86 points. The bond market is currently up 13/32 (2.08%), which with yesterday’s late gains should improve this morning’s mortgage rates by approximately .250 – .375 of a discount point over Wednesday’s early pricing.

The bond market strengthened a little bit during early afternoon trading yesterday but picked up steam following the release of the FOMC minutes. The 2:00 PM ET release indicated that the Fed may not be as anxious to start raising key short-term interest rates as many had thought. Their comments and voting raised the possibility that the first rate hike may not come at next month’s FOMC meeting after all. Their specific concerns were inflation that is still well below their ideal level and concerns about the global economy that could have a negative impact on ours. The fact that the big picture points towards concerns about economic growth made bonds more attractive to investors late yesterday. Many lenders issued intraday rate improvements, so how much of an improvement you will see this morning depends on the size of the adjustment that was made yesterday afternoon.

Last week’s unemployment figures kicked off today’s three pieces of relevant data. They showed that 277,000 new claims for unemployment benefits were filed last week. This was a little higher than expectations and an increase from the previous week’s revised 273,000 initial claims. This is good news for mortgage rates, especially since analysts were calling for a small decline in new claims because rising claims are a sign of employment sector weakness. However, this is only a weekly snapshot and does not carry much significance unless it shows a wide variance from forecasts. Therefore, its impact on today’s bond trading and mortgage pricing has been minimal.

The National Association of Realtors announced late this morning that July’s Existing Home Sales rose approximately 2.0% when analysts were expecting to see a decline of 1.0%. That means the housing sector was stronger than expected last month, making the data negative for bonds and mortgage rates.

Lastly, the Conference Board said its’ Leading Economic Indicators (LEI) for July slipped 0.2%, meaning they are predicting slower economic activity over the next couple months. Analysts were expecting to see an increase of the same size, so we can consider this report good news. Unfortunately, it is not considered to be highly important and hasn’t done much to spur bond buying this morning.

Tomorrow has nothing of importance set for release, so we can expect stocks to have the biggest influence on bond prices and mortgage rates. I am expecting to see a pretty quiet day, but keep an eye on the markets because things can change quickly. This is particularly true if stocks make a move either direction.

Lake Tahoe Mortgage Rate Trends- August 19, 2015

Wednesday’s bond market has opened in negative territory despite weaker than expected inflation news and sizable stock losses. The stock markets are in selling mode with the Dow down 174 points and the Nasdaq down 44 points. The bond market is currently down 4/32 (2.20%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.

July’s Consumer Price Index (CPI) was posted early this morning, revealing a 0.1% increase in both the overall and core readings. Both were 0.1% lower than forecasts, indicating inflationary pressures at the consumer level were softer than expected. That makes the data favorable for bonds and mortgage rates, but traders to seem to be too impressed this morning.

This afternoon we get the minutes from the last FOMC meeting. There is a pretty good possibility of the markets reacting to them following their release. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy, economic growth and the Fed’s plans for raising short-term interest rates. Since the minutes will be released at 2:00 PM ET, look for a reaction during mid-afternoon trading. This is one of those events that can cause significant movement in rates after its release or be a non-factor, so be prepared for a move, but not surprised if the impact on rates is minimal.

There are three relevant reports scheduled for release tomorrow. Last week’s unemployment figures will be released at 8:30 AM ET. They are expected to show that 272,000 new claims for unemployment benefits were filed last week, down slightly from the previous week’s total of 274,000. Declining initial claims are a sign of employment sector strength, so the larger the number of claims, the better the news it is for mortgage rates. Although, because this is only a weekly reading we usually need to see a significant variance from forecasts for it to impact mortgage rates.

July’s Existing Home Sales report will be posted at 10:00 AM tomorrow morning. The National Association of Realtors will release this report, giving us a measurement of housing sector strength and mortgage credit demand. It covers a very high percentage of all home sales in the U.S., but usually does not have a major influence on bond trading and mortgage rates unless it varies greatly from analysts’ forecasts. It is expected to show a decline from June’s sales, meaning the housing sector softened last month. This would generally be good news for the bond market and mortgage rates because a strengthening housing sector makes broader economic growth more likely. But unless the decline is much larger than current forecasts, the report will likely have a minimal impact on tomorrow’s mortgage pricing.

The Conference Board is a New York-based business research group that will post its Leading Economic Indicators (LEI) for Jul late tomorrow morning also. This index attempts to measure economic activity over the next three to six months and is considered to be moderately important. A higher than expected reading is bad news for the bond market because it indicates that the economy may be strengthening more than thought. However, a weaker reading means that the economy may not grow as much as predicted, making stocks less appealing to investors. This also eases inflation concerns in the bond market and could lead to slightly lower mortgage rates Thursday. It is expected to show an increase of 0.2% in the index, indicating modest economic growth over the next couple of months. It will take a sizable difference between forecasts and its actual reading for this report to noticeably influence mortgage rates.

Lake Tahoe Mortgage Rate Trends- August 18, 2015

Tuesday’s bond market has opened in negative territory following stronger than forecasted economic news. The stock markets are showing relatively minor losses with the Dow down 17 points and the Nasdaq down 13 points. The bond market is currently down 4/32 (2.18%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.

The Commerce Department announced early this morning that new home groundbreakings rose last month to their highest level since October 2007. The increase was only 0.2% from June, but a sizable upward revision to June’s starts allowed the small increase to reach that level. Because most of the surprise came from June’s data, the impact on today’s bond trading and mortgage pricing has been limited. However, the data is still bad news for mortgage rates because it points toward a strengthening housing sector.

Tomorrow is the key day of the week. July’s Consumer Price Index (CPI) will be posted at 8:30 AM ET tomorrow morning. The CPI is one of the most important reports we see each month as it measures inflation at the consumer level of the economy. As with last week’s Producer Price Index, there are also two readings in the report. Analysts were expecting to see a 0.2% increase in the overall index and a 0.2% rise in the core data reading. Declines in the readings, especially in the core data, should lead to lower mortgage rates since it would mean inflation is still not a threat to the economy and a Fed rate hike may come later than sooner. On the other hand, stronger than expected readings will likely lead to an increase in mortgage pricing tomorrow.

We will also get the minutes from the last FOMC meeting tomorrow. There is a pretty good possibility of the markets reacting to them following their release. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy, economic growth and the Fed’s plans for raising short-term interest rates. Since the minutes will be released at 2:00 PM ET, if there is a market reaction to them it will be evident during afternoon trading. This is one of those events that can cause significant movement in rates after its release or be a non-factor, so be prepared for a move, but not surprised if the impact on rates is minimal.