U.S. house prices rose 1.0 percent on a seasonally adjusted basis from October to November, according to the Federal Housing Finance Agency’s monthly House Price Index. The previously reported 0.2 percent decrease in October was revised downward to reflect a 0.7 percent decrease. For the 12 months ending in November, U.S. prices fell 1.8 percent. The U.S. index is 18.8 percent below its April 2007 peak and roughly the same as the February 2004 index level.

After reaching a 19-month high, pending home sales eased in December but stayed above year-ago levels, according to the National Association of Realtors.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, declined 3.5 percent to 96.6 in December from 100.1 in November but is 5.6 percent above December 2010 when it was 91.5. The data reflects contracts but not closings.

Lawrence Yun, NAR chief economist, said the trend line remains positive. “Even with a modest decline, the preceding two months of contract activity are the highest in the past four years outside of the homebuyer tax credit period,” he said. “Contract failures remain an issue, reported by one-third of Realtors® over the past few months, but home buyers are not giving up.”

HIGHLIGHTS

-The total mortgage portfolio decreased at an annualized rate of 10.0% in December.

-Single-family refinance-loan purchase and guarantee volume was $23.3 billion in December, representing 76% of total mortgage portfolio purchases and issuances.

-Total number of loan modifications were 5,591 in December 2011 and 109,174 for the twelve months ended December 31, 2011.

-The aggregate unpaid principal balance (UPB) of our mortgage-related investments portfolio decreased by approximately $10.0 billion in December.

-Freddie Mac mortgage-related securities and other guarantee commitments decreased at an annualized rate of 14.8% in December.

-Our single-family seriously delinquent rate increased from 3.57% in November to 3.58% in December. Our multifamily delinquency rate decreased from 0.28% in November to 0.22% in December.

-The measure of our exposure to changes in portfolio market value (PMVS-L) averaged $302 million in December.

-Duration gap averaged 0 months.

-On September 6, 2008, the Director of the Federal Housing Finance Agency (FHFA) appointed FHFA as Conservator of Freddie Mac.

The overnight session was almost completely unnecessary. 10yr yields climbed to nearly 2.08, apparently not willing to test yesterday's highs, and subsequently sank 2.03+, apparently also not willing to test yesterday's lows. As far as 10's are concerned, the story of the past two weeks has been a quick rise from a 1.85-2.0 range to now hone in on 2.06 ahead of today's events. Picture a pennant on a flagpole. That flagpole was created by the rise in yields last Thursday/Friday and the "pennant" has been forming since Monday, beginning with the 2.09+ highs and yesterday's 2.03+ lows and ping ponging back and forth around the implied apex of the pennant at 2.06.

We could discuss overnight market moving events such as a strong German Bund auction and mixed Euro-Zone economic data, but these matter not when compared to the "power" of the wait-and-see vibes that are driving the range mercilessly sideways ahead of today's events. It's really that simple and any break of the pennant before at least the 5yr auction, but probably FOMC, is purely incidental.

All this, however, applies to broader bond market momentum (or lack thereof). MBS have been a bit queasier by comparison with 3.5's, just now getting back to yesterday's latest levels after being down earlier this morning, vs 10yr notes being up a few ticks all morning. MBS have been underperforming a bit since yesterday afternoon. Even so, they too remain inside their range marked by 102-19 on the downside, though they've tested through this to 102-15 on Monday, 102-18 yesterday and earlier this morning, but 102-19 is certainly the modal limit and most likely technical candidate for a range boundary. Incidentally, this also makes it a good early-indication "trigger" to increase one's lock bias.