Market Update: February 26, 2025
Equities & Bonds
Equity markets are trading higher today, though they have faced some pressure in recent sessions. Meanwhile, Mortgage Bonds are starting the day flat after five consecutive days of improvement, following movement in the 10-year Treasury yield.
New Home Sales
New Home Sales, which track signed contracts for newly constructed homes, declined by 10.5% in January to an annualized pace of 657,000 units—23,000 below market expectations. However, December’s figures were revised higher, tempering the perceived decline. Year-over-year, sales are down by 1.1%.
The median home price increased to $446,000, reflecting a 7.5% gain from December and a 3.7% rise year over year. It is important to note that month-over-month fluctuations can be influenced by the mix of homes sold, with a higher proportion of luxury homes contributing to the price increase.
At the end of January, 495,000 new homes were available for sale, equating to a nine-month supply based on the current sales pace—up from eight months previously. However, only 115,000 homes were fully completed, while 106,000 had not yet begun construction and may not come to market. When considering only completed homes relative to sales, the effective supply drops to just 2.1 months, indicating a much tighter inventory.
Mortgage Applications
According to the Mortgage Bankers Association (MBA), mortgage rates edged lower last week, moving from 6.93% to 6.88%. Rates remain approximately 0.125% higher than they were at this time last year.
Purchase applications remained flat week over week but are now up 3% annually. Meanwhile, refinance applications declined by 4% from the prior week but have increased by 45% year over year.
Key Economic Reports This Week
- Thursday: Initial Jobless Claims, GDP, Pending Home Sales
- Friday: Personal Consumption Expenditures (PCE)
Technical Analysis
Mortgage Bonds closed above the 101.39 Fibonacci resistance level yesterday, confirming a bullish move. With this breakout, there is potential for further gains until the next resistance level at 101.55.
The 10-year Treasury yield has entered a new trading range, with resistance at the 4.332% Fibonacci level and support at its 200-day Moving Average.
With Mortgage Bonds holding above key support, a floating strategy remains favorable for now.
