Home sales rose in December to the highest pace in nearly a year. The gain coincides with other signs that show the troubled housing market improved at the end of last year.

The National Association of Realtors said Friday that sales increased 5 percent last month to a seasonally adjusted annual rate of 4.61 million, the best level since January 2011 and the third straight monthly increase.

Sales are increasing at a time when the market is flashing other positive signs. Mortgage rates are at record-low levels. Homebuilders have grown slightly less pessimistic because more people are saying they might be open to buying a home this year. And home construction picked up in the final quarter of last year.

The median sales price rose 2.3 percent to $164,500 in December.

What Happened to Rates Last Week?

Mortgage backed securities (MBS) lost -91 basis points from last Friday to the prior Friday which moved mortgage rates upward.
The biggest economic surprise was the large decrease in the weekly Initial Jobless Claims data which is certainly positive for the economy, but negative for bonds.
But the real catalyst was a change in market sentiment that Greece’s bond holders were close to accepting the new terms of a “voluntary” hair cut of 60% to 70% on what they are owed. This removed some of the “fear factor” premium in bonds that have kept mortgage rates artificically low for the past 8 weeks.

The following are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises:

Courtesy of

Stephanie Halpin

Fairway Mortgage