Home prices ticked up 0.7% in November.  The Federal Housing Finance Agency tracks this data and, like Case-Shiller, it runs on a two-month delay.

That is perhaps the biggest issue.  The Realtor data shows 80% of Pending Home Sales close within 60 days meaning that the home price figures are always about a full sales cycle behind.

Over a year, the data can be fairly useful.  The facts are that home prices are up and home supplies are down over the past 12 month.

There are three main reasons to buy a home today:

1. First time home buyer tax credit
2. Home prices are low
3. Mortgage rates are low

We’re inside of 90 days on the expiration of the tax credit, we’re already seeing home prices move higher, and FHA interest rates are going to rise at the termination of the Fed’s purchase program.

Homes may not be this affordable for quite some time.

The S&P dropped 4% in its worst week since October.  As money left stocks, it went into bonds, and pushed FHA loan rates lower.

Since a very ugly December, mortgage bonds have made up half of the losses and it is helping with home affordability and has opened the window on another surge of refinancing activity.

This week is loaded with news and could push rates back up in a blink.

Today, the December Existing Home Sales report came in and it was very weak.  This is because of a combination of factors including:

1. The initial tax credit expiration date of November 30, 2009
2. Sharply rising mortgage rates throughout the month of December
3. A general slowdown from the holidays and from the weather

Home sales are down 16%, but there are a lot of reasons.

Later this week, we’ll see the Case-Shiller Index – a measure of home prices nationwide — and the New Home Sales report. The Case-Shiller Index has registered mild home price improvement over the past 8 months and its latest report is expected to show the same.  New Home Sales should be similarly strong.

But, the biggest news of the week is the first Federal Open Market Committee meeting of 2010.

The Fed meets Tuesday and Wednesday this week and Wall Street will be watching closely.  The Fed is not expected to change the Fed Funds Rate from its current target range of 0.000-0.250 percent, so, instead, markets will watching for the Fed’s post-meeting press release.

As always, what the Fed says is almost more important than what they do. If the Fed says the economy is growing and everything is going as expected, mortgage rates should rise.  On the flip side, if the Fed says there are still significant risks, rates could drop a little lower.

Rates will be volatile all week, but once the Fed’s press release hits the wires, it’s anyone’s guess what will happen.