Appreciation Continues to Climb

Good morning everyone!

It’s another month of hot appreciation. According to Core Logic’s Home Price Index, prices are up 10.4% from a year ago and up 10% from last months year over year reading. As we talked about last week, there are a record number of homes being sold above asking price – higher than leading up to the Great Recession. According to Red Fin, 41% of sales across the nation are going above asking price. While many economists and real estate industry publications envision a massive pullback with negative home appreciation, we expect to see continued moderate growth in the housing market and especially in Utah as the three states with the largest appreciation come from the West Coast.  

Mortgage Backed Securities continue yesterday’s climb. After a 22 bps gain yesterday, they are up another 22 this morning. US 10 Year Treasuries, which have an inverse relationship to MBS pricing, have been stumped by the 1.75 ceiling which was tested mid-March and again in the beginning of April. MBS’ are sitting on top of their 25 day moving average so it will be interesting to see where they close. Because breakouts are the exception and not the rule, we recommend locking in the great gains we have seen over the past 2 days.

Have a good day everyone!