May Up on New Homes

There will be lots of news coming out this week, but it looks like we're starting the week off on a positive note with home sales increasing in May. I believe we will see some negative news as the week progresses, however, including the expected rate increase from the Fed which will push short term interest rates a bit higher.

Remember, the Feds rate increase does not directly affect mortgage rates, but rather short term rates like car loans, home equity lines, etc. The mortgage rates are more closely tied with the Bond market.

Bad bond news is good mortgage rate news (and visa versa). Here's a short article from CNN on the May housing news:

Latest reading shows pickup in new home sales, despite rising mortgage
rates and other signs of a cooling real estate market.

June 26 2006: 10:11 AM EDT
NEW YORK (CNNMoney.com) -- The pace of new home sales showed an unexpected increase in May, as the latest reading of real estate market strength bucked rising mortgage rates and other signs of a cooling housing market New homes sold at an annual pace of 1.23 million homes in the month, up 4.6 percent from the revised 1.18 million annual sales pace in April. Economists surveyed by Briefing.com had forecast that sales would slow to a 1.15 million rate in May. The report showed a decline in new home prices in May when compared to April, though price measures were still above year-earlier price levels.