25 Jul 2022
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – July 25, 2022

Financial Reports

What's Ahead For Mortgage Rates This Week - July 25, 2022Last week’s economic news included readings from the National Association of Home Builders on home prices, Commerce Department readings on building permits issued, and housing starts.  The National Association of Realtors® reported on sales of previously-owned homes; weekly reports on mortgage rates and jobless claims were also released.

NAHB Housing Market Index Posts Lowest Reading Since May 2020

The housing market is cooling off according to July’s NAHB Housing Market Index, which declined to an index reading of 55 as compared to June’s reading of 67 and the expected reading of 66. July’s reading was the second lowest posted since the start of the index and was the seventh consecutive monthly decline in home prices.

Component readings for the Housing Market Index were also lower. Homebuilder confidence in sales conditions over the next six months lost 11 points for an index reading of 50 points. Homebuilders surveyed were less certain about expected buyer traffic in new housing developments as July’s reading decreased by 11 points to 37.

Regional results were also lower as builder confidence in the Northeastern region slipped by five points to an index reading of 57. Home builder confidence in the Midwestern regions fell by six points to 49. The Southern region’s reading was 15 points lower in July with an index reading of 60; home builder confidence in current market conditions in the Western region declined from June’s reading of 64 to 48 in July. Coastal metro areas that enjoyed rapidly rising home values saw declines in home values as affordability and demand for high-priced homes shrank amid economic uncertainty.

June Sales of Previously-Owned Homes Fall as Mortgage Rates Rise

Sales of previously-owned homes fell in June with 5.12 million sales completed on a seasonally-adjusted annual basis. Analysts expected a reading of 5.36 million sales; 5.41 million sales of previously-owned homes were reported in May. Rapidly rising mortgage rates and inflation sidelined prospective home buyers concerned about higher closing costs and rising day-to-day living expenses.

Freddie Mac reported higher fixed mortgage rates last week as rates for 30-year fixed-rate mortgages averaged 5.54 percent and three basis points higher. 15-year fixed-rate mortgages averaged 4.75 percent and were eight basis points higher. Rates for 5/1 adjustable-rate mortgages averaged  4.31 percent and four basis points lower than in the previous week. Discount points averaged 0.80 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable-rate mortgages.

Initial jobless claims rose to 251,000 new claims filed as compared to the prior week’s reading of 244,000 new jobless claims filed and the expected reading of 240,000 first-time claims filed. 1.38 million ongoing jobless claims were filed last week as compared to the prior week’s reading of 1.33 million continuing claims filed.

What’s Ahead

This week’s scheduled economic news includes readings on new home sales inflation and consumer sentiment  Weekly readings on mortgage rates and jobless claims will also be published. 

18 Jul 2022
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – July 18, 2022

Financial Reports

What's Ahead For Mortgage Rates This Week - July 18, 2022Inflation dominated last week’s economic readings and predictions as it hit a year-over-year growth rate of  9.10 percent in July. Inflation reached its highest year-over-year growth rate since 1981. Gasoline prices eased somewhat, but not enough to provide relief against a backdrop of high housing and food prices. Low and moderate-income consumers were disproportionately impacted as rents rose beyond near-record inflation and home prices remained out of reach for many would-be home buyers.

Inflation Causing Hardship for Moderate-Income Consumers

Consumers faced with rapidly growing expenses turned to credit cards for purchasing food and household items; this trend suggests that as interest rates rise, more households could experience increasing financial stress as paying off consumer debt becomes more difficult.

The Consumer Price Index rose by 1.3 percent in June on a month-to-month basis; analysts expected a month-to-month reading of 1.1 percent inflationary growth based on May’s reading of 1.0 percent growth. The core Consumer Price Index, which excludes volatile food and fuel sectors, rose by 0.70 percent in June and exceeded analysts’ expected reading of 0.50 percent growth and May’s month-to-month reading of 0.60 percent growth.

Year-over-year inflation reached 9.10 percent in June and surpassed analysts’ expectations of 8.80 percent- year-over-year-inflationary growth and May’s year-over-year reading of 8.60 percent growth. Core inflation rose by 5.90 percent year-over-year in June and fell short of analysts’ forecasts of 5.7 percent year-over-year growth. May’s year-over-year reading for inflationary growth was 6.0 percent and could suggest that inflation has peaked.

Mortgage Rates Rise After Fed Raises Key Interest Rate Range

Although the Federal Reserve raised its key interest rate range in an attempt to slow inflation, mortgage rates also rose last week. Freddie Mac reported that rates for 30-year fixed-rate mortgages rose by 21 basis points to 5.51 percent on average. Rates for 15-year fixed-rate mortgages averaged 22 basis points higher at 4.67 percent. The average rate for 5/1 adjustable rate mortgages was 16 basis points higher at 4.35 percent; discount points averaged 0.80 percent for fixed-rate mortgages and 0.20 percent for 5/1 adjustable rate mortgages.

New jobless claims rose last week with 244,000 first-time claims filed as compared to the previous week’s reading of 235,000 initial jobless claims filed. Fewer ongoing jobless claims were filed last week with 1.33 million continuing claims filed as compared to the prior week’s reading of 1.37 million ongoing jobless claims filed.

Consumer concerns over inflation eased in July with a preliminary reading of 51.1 reported in the University of Michigan’s preliminary consumer confidence index. Any reading over 50 indicates that most consumers surveyed were confident about current economic conditions.

What’s Ahead

This week’s scheduled economic reporting includes readings on home prices, building permits issued, and housing starts. Data on sales of previously-owned homes will be released along with weekly readings on mortgage rates and jobless claims.  

 

05 Jul 2022
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – July 5, 2022

Financial Reports

What's Ahead For Mortgage Rates This Week - July 5, 2022Last week’s scheduled economic news included reports on home prices, pending home sales, and inflation. Weekly readings on mortgage rates and jobless claims were also released.

S&P Case-Shiller: National Home Price Growth Ticks Down in April

Home price growth slowed in April according to the S&P Case-Shiller National Home Price Index as growth slowed by 0.20 percent to a 20.40 percent gain year-over-year. Slower growth in home prices suggested that affordability concerns have caught up with the rapid home price growth seen during the pandemic.

The S&P Case-Shiller 20-City Home Price Index reported that Tampa, Florida home prices gained 35.8 percent year over year in April followed by a 33.3 percent price gain in Miami, Florida. Home prices in Phoenix, Arizona grew by 31.3 percent year-over-year.

Pending home sales rose by 0.70 percent in May as compared to April’s reading of -0.40 percent.  Analysts expected pending home sales to fall by 0.40 percent in May.

Fixed Mortgage Rates, Jobless Claims Fall

Freddie Mac reported lower fixed mortgage rates last week as the average rate for 30-year fixed-rate mortgages fell by 11 basis points to 5.70 percent. Rates for 15-year fixed rate mortgages averaged 4.83 percent and were nine basis points lower than in the prior week. The average rate for 5/1 adjustable rate mortgages rose by nine basis points to 4.50 percent. Discount points averaged 0.90 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages. 

New jobless claims fell to 231,000 claims filed last week as compared to 233,000 initial claims filed in the prior week. Continuing jobless claims were unchanged with 1.33 million ongoing claims filed last week.

In other news, the federal government reported that the Consumer Price Index rose by 8.60 percent year-over-year in May. This was the highest reading since 1981. Rising inflation was largely caused by rising food and fuel prices. The month-to-month reading for the Consumer Price index rose to 0.60 percent in May as compared to April’s month-to-month reading of 0.20 percent growth. Analysts said that the economy is slowing due to rising consumer prices and interest rates; the  Federal Reserve recently rose its key interest rate range to 0.75 to 1.00 percent to ease rapidly rising inflation.

What’s Ahead

This week’s scheduled economic reports include labor sector data on job growth, the national unemployment rate, and job openings. Weekly readings on mortgage rates and jobless claims will also be released.

01 Jul 2022
By Kevin Gahagan

Case-Shiller: Home Price Growth Slows in April

Financial Reports

Case-Shiller: Home Price Growth Slows in April

U.S. home price growth continued but slowed in April according to the S&P Case-Shiller Home Price Indices. The national home price index posted year-over-year home price growth of 20.4 percent in April as compared to the corresponding home price growth rate of 20.6 percent in March. Analysts said that diminishing affordability was slowing rapid gains in home prices seen during the pandemic.

20-City Home Price Index: Florida and Arizona Report Top Home Price Growth Rates

The top three cities for year-over-year home price growth in April’s 20-City Home Price Index were Tampa, Florida with a reading of 35.8 percent; Miami, Florida reported 33.3 percent growth and Phoenix, Arizona reported a year-over-year home price growth rate of 31.3 percent.

Nine of the 20 cities included in the index reported higher price gains in April as compared to March. All 20 cities reported higher home prices in April than in March. While analysts noted the slower pace of home price growth, they cautioned against expecting falling home prices any time soon. Craig J. Lazzara, managing director of S&P Dow Jones Indices said that April’s increase in home prices ranked in the top 20 percent of historical experience for every city, and in the top 10 percent for 19 of the cities included in the 20-City Home Price Index.

FHFA House Price Index: Home Prices Rise in April

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, reported a year-over-year home price growth rate of 18.8 percent for single-family homes owned or financed by Fannie Mae or Freddie Mac. Home prices of homes owned or financed by Fannie Mae and Freddie Mac rose at a month-to-month pace of 1.6 percent in April.

The FHFA Home Price Index reports on home prices across the nine Census divisions; month-to-month home price growth ranged from 0.3 percent in the East South-Central division to 14.1 percent in the Mid-Atlantic division to 23.5 percent in the South Atlantic division. The FHFA Home Price Index is based on single-family home sales data from more than 400 cities in all 50 states. 

27 Jun 2022
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – June 27, 2022

Financial Reports

What's Ahead For Mortgage Rates This Week - June 27, 2022

Last week’s economic reporting included readings on home sales, Fed Chair Jerome Powell’s testimony on monetary policy to the House Financial Services Committee, and the University of Michigan’s Consumer Sentiment Index. Weekly reports on mortgage rates and jobless claims were also released.

New Home Sales Pace Rises as Pre-Owned Homes Sales Pace Slows

The Commerce Department reported a seasonally-adjusted annual pace of 696,000 new homes sold in May; analysts predicted a year-over-year pace of 587,000 new homes sold as compared to April’s year-over-year pace of 629,000  new homes sold. While the year-over-year pace of new home sales increased by 10.70 percent month-to-month in May, the year-over-year sales pace for new homes fell by 5.90 percent.

Increasing materials and labor costs continued to challenge home builders, but high demand for homes fueled sales of new homes even as mortgage rates and home prices rose.  The median price of new homes sold in May fell to $449,000 from April’s record high of $454,700. The inventory of available homes fell by 7.20 percent in May, which equaled a 7.70-month supply of new homes for sale.

Regional results for new home sales were mixed; sales of new homes fell by -51.10 percent in the Northeast and were -18.30 percent lower in the Midwest. New home sales rose by 12.80 percent in the South and were 39.30 percent higher in the West.

In other news, Fed Chair Jerome Powell spoke on monetary policy before the House Financial Services Committee and explained the Fed’s strategy to ease inflation through a series of interest rate increases intended to cut into consumers’ purchasing power. 

Mortgage Rates Rise; New Jobless Claims Fall

Freddie Mac reported higher average mortgage rates last week as the rate for 30-year fixed-rate mortgages rose by three basis points to 5.81 percent. Rates for 15-year fixed-rate mortgages averaged 4.92 percent and were 11 basis points higher than in the previous week. The average rate for 5/1 adjustable rate mortgages was eight basis points higher at 4.41 percent. Discount points averaged 0.80 percent for 30-ye

ar fixed-rate mortgages and 0.90 percent for 15-year fixed-rate mortgages.

Initial jobless claims fell to 229,000 new filings last week as compared to 231,000 new claims filed in the previous week. Analysts expected 225,000 new jobless claims last week. Continuing jobless claims inched up with 1.32 million continuing claims filed as compared to the previous week’s reading of 1.31 ongoing jobless claims filed.

The University of Michigan’s Consumer Sentiment Index fell to an index reading of 50.0 for June as compared to May’s reading of 50.2 and the expected June reading of 50.2. Consumer concerns over fuel prices and rising inflation eroded consumer confidence in the economy. Readings above 50 indicate that most consumers have a positive outlook on current economic conditions.

What’s Ahead

This week’s scheduled economic reports include readings from Case-Shiller on home prices, pending home sales,  and construction spending. Weekly readings on mortgage rates and jobless claims will also be released.