All good things really do end, and that includes optimism. Home builder sentiment had been improving measurably for the past seven months, until this month when the NAHB/Wells Fargo Housing Market Index fell three notches to score 25 compared with March's 28.

Many home builders had expected the volume of signed contracts to pick up at a faster pace by this time of year. Unfortunately, that hasn't been the case. Recent economic data over the past month point to a sputtering, if not stalled, economy.

The latest housing starts data, no doubt, impacted home builder sentiment. Starts dipped 5.8 percent in March after decreasing 2.8 percent in February. The March pace of 654,000 annualized units fell far below market expectations for 700,000 units. March's drop was driven by a nearly 20 percent decline in multifamily starts. Home builder sentiment might be down on volume, but it should be up on price. We were all somewhat concerned on the direction prices were taking at the beginning of the year, but that appears to have changed for the better in many markets. According to RE/MAX's latest price report, home prices in the 53 largest cities it follows increased 5.8 percent year-over-year, with the median sales price rising to $184,525, in March.

It's worth noting that RE/MAX CEO Margaret Kelly shares our sentiment on markets and prices, in that real estate markets are local, wholesale price declines are behind us, and prices are stabilizing and improving. Ms Kelly says, "Although we don't expect home prices to rise in every market at the same rate, the worst is definitely behind us, and a slow, steady recovery is taking hold." We couldn't agree more.On the other hand, we don't necessarily agree with many of our colleagues on mortgage lending rates. Rates have been volatile and mostly lower over the past two weeks. Rates are again near an all-time low. This has created another spurt of refinancing. Rising interest rates shook many borrowers back to reality. When rates dropped, borrowers didn't want to miss an opportunity that could prove fleeting.

Taking advantage of these low lending rates is a smart move. We've laid out a case over the past couple months on why we think interest rates will head higher, at least in the long term. No new data have convinced us otherwise.

Admittedly, it's impossible to predict interest rates with certainty in the near term, but a few factors are worth considering: We've seen a marked increase in rate volatility that has moved the market back to a sideways trend. To be sure, rates could be higher or lower over the next month, but given their proximity to all-time lows and their unwillingness to move lower, we think there's more risk than reward in waiting for still lower rates.

Last month, lending rates shot up nearly 50 basis points, which shocked many borrowers. Those who thought they missed the boat got lucky, but they might not be so lucky on the next lending rate spike.

Courtesy of Jessica Regan.

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