Interest rates move down again

Interest rates for buying a home on the Palos Verdes Peninsula moved down about a tenth of a point with the Feds latest announcment.The following are excerpts from the newsletter on interest rates published by HSH Associates :

“As expected, mortgage rates moved lower this week in the wake of last week’s inaction by the Federal Reserve. The decline was a little more than we expected — we thought the decline would be more of a multi-week affair, rather than as quickly as it occurred over the past seven business days — but markets move as they wish.

Arguably, one of the reasons the Fed stayed the course is that it wants more time to see if the sizable bump in mortgage rates has derailed the housing market. Early evidence from July came in the form of a plummet in new home sales, which featured a 13.4 percent drop for the month. Following that up this week was the report covering August, and truth be told, although the number was improved compared to July it was still pretty soft. Despite a 7.9 percent jump from month to month, the 421,000 annualized rate of sale was the second lowest of 2013, with the nadir being July’s 390,000 rate. Supplies of new homes moved to a flat five months of unsold stock totaling 175,000 units. Stockpiles of unsold homes still remain near all-time lows, but inventories have been steadily climbing since last August’s bottom of 143,000 units.

A few important clues about where we are economically come next week in the form of the Institute for Supply Management reports on both manufacturing and service-business health. A measure of consumer spending couched as vehicle sales and the all-important employment report is also due, as noted above. If the present overall pattern for economic data holds, all will be probably lukewarm in some way or another, and mortgage rates will level off, with the most likely move down by a couple of basis points (warmer data could reverse this, however).”