30 Apr 2018
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – April 30th, 2018

Financial Reports

What's ahead for mortgage rates april 30 2018Last week’s economic reports included readings from Case-Shiller Home Price Indices, new and existing home sales and weekly readings on mortgage rates and first-time jobless claims.

Case-Shiller: Home Prices Rise to Near Four-Year High

February home prices rose 6.30 percent year-over-year and 0.50 percent month-to-month. Home prices rose just shy of a record set in 2014. The 20-City Home Price Index reported home prices were 6.80 percent higher year-over-year and rose 0.80 percent month-to-month in February. The year-over-year reading surpassed the peak reading in 2006. Home prices accelerated in contrast to analyst expectations that they nay slow as buyers deal with a short supply of homes for sale.

Cities with the three highest readings in year-over-year home price growth were Seattle, Washington with 12.70 percent growth, Las Vegas, Nevada home prices rose 11.60 percent, and San Francisco, California home prices rose by 10.10 percent according to Case-Shiller’s 20-City Home Price Index for February.

Severe shortages of homes and high demand in the west and in areas impacted by the housing bubble burst are driving the rapid rise of home prices; while it appears that homebuyers may be sidelined by high home prices, increasing home sales suggest that buyers may be buying before higher prices cut them out of the market.

Sales of New and Existing Homes Surpass Expectations in March

Sales of pre-owned homes rose to 5.60 million sales on a seasonally-adjusted year-over-year basis. Analysts expected a reading of 5.52 million sales based on February’s reading of5.54 million pre-owned homes sold. Sales of new homes also exceeded expectations with a sales rate 0f 694,000 sales on a seasonally-adjusted annual basis. Analysts expected a reading of 634,000 new hone sales. February’s reading was 667,000 new home sales. As with the boost in sales of pre-owned homes, analysts said that buyers are anxious to buy before they’re priced out of the market or cannot qualify for mortgage loans.

Mortgage Rates Rise, New Jobless Claims Fall

Freddie Mac reported higher average mortgage rates for the third consecutive week. Rates for a 30-year fixed rate mortgage averaged 4.58 percent and were 11 basis points higher. The average rate for a 15-year fixed rate mortgage was 8 basis points higher at 4.02 percent; The average rate for a 5/1 adjustable rate mortgage was seven basis points higher at 3.74 percent. Rising Treasury yields were driven by higher commodity prices drove mortgage rates higher.

Economic indicators have steadily strengthened, which traditionally boosts home prices. While analysts have shown concerns over rapidly rising home prices and mortgage rates, the Mortgage Bankers Association reported mortgage applications were 11 percent higher year-over-year.

New jobless claims fell to 209,000 first-time claims filed as compared to expectations of 230,000 new claims, and the prior week’s reading of 233,000 new claims filed. Lower jobless claims indicate fewer layoffs and strengthening labor markets.

What’s Ahead

This week’s economic releases include readings on inflation, job growth, and national unemployment. Weekly readings on mortgage rates and new jobless claims will also be released.

23 Apr 2018
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – April 23rd, 2018

Financial Reports

What’s Ahead For Mortgage Rates This Week – April 23rd, 2018Last week’s economic reports included readings on builder confidence, housing starts and building permits issued. Weekly readings on mortgage rates and new jobless claims were also released.

NAHB: Builder Confidence Drops by One Point

The National Association of Home Builders reported that builder confidence dipped by one point in April to an index reading of 69. While any reading over 50 indicates positive builder sentiment, NAHB noted that builder sentiment has decreased for the past four months.

During the housing bubble of 2004 and 2005, builder confidence in market conditions averaged 68, but analysts said that the post bubble crash in home values was preceded by several months of decreasing builder sentiment. 

Builders are maintaining a steady approach to housing starts despite high demand in many markets. Short supplies of available homes are driving prices higher and causing issues of affordability for would be buyers. Home builders continued to face shortages of buildable lots and rising materials prices. This could account for decisions not to ramp up home construction enough to meet demand.

Housing Starts, Building Permits Rise

According to the Commerce Department, housing starts and building permits issued rose in March. 1.319 million starts were reported on a seasonally-adjusted annual basis as compared to 1.1,295 million starts in February. Analysts expected housing starts to drop in March to 1.255 million, due to rising materials costs and concerns over trade wars. Housing starts were 10.90 percent higher year-over-year.

Single-family housing starts were lower by 3.70 percent lower than for February, but were 8.00 percent higher year-over-year. This suggests that aside from seasonal fluctuations, home builders are boosting their efforts to keep up with demand for homes.

Building permits issued increased in March to 1.354 million on a seasonally-adjusted annual basis; the February reading showed 1.321 million building permits issued. Building permits issued in March were 2.50 percent higher than for February and 7.50 percent higher year-over-year.

Mortgage Rates, Jump, New Jobless Claims Dip

Freddie Mac reported higher average mortgage rates last week, with the rate for a 30-year fixed rate mortgage rising by five basis points to 4.47 percent. This was the highest average rate for 30-year fixed rate mortgages since January 2014 and the highest weekly rate increase since February. Rates for 15-year fixed rate mortgages averaged 3.94 percent and increased by seven basis points.

The average rate for 5/1 adjustable rate mortgages was six basis points higher at 3.67n percent. Discounts points averaged 0.50 percent for 30-year fixed rate mortgages, 0.40 percent for 15-year fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

New jobless claims were lower last week with 232,000 new claims filed. Analysts expected 230,000 new claims based on the prior week’s reading of 233,000 new claims filed.

What‘s Ahead

This week’s economic reports include readings from Case-Shiller Home Price Indices, sales reports for new and previously-owned homes, and weekly readings on average mortgage rates and new jobless claims. A monthly reading for consumer sentiment will be released Friday.

16 Apr 2018
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – April 16th, 2018

Financial Reports

What’s Ahead For Mortgage Rates This Week – April 16th, 2018Last week’s economic reports included readings on inflation, the minutes of the most recent meeting of the Fed’s Federal Open Market Committee and weekly reports on mortgage rates and first-time jobless claims. The University of Michigan released its Consumer Sentiment Index for April.

Inflation Grows, Fed Indicates Future Rate Hikes Likely

The minutes of the Federal Open Market Committee Meeting held March 20 and 21 indicate Fed policymakers are likely to increase the target federal funds rate at their June meeting. Economic indicators including strong labor markets and low unemployment rate were cited as contributing to expectations for federal rate hikes throughout 2018.

How the Fed moves on interest rates affects private sector interest rates as financial institutions typically follow the Fed’s lead regarding raising or not raising consumer lending and mortgage rates.

FOMC minutes said that members noted increasing consumer credit card balances, but also said that sub-prime borrowers continued to have trouble in getting adequate credit at favorable interest rates.

Mortgage Rates Hold Steady, New Jobless Claims Dip

Mortgage rates were little changed last week according to Freddie Mac. The average rate for a 30-year fixed rate mortgage rose two basis points to an average of 4.42 percent; the average rate for a 15-year fixed rate mortgage was unchanged at 3.87 percent.

Rates for a 5/1 adjustable rate mortgage averaged one basis point higher at 3.61 percent. Discount points averaged 0.40 percent for fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

New jobless claims were lower last week with 223,000 claims filed; analysts expected 230,000 new claims filed based on the prior week’s reading of 242,000 new claims filed. In other news, the University of Michigan released its Consumer Sentiment Index with an index reading of 97.8 for April. Analysts expected a reading of 101.8, which was based on the March reading of 101.4

Consumers surveyed were fearful of possible trade wars resulting from recent tariffs on foreign goods; the consumer sentiment index dipped from its March reading of 101.4 to 97.8. Builders have said that tariffs will increase prices on building materials and such increases would drive home prices up.

What‘s Ahead

This week’s scheduled economic releases include readings on builder sentiment from the National Association of Home Builders, Commerce Department reports on housing starts and building permits issued and readings on retail sales. Weekly reports on mortgage rates and new jobless claims will also be released.

09 Apr 2018
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – April 9th, 2018

Financial Reports

What’s Ahead For Mortgage Rates This Week – April 9th, 2018Last week’s economic reports included readings on construction spending, mortgage rates and weekly jobless claims. Other labor-related claims included ADP payrolls, Non-Farm Payrolls and the national unemployment rate.

Construction Spending Rises in February

Construction spending was higher in February according to the Commerce Department. Spending on building projects rose by 0.10 percent in February Reuters reported that construction spending rose 0.10 percent as compared to expectations of an 0.40 percent increase and January’s unchanged reading. Seasonal weather conditions typically cause lulls in building. Analysts said that residential construction spending increased by 0.10 percent to its highest level since January 2007.

Real estate analysts have consistently indicated that building more homes is the only solution to lingering shortages of available homes in the U.S. Recent news about tariffs on foreign building materials may cause builders to wait and see how tariffs will impact business before going all-out on building homes.

Mortgage Rates Fall as New Jobless Claims Rise

Freddie Mac reported lower mortgage rates last week; the average rate for a 30-year fixed rate mortgage was four basis points lower at 4.04 percent.15-year fixed rate mortgage rates averaged 3.87 percent, which was three basis points lower than the prior week. Rates for a 5/1 adjustable rate mortgage averaged 3.62 percent and were four basis points lower than for the prior week. Discount points averaged 0.50 percent for 30-year fixed rate mortgages and 0.40 percent for 15-year fixed rate mortgages and 5/1 adjustable-rate mortgages.

Weekly jobless claims rose to 242,000 new claims filed as compared to 225,000 new claims expected and 218,0000 claims filed the prior week.

Labor Reports Show Mixed Results

ADP reported fewer private-sector jobs created in March with 241,000 jobs created as compared to February’s reading of 246,000 new private-sector jobs. The Labor Department reported a sharp drop in Non-Farm payrolls, which measures public and private-sector job growth. 103,000 jobs were added in March as compared to February’s revised reading of 326,000 jobs added. Jobs added in March were at their lowest level since fall 2017.

Analysts put the low Non-Farm payrolls reading in perspective; on average 202,000 jobs were added monthly during the first quarter of 2018 and jobs growth was faster than during first quarters of 2016 and 2017. The national unemployment rate was unchanged at 4.10 percent; this was the lowest rate in 17 years. Low unemployment rates typically indicate few layoffs and suggest strong economic growth.

What‘s Ahead

This week’s scheduled economic releases include readings on inflation, core inflation and consumer sentiment. The Federal Open Market Committee of the Fed will release minutes from its last meeting. Weekly readings on mortgage rates and new jobless claims will also be released.

02 Apr 2018
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – April 2nd, 2018

Financial Reports

What's Ahead For Mortgage Rates This Week April 2nd, 2018 Last week’s economic releases included readings from Case-Shiller, pending home sales, and consumer sentiment. Weekly reports on mortgage rates and first-time jobless claims were also released.    

Case-Schiller: Home Prices Continue to Rise

According to Case-Shiller Home Price Index reports for January, U.S. home prices continued to rise at a rapid pace with the national home price index rising at a seasonally-adjusted annual rate of 6.20 percent. Case-Shiller’s 20-City Home Price Index rose by 6.40 percent year-over-year. Seattle, Washington held the top spot with year-over-year home price growth of 12.90 percent.

Las Vegas, Nevada reported year-over-year home price growth of 11.20 percent. After a lull in home price growth, San Francisco, California home prices grew by 10.20 percent year-over-year. The only city to lose ground in the 20-City Index was Washington, D.C., which posted a drop of 0.40 percent in January, but posted a year-over-year gain of 2.40 percent.

David M. Blitzer, Chairman of the Dow Jones S&P Indices Committee, said that rapidly rising home prices were all about supply and demand. Growing demand and slim supplies of homes for sale were again cited as the primary reason for rapidly rising home prices. Faced with limited choices and rising mortgage rates, more buyers could be sidelined until demand subsides or inventories of available homes increase.

Mortgage Rates, New Jobless Claims Fall

Freddie Mac reported slight drops in average mortgage rates last week. 30-year mortgage rates dropped by one basis point to 4.44 percent; 15-year mortgage rates averaged one basis point lower at 3.90 percent, and rates for 5/1 adjustable rate mortgages also dropped by one basis point to 3.66 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

First-time jobless claims fell last week with 215,000 new claims filed. Analysts expected 230,000 new claims to be filed based on the prior week’s reading of 227,000 new claims filed.

Consumer Sentiment dipped lower in March with an index reading of 101.4, which fell below expectations of 102.0 and February’s index reading of 102.0.

What‘s Ahead

This week’s scheduled economic reports include readings on construction spending, and labor-related readings on ADP payrolls, Non-Farm payrolls and the national unemployment rate. Weekly readings on mortgage rates and new jobless claims will also be released.