Mortgage Rates

Last week’s economic news included readings on pending home sales, construction spending. Several reports related to employment were also posted along with weekly readings on mortgage rates and new jobless claims.

Pending Home Sales Rise as Construction Spending Lags

Pending home sales rose by 1.50 percent to an index reading of 110.2 in June according to the National Association of Realtors®. Sales of homes under contract that have not yet closed regained positive territory after May’s negative reading of -0.70 percent. Pending sales were in negative territory for the past three months.

Regional results for pending sales were mixed. The Northeast posted a gain of 0.70 percent, which was 3.40 percent higher than in June 2016. The Midwest region lost ground with a reading of -0.50 percent in June, but pending sales were 3.40 percent higher year-over-year. Pending home sales increased by 2.10 percent in the Southern region, which was 2.60 percent higher year-over-year. Although the Western region posted a month-to-month pending home sales gain of 2.90 percent for June, pending home sales were 1.10 percent lower year-over-year.

The west has enjoyed a run on rapid home price growth due to slim supplies of homes for sale and high demand for homes in popular metro areas. June’s lower year-over-year reading could signal that home prices have maxed out and low inventory of homes isn’t providing potential buyers with enough choices given higher home prices.

Construction Spending Slows, Mortgage Rates Hold Steady

Real estate pros again cited the shortage of available homes as driving high home prices and creating high competition for homes on the market. These conditions can make homeownership difficult for first-time and moderate- income buyers. Despite pressure on home builders to increase construction, the Commerce Department reported lower construction spending in June. Spending was lower by -1.10 percent against expectations of 0.40 percent growth based on May’s flat reading.

Mortgage rates were little changed last week; the average rate for a 30-year fixed rate mortgage rose one basis point to 3.93 percent. 15-year fixed mortgage rates were two basis points lower at 3.18 percent. Rates for a 5/1 adjustable rate mortgages were three basis points lower at 3.15 percent. Discount points averaged 0.50 percent for all three mortgage types.

Weekly Jobless Claims, Unemployment Rate Fall

New jobless claims fell to 20,000 new claims as compared to expectations of 244,000 new claims and the prior week’s reading of 245,000 initial jobless claims filed. Readings for Non-Farm Payrolls were lower at 209,000 private and public-sector jobs created.in July. Analysts expected 175,0000 new jobs based on June’s reading of 231,000 jobs. ADP Payrolls reported 178,000 private sector jobs created in July as compared to June’s reading of 191,000 new jobs created.

The national unemployment rate dropped to 4.30 percent as expected and was lower than June’s reading of 4.40 percent. Lower unemployment readings suggest that fewer people are seeking full-time work.

What‘s Ahead

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

Last week’s economic news included readings on new and existing home sales, Case-Shiller Home Price Index reports and an announcement by the Federal Open Market Committee of the Federal Reserve. Weekly readings on mortgage rates and new jobless claims were also released.

New and Existing Home Sales Mixed in June

Sales of new homes rose in June rose to a seasonally- adjusted annual rate of 610,000 homes. Analysts expected 614,000 new home sales based on May’s reading of 605,000 new home sales. The National Association of Realtors® reported 5.52 million previously owned homes sold in June on a seasonally-adjusted annual basis. A reading of 5.57 million sales was expected, based on May’s reading of 5.62 million sales. Sales of pre-owned homes are lagging due to a severe shortage of homes available. Low inventory and high demand are limiting options for buyers, who are frequently forced to compete with multiple offers for homes they want and not enough listings of appropriate or affordable homes.

New home sales rose in June according to the Commerce Department. June sales of new homes increased by 5000 sales to a seasonally-adjusted annual rate of 610,000 new home sales. June’s reading fell short of the 614,000 sales anticipated by analysts.  While housing and real estate industries say that building more homes is the only solution to reducing the shortage of homes for sale, builders cite labor and lot shortages and increases in materials cost as headwinds to building more homes at a fast pace. June’s reading was 9.10 percent higher than a year ago.

Case–Shiller: Home Prices Hold Steady in May

National home price appreciation held steady at a seasonally adjusted annual rate of 5.60 percent in May. The 20-City Index, which reported a year-over-year gain of 5.70 percent. indicated that home values remain highest in the West. Seattle, Washington had the highest year-over-year home price gain of 13.30 percent. Portland Oregon followed with a year-over-year gain of 8.90 percent. Denver, Colorado reported a year-over-year gain of 7.90 percent for home prices.

The Federal Reserve announced that its target federal funds interest rate would not change; it is currently at 1.00 to 1.25 percent. The Fed also noted that it would start reducing its balance sheet soon.

Mortgage Rates Fall as New Jobless Claims Rise

Freddie Mac reported lower average mortgage rates with the rate for a 30-year fixed rate mortgage four basis points lower at 3.92 percent. The average rate for a 15-year fixed rate mortgage dropped three basis points to 3.20 percent. The average rate for a 5/1 adjustable rate mortgages was three basis points lower at 3.18 percent. Discount points averaged 0.50 percent for all three mortgage types.

New jobless claims rose to 244,000 as compared to 245,000 new claims expected and 234,000 new claims filed the prior week.

What‘s Ahead

Next week’s scheduled economic releases include readings on pending home sales, inflation, construction spending and ADP payrolls. Non-farm payrolls and the national unemployment rate will also be released, along with weekly reports on mortgage rates and new jobless claims.

Last week’s economic news included releases from the National Association of Home Builders and releases from the Commerce Department on housing starts and building permits issued. Weekly readings on mortgage rates and new jobless claims were also released.

NAHB Housing Market Index Dips; Builder Sentiment Remains Strong

Higher lumber costs were cited by the National Association of Home Builders as contributing to lower readings for the group’s monthly Housing Market Index. July’s reading was two points lower than May’s index reading. The original May reading of 67 was adjusted to 66.

Builders said that a steep tariff on Canadian lumber has raised building costs, but sentiment remains high as high demand for homes coupled with short supplies of homes for sale set the stage for new home construction. Builder confidence in market conditions for newly-built homes remained strong as any NAHB Index reading over 50 indicates that more builders than fewer have a positive outlook on market conditions.

Commerce Department: Housing Starts and Building Permits Increase in June

Housing starts increased in June to 1.215 starts on a seasonally-adjusted annual basis. Analysts expected 1.163 million housing starts based on 1.122 million housing starts reported in May. Building permits were issued at a higher rate in June, with the annual rate of 1.254 million permits issued as compared to May’s rate of 1.168 million permits issued on a seasonally adjusted annual basis.

Single-family housing starts rose 6.30 percent as compared to May’s reading, which suggested that builders are focusing on building new homes for sale rather than concentrating on multi-family rental projects. If this trend continues, new construction of single-family homes would help ease severe shortages of homes for sale.

Mortgage Rates, New Jobless Claims Lower

Freddie Mac reported lower mortgage rates last week with the average rate for a 30-year fixed rate mortgage falling seven basis points to 3.96 percent. The average rate for a 15-year fixed rate mortgage was six basis points lower to 3.23 percent. The average rate for a 5/1 adjustable rate mortgage was seven basis points lower at 3.21 percent. Discount points averaged 0.60 percent 30-year fixed rate mortgages and 0.50 percent for 15-year fixed rate mortgages and 5/1 adjustable rate mortgages.

New jobless claims reached their second-lowest post-recession level last week with a reading of 233,000 first-time claims filed. Analysts expected a reading of 245,000 new claims based on the prior week’s reading of 248,000 new claims filed.

What‘s Ahead

Economic releases set for this week include readings on new and previously-owned home sales, Case-Shiller’s Home Price Index reports, and the post-meeting statement of the Fed’s Federal Open Market Committee. Weekly readings on mortgage rates and new jobless claims will be released along with data on consumer sentiment from the University of Michigan.

Inflation Rate Stays Flat in June

Inflation was flat in June, but achieved a 0.00 percent reading as compared to May’s – 0.10 percent reading. Analysts expected a June reading of +0.10 percent reading month-to-month. The Federal Open Market Committee of the Federal Reserve has established a benchmark reading of 2.00 percent inflation year-over-year as an indication of economic recovery. In recent months, the Fed has increased its target federal funds rate at each meeting of the FOMC. A slowdown in inflation and other economic indicators may cause the Fed to halt rate increases until conditions improve.

Fed Chair Testifies before House Financial Services Panel

During testimony last week, Fed Chair Janet Yellen addressed questions about Federal Reserve board members’ interaction with Wall Street. Ms. Yellen explained that the Fed values clear communications with Wall Street as a productive relationship. Chair Yellen also noted that the Fed may taper off on interest rate increases soon; she said that further rate increases may not be warranted at present.

Stating that “monetary policy is not a preset course,” Chair Yellen said that the Fed is aware of problems associated with forecasting higher than actual inflation gains, but also said that the Fed believes that inflation will achieve the 2.00 percent annual goal established by the Fed.

Ms. Yellen hinted that her tenure as Fed Chair may be reaching its conclusion; she did not answer media inquiries about whether she would stay on if asked. She said she was concentrating on current issues instead of focusing on potential developments.

Mortgage Rates Rise, New Jobless Claims Lower

Mortgage rates rose again last week; the average rate for a 30-year fixed rate mortgage exceeded four percent for the first time since May with an average rate of 4.03 percent. Fifteen-year fixed rate mortgages had an average rate of 3.29 percent. Average mortgage rates for 15 and 30-year fixed rate mortgages rose seven basis points over last week’s average rates. The average rate for a 5/1 adjustable rate also rose seven basis points to 3.28 percent. Discount points averaged 0.50 percent for all three mortgage types.

247,000 new jobless claims were filed last week as compared to expectations of 245,000 new claims filed and last week’s reading of 250,000 new claims. First-time jobless claims stayed below 300,000for 123 consecutive weeks. This run is the longest since the 1970s.  Analysts said that low jobless claims indicate a very low rate of layoffs.

Consumer sentiment dropped by two index points from 95.10 to 93.10 percent. Rising mortgage rates and concerns about current events likely contributed to wavering consumer sentiment.

What‘s Ahead

This week’s scheduled economic readings include NAHB Housing Market Indices, Commerce Department reports on housing starts and building permits issued and weekly releases on mortgage rates and new jobless claims.

Last week’s economic news included Case-Shiller Home Price Indices, pending home sales and inflation. Weekly readings on mortgage rates and new jobless claims were released along with a reading on consumer sentiment. Case-Shiller and pending home sales readings suggested that recent rapid growth in home prices and home sales may be easing. High demand for homes coupled with low inventories of homes for sale has created an artificially high rate of home price growth and competition among buyers for a limited number of homes.

Home Price Growth Rate, Pending Home Sales Slow

Case-Shiller Home Price Indices for April showed lower home price growth than in March. April’s 20-City Home Price Index slipped from a seasonally-adjusted year-over-year rate of 5.60 percent to 5.50 percent. Analysts noted that high home prices and a limited inventory of homes on the market have sidelined some buyers.

According to the Commerce Department, pending home sales remained in negative territory in May with a reading of -0.80 percent as compared to April’s reading of -0.90 percent. While this is an improvement, home sales typically pick up during spring and summer months; a negative reading in pending home sales suggests that would-be buyers are waiting for home prices to ease and for more homes to become available.

Mortgage Rates Mixed, New Jobless Claims Rise

Freddie Mac reported 30-year mortgage rates were two basis points lower at an average of 3.88 percent, while the average rate for a 15-year fixed rate mortgage was unchanged at 3.17 percent. The average rate for a 5/1 adjustable-rate mortgage rose three basis points to 3.17 percent. Discount points were unchanged at an average of 0.50 percent for all mortgage types.

First-time unemployment claims were higher last week at 244,000; analysts estimated a reading of 243,0000 new claims based on the prior week’s reading of 242,000 new claims.

Consumer spending declined by 0.30 percent to 0.10 percent in May, which matched analyst’s expectations. Core consumer spending met expectations and held steady in May with a reading of 0.10 percent growth. Consumer sentiment rose in June to an index reading of 95.10 as compared to expectations of 94.50, which matched April’s reading of 94.50

What‘s Ahead

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