From Stuart Crawford at V.I.P. Mortgage, Inc.:
"Last week, investors were almost exclusively focused on the results of the Federal Reserve Meeting. Expectations about future Fed policy guidance caused a good deal of volatility during the week. However, as a vast majority predicted, the Fed statement contained no major changes, and mortgage rates ended the week with little change.
Ahead of Wednesday's Fed meeting, investors debated about whether the Fed statement would include significant changes in language in one or two areas, but these changes were not made. Fed officials kept the language saying that the fed funds rate will remain near zero for a "considerable time" after the end of the bond purchase program. Fed officials also continued to describe the labor market as containing "significant underutilization". As expected, the Fed will decrease its purchases of Treasuries and mortgage-backed securities (MBS) by another $10 billion per month to $15 billion and Fed officials expect to conclude the purchases next month.
The headlines for the Housing Starts report pointed out that August Housing Starts declined 14% from July. To keep it in perspective, the drop in August follows an increase of 23% (after revisions) in July to the highest level since November 2007. In addition, the monthly volatility has been almost entirely due to multi-family units.
Single-family housing starts have been much more stable this year, with the seasonally adjusted annual rate showing modest improvement since the beginning of the year. Also released last week, the September NAHB Housing Index showed that home builder confidence increased to the highest level since November 2005.
This morning, August Existing Home Sales were released at $5.05M versus the consensus estimate of $5.20M (just slightly lower than expected)."
Stuart can be reached at 602.710.8975