171-300x225In this week’s Mortgage Market Update we’ll take a look at the latest news from the National Association of Home Builders’ builders confidence index, which brought some good news to the industry. Plus, we’ll go over where mortgage rates have been moving and where they’re likely to go in the coming days.

Home Builder Confidence Surges in August

After finally reaching positive territory in July, the level of home builder confidence continued to improve in August, according to the latest data released by the National Association of Home Builders (NAHB).

Their monthly index that measures builder sentiment provided proof that the market for newly built homes is maintaining its positive momentum. Although analysts expected the level to remain unchanged in August, it was a pleasant surprise when the final results showed a two-point increase, bringing August’s builder sentiment level to 55.

Any reading above 50 is considered a positive level of sentiment, with more respondents feeling confident about the market. This marks the third consecutive monthly gain and puts the index at its highest level since January of this year.

“As the employment picture brightens, builders are seeing a noticeable increase in the number of serious buyers entering the market,” said NAHB Chairman Kevin Kelly.

NAHB Chief Economist David Crowe also stated that the improvements is largely due to employment gains:

“Factors contributing to this rise include sustained job growth, historically low mortgage rates and affordable home prices, which are helping to unleash pent-up demand.”

Mortgage Rates At-A-Glance

  • Currently Trending: Neutral
  • 7 Day Forecast: Neutral
  • Potential Volatility: Average

Analysts from Sigma Research indicated that last week was very light on new information about the economy, which helped keep rates from experiencing any drastic changes. The Mortgage Backed Securities (MBS) market gained 62 basis points (BPS) from last week which is positive for rates.

Sigma Research also revealed that the MBS market had more to trade this week versus last week. Last week the focus was mostly on the geo-political tensions and softening European market. This week is unlikely to be any different, according to Sigma. However, the expectation that there will be information coming from Janet Yellen on her thoughts about the labor market and interest rates could influence where rates move. The market will continue to debate how she plans to frame her opening remarks at the annual Kansas City Fed Jackson Hole conference on Friday.

As for this week’s potential volatility, analysts say the risk is average to slightly higher throughout the week. As noted above, geo-political issues on any given day could cause dramatic changes in the market. However, for now, things appear to be remaining calm.

Be sure to check back next week to see where mortgage rates are likely to go and to stay updated on more housing and mortgage market news.