Housing: Rates Rise, Pending Sales Tiptoe Higher


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Mr. Gao co-found and became the CFO at Oxstones Capital Management. Mr. Gao currently serves as a director of Livedeal (Nasdaq: LIVE) and has served as a member of the Audit Committee of Livedeal since January 2012. Prior to establishing Oxstones Capital Management, from June 2008 until July 2010, Mr. Gao was a product owner at Procter and Gamble for its consolidation system and was responsible for the Procter and Gamble’s financial report consolidation process. From May 2007 to May 2008, Mr. Gao was a financial analyst at the Internal Revenue Service’s CFO division. Mr. Gao has a dual major Bachelor of Science degree in Computer Science and Economics from University of Maryland, and an M.B.A. specializing in finance and accounting from Georgetown University’s McDonough School of Business.

More tempered pending home sales on Thursday dampened excitement generated by bullish data earlier in the week, while mortgage rates provided little new fodder for what have been increasingly optimistic takes on the housing industry.

Data earlier this week showed new home sales rose 5.7% in September to 389,000, and the FHFA home price index ticked up 0.7% — better than expected on both counts. They followed even rosier data on housing starts and building permits — up 15% and 12%, respectively, the week prior.

On Thursday the National Association of Realtors reported that pending home sales rose for the 17th straight month on a year over year basis — with all regions but the West showing double-digit growth over the same time last year. But anemic growth of 0.3% month over month, in September from August, underwhelmed expectations. It followed an even more underwhelming decline of 2.6% in August over July.

“Pending” sales are a forward-looking indicator based on contracts signed. Although home contracts are elevated compared to recent years, they “appear to be bouncing around in a narrow range,” says Lawrence Yun, NAR chief economist. “This means only minor movement is likely in near-term existing-home sales, but with positive underlying market fundamentals, they should continue on an uptrend in 2013.”

Mortgage rates reversed last week according to data released by Freddie Mac on Thursday. The 30-year fixed rate rose to 3.41%, its highest in five weeks. The 15-year rate ticked up to 2.72% from 2.66%, the highest in a month. The changes are still relatively insignificant when you look at the long term chart of rates (see below). Last year at this time, the 30-year rate was at 4.1%.


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