Commentary: Mortgage & Housing

The Federal Reserve kept the short term rate unchanged at 5.25% and also referred to "tentative signs of stabilization" in the housing market in its Wednesday statement. Investors are liking the fact that a strong 3.5% annualized growth in the economy occurred over the final quarter of 2006, while inflation moderated.

The Homebuilders' ETFs have started having a good run up -- We told you in our last week's posting to keep those under your watch. The National Association of Realtors reported today that the seasonally adjusted pending home sales jumped 4.9% in December, the largest gain in nearly three years. The pending home sales index was at its highest level since June and was down 4.4% compared with December 2005. The index increased in all four regions. Pending sales rose 8.1% in the Northeast, 5.3% in the West, 4.3% in the South and 3.2% in the Midwest. On a year-over-year basis, pending sales are down between 4% and 5% in all four regions.

According to Freddie Mac's weekly survey, the 30-year fixed-rate mortgage rose to 6.34% from 6.25% average last week. The rate was 6.23% one year back. The 15-year fixed rate averaged at 6.06% this week -- up from last week's average of 5.98%. At this time last year this rate was 5.81%.

The Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.04%, up from 6.00% average last week. The hybrid averaged 5.87% a year ago. One-year Treasury-indexed ARMs averaged 5.54%, up from 5.49% of last week. This rate averaged 5.33% a year ago.