Mortgage Rates

Last week’s economic news was slim due to the Labor Day Holiday. Scheduled releases included the Fed’s Beige Book Report and weekly readings on mortgage rates and new jobless claims. 

Beige Book Cites Concerns Over U.S. Auto Industry

Federal Reserve Board members shared anecdotes from their respective regions; of note were concerns about U.S. automakers. Auto production was more than 16 percent lower year-over-year in Cleveland, Ohio. Fed business contacts said that automakers are no longer seeking buildings for expanding production. Analysts said that slowing auto production and sales could indicate slowing economic trends. Auto industry slow-downs could also result in layoffs in auto production and sales/

Economic conditions, in general, continue to improve at a “modest to moderate” rate. August’s Beige Book did not include responses to damage caused by Hurricane Harvey, but damage to Houston and surrounding areas were expected to impact negatively impact the economy.

Mortgage Rates Mixed, New Jobless Claims Rise

Freddie Mac reported lower fixed rate mortgage rates last week; this was the second consecutive week of record low rates. The average rate for a 30-year fixed rate mortgage dropped by four basis points to 3.78 percent. The average rate for a 15-year fixed rate mortgage was also four basis points lower at 3.08 percent and rates for 5/1 adjustable rate mortgages averaged 3.15 percent. Discount points for fixed rate mortgages averaged 0.50 percent and points for 5/1 adjustable rate mortgages averaged 0.40 percent.

New jobless claims rose sharply to 298,000 new claims filed as compared to expectations of 242,000 new claims and the prior week’s reading of 236,000 new jobless claims filed. Hurricane Harvey was blamed for the surge in new jobless claims. Further impacts on jobless claims were expected as two hurricanes, Irma and Jose, approached Florida on Friday. Severe damage was predicted; the total economic impact will be assessed in the aftermath of the hurricanes.

What‘s Ahead

This week’s economic reports include readings on job openings, inflation, retail sales and consumer sentiment. Weekly readings on mortgage rates and new jobless claims will also be released.

Last week’s economic reports included readings on home prices, pending home sales and construction spending. Weekly reports on mortgage rates and new jobless claims were released along with labor-sector readings on Non-Farm Payrolls, ADP employment and National Unemployment.

Case–Shiller: Three Western Cities Hold Top Three Places for Home Price Growth

According to Case-Shiller’s June edition of its 20-City Home Price Index, the top three spots were again held by Seattle, Washington, Portland Oregon and Dallas, Texas. Seattle home prices outstripped Portland, Oregon with a reading of 13.40 percent home price growth on a seasonally-adjusted annual basis. Portland, Oregon home prices grew by a seasonally-adjusted year-over-year rate of 8.20 percent while Dallas, Texas held third place with its year-over-year reading of 7.70 percent growth.

 David Blitzer, CEO and Managing Director of S&P’s Index Committee, said that he sees no indications that home prices will cool anytime soon. Strong labor markets and economic growth are encouraging home buyers while low inventories of homes for sale coupled with high demand continued to fuel home price growth.

Construction spending dipped in July by -0.60 percent as compared to expected growth of + 0.60 percent and June’s reading of 1.30 percent growth in spending. Real estate pros said that building more homes is the only way to ease demand for homes, but builders cited labor and lot shortages along with rising materials costs as obstacles to building more homes faster.

Mortgage Rates Fall, Weekly Jobless Claims Rise

Mortgage rates remain relatively low; Freddie Mac reported average mortgage rates for a 30-year fixed rate mortgage fell four basis points to 3.82 percent; interest rates for a 15-year fixed rate mortgage were four basis points lower at 3.12 percent and the average rate for a 5/1 adjustable rate mortgage was three basis points lower at 3.14 percent. Discount points averaged 0.50 percent for all three mortgage types.

First-time jobless claims rose by 1000 claims to 236,000. Analysts had expected no change from the prior week’s reading of 235,000 new jobless claims.

ADP payrolls rose to 237,000 new jobs reported for August as compared to 201,000 new private-sector jobs reported in July. The Bureau of Labor Statistics reported 156,000 new public and private sector jobs in August; Based on the ADP report and the expected reading of 170,000 new public and private-sector jobs, revision of the Non-Farm Payrolls report appears likely.

The National Unemployment rate ticked up from July’s reading of 4.30 percent to 4.40 percent in August. Low readings for unemployment indicate that layoffs are not significantly contributing to unemployment.

What‘s Ahead

No financial reports will be issued Monday in observance of the Labor Day Holiday. The Federal Reserve’s Beige Book report will be released along with reports on productivity and weekly readings on mortgage rates and new jobless claims.

Last week’s economic news included readings on sales of new and previously-owned homes, Weekly readings on mortgage rates and new jobless claims were also released, along with coverage of Fed Chair Janet Yellen’s remarks at a conference in Jackson Hole, Wyoming.

Home Sales Lower in July

According to the Commerce Department, new home sales fell to a seven-month low in July; 571,000 new homes were sold on a seasonally-adjusted annual basis in July.  This reading fell short of the expected sales rate of 608,000 new home sales and June’s reading of 630,000 sales. This was unwelcome news for home builders, who have been under pressure to build more homes.  pronounced shortage of available homes coupled with high buyer demand has pressured builders to increase their rate of housing starts. A sudden dip in new home sales could impact builders’ production rates if slow sales persist.

Buyer demand may be waning as home prices have continued to climb. July’s national average home price rose to $313700, which was 6.30 percent year over year. The National Association of Realtors® said the current inventory of available homes rose to 5.70 months. This was the highest reading in highest reading in several months. Real estate pros consider a six-month supply of homes for sale an average reading. Regardless of record high demand for homes and low inventories, rapidly rising home prices reduce the pool of potential buyers due to affordability.

Sales of previously owned homes also fell in July. The National Association of Realtors® reported that pre-owned homes sold at a seasonally-adjusted annual rate of 5.44 million sales. Analysts predicted a rate of 5.50 million sales based on June’s reading of 5.51 million sales.

Mortgage Rates, New Jobless Claims

Freddie Mac reported mixed mortgage rates results, but mortgage types surveyed were little changed. The average rate for a 30-year fixed rate mortgage fell three basis points to 3.86 percent; the average rate for a 15-year mortgage was unchanged at 3.16 percent. Rates for 5/1 adjustable rate mortgage averaged 3.17 percent. Discount points averaged 0.50 percent for all three mortgage types.

First-time jobless claims rose to 234,000, which fell short of the expected reading of 238,000 new claims and the prior week’s reading of 232,000 new claims.

Fed Chair Defends Dodd–Frank Act

Fed Chair Janet Yellen defended Dodd-Frank mortgage legislation passed after the financial crisis. The legislation established credit standards for mortgage lenders to eliminate irresponsible lending practices. Speaking at the Federal Reserve’s annual retreat in Jackson Hole, Wyoming, Chair Yellen’s comments responded to recent indications by the administration and banking officials that the Dodd-Frank Act should be repealed.

What‘s Ahead

This week’s economic reports include readings from Case-Shiller on home prices. Pending home sales, construction spending and inflation reports will be released in addition to weekly readings on mortgage rates and new jobless claims. Several labor reports will also be released including ADP Payrolls, Non-Farm Payrolls, and the national unemployment rate will also be released. 

Last week’s economic readings included the National Association of Home Builders Housing Market Index and readings on housing starts and building permits issued. Consumer sentiment for August was reported by the University of Michigan. Weekly reports on mortgage rates and new jobless claims were also released.

NAHB: Builder Confidence Jumps 4 Points in August

Builder confidence in housing market conditions improved by four index points in August after reaching its lowest reading in eight months in July. Builder confidence rose in consideration of a strong labor market and overall economic growth. Obstacles including labor shortages, rising materials costs and a lack of buildable lots continued to present obstacles to builders producing homes at a pace sufficient to meet high demand and alleviate low inventories of homes for sale.

Housing starts were lower in July at a seasonally-adjusted annual rate of 1.155 million starts and fell short of 1.229 million starts. 1.223 million starts were reported in July. Single family home construction was higher as builders focus on meeting demand for single-family homes. Building permits issued in July were also lower at a seasonally-adjusted annual rate of 1.223 million permits issued as compared to July’s reading of 1,275 million permits issued.

Mortgage Rates Mixed, New Jobless Claims Lower

Average rates for fixed rate mortgages fell last week. 30-year fixed rate mortgage rates averaged 3.89 percent at one basis point lower than the previous week. Rates for a 15-year fixed rate mortgage averaged 3.16 percent and were two basis points lower than the previous week. The average rate for a 5/1 adjustable rate mortgage rose two basis points to 3.16 percent. Discount points averaged 0.40 percent for 30-year fixed rate mortgages, 0.50 percent for 15-year fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

First-time jobless claims were lower last week with 232,000 new claims filed as compared to expectations of 241,000 new claims and 244,000 new claims filed the prior week.

August’s reading for the University of Michigan Consumer Sentiment Index was higher at 97.6 as compared to an expected reading of 94.8 and July’s index reading of 93.4. Growing consumer confidence could along with improving job markets and economic expansion could prompt renters to buy homes.

What‘s Ahead

This week’s scheduled economic reports include readings on sales of new and previously owned homes along with weekly readings on mortgage rates and new jobless claims.

Job Openings, New Jobless Claims Rise

Job openings rose in June to 6.20 million as compared to May’s reading of 5.70 million job openings. Analysts said that increasing job vacancies show that employers are unable to find qualified workers. Business services, construction, health care and professional job sectors had the most job openings. Slow wage growth could be contributing to widespread job openings. Average wage growth has been running at approximately 2.50 percent, which is lower than the average of 3.50 to 4.00 percent typically seen during economic expansion.

First-time jobless claims rose to 244,000 as compared to expectations of 242,000 new claims and the prior week’s reading of 242,000 new jobless claims.

Mortgage Rates Lower

Freddie Mac reported lower mortgage rates last week. The average rate for a 30-year fixed rate mortgage was three basis points lower at 3.90 percent. The average rate for a 15-year fixed rate mortgage was unchanged at 3.18 percent. The average rate for a 5/1 adjustable rate mortgage was one basis point lower at 3.14 percent.

Inflation rose in July by 0.10 percent against an expected increase of 0.20 percent; June’s reading was unchanged. Core inflation, which excludes volatile food and energy sectors, rose by 0.10 percent against expectations of 0.20 percent and 0.10 percent growth in June.

What’s Ahead

This week’s scheduled economic reports include the NAHB Housing Market Index, Commerce Department readings on housing starts and building permits issued and the University of Michigan’s Consumer Sentiment Index, Weekly reports on mortgage rates and new jobless claims will also be released.