01 Oct 2018
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – October 1st, 2018

Financial Reports

What's Ahead For Mortgage Rates This Week - October 1st, 2018Last week’s economic readings included reports on home prices, new and pending home sales and remarks released by the Federal Open Market Committee of the Federal Reserve. Weekly readings on average mortgage rates and first-time jobless claims were also released.

Case-Shiller HPI: Home Price Growth Slows in July

Home prices grew slower in July according to data released last week. Home prices rose at a seasonally-adjusted annual rate of 6.0 percent in July as compared to June’s rate of 6.2 percent growth. Analysts cited increasing inventories of homes available, which typically increases competition and lowers asking prices. Would-be home buyers have also suspended their home searches due to slim supplies of homes and competition with cash buyers.

New and Pending Home Sales Show Mixed Results

Sales of new homes rose in August according to the Commerce Department. New homes sold at a seasonally adjusted annual rate of 629,000 sales. Analysts expected a reading of 625,000 sales New home sales grew by 3.50 percent from July to August and were 12.70 percent higher year-over-year. New homes sold for an average price of $320,200 in August, which was a year-over-year price increase of 1.90 percent.

Pending home sales dipped in August with a reading of – 1.80 percent in August as compared to July’s reading, which was also negative at 0.80 percent. Pending sales typically slow as fall approaches and peak hone buying season ends. Pending home sales indicate what’s ahead in closed home sales and mortgage loans. Analysts said that government readings on home sales are gleaned from small samples and are subject to adjustment.

Mortgage Rates, New Jobless Claims Rise.

Freddie Mac reported higher mortgage rates last week after the Federal Reserve announced that it would raise its target federal funds range to 2.00 to 2.25 percent. Analysts said that the Federal Open Market Committee dropped the term “accommodative” in its post-meeting announcement on Wednesday.

Interest rates for a 30-year fixed rate mortgage averaged 4.72 percent, which was an increase of seven basis points. The average rate for a 15-year fixed rate mortgage rose five basis points to 4.16 percent and the average rate for a 5/1 adjustable rate mortgage rose five basis points to 3.97 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

First-time jobless claims also rose last week with 214,000 first-time claims filed as compared to expectations of 216,000 new claims filed and the prior week’s reading of 202,000 new claims filed. High numbers of claims filed in Kentucky, North Carolina and South Carolina suggested that the jump in initial claims related to Hurricane Florence.

What‘s Ahead

This week’s scheduled economic releases include readings on public and private-sector jobs growth, the national unemployment rate and construction spending. Weekly readings on mortgage rates and new unemployment claims will also be released.

27 Sep 2018
By Kevin Gahagan

Fed Raises Key Interest Rate For 3rd Consecutive Time

Real Estate

Fed Raises Key Interest Rate for 3rd Consecutive TimeThe Federal Open Market Committee of the Federal Reserve announced that it raised the target federal funds rate to a range of 2.00 percent to 2.25 percent. This was the third consecutive increase in the Fed’s key interest rate and was the eighth time the Fed raised its key interest rate since 2015.

In its customary post-meeting statement, Committee members cited strong economic conditions and continued labor market growth coupled with historically low unemployment rates as a basis for raising the federal funds interest rate.

Fed Cites Steady Inflation, Healthy Household And Business Spending

Further economic conditions cited in the FOMC statement were steady inflation, which has held close to the Fed’s objective of two percent for a year. Projections on long-term inflation were “little changed” according to the statement.

FOMC’s statement explained how committee members make decisions about the target range for the federal funds rate. The Federal Reserve must make decisions based on its legislative mandate of achieving and maintaining maximum employment and an inflation rate at or near two percent.

The FOMC also considers measures of economic and labor conditions, pressures on inflation and projections on inflation. Committee members keep up-to-date on domestic and global economic developments.

After the FOMC statement was released, Fed Chair Jerome Powell gave a press conference.

Fed Chair: Economy Strengthening Without Need Of Fed Accommodation

Federal Reserve Chair Jerome Powell expressed confidence in current economic conditions and said that future rate hikes would help maintain the Fed’s goals and promote healthy economic growth. Mr. Powell said that future meetings of the Federal Open Market Committee would be guided by asking and answering the question of whether current monetary policy is set to achieve FOMC goals. Analysts interpreted Chair Powell’s comments as indicating that current economic conditions are as good as could be expected and that the Fed’s monetary policy decisions are working as planned.

 

24 Sep 2018
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – September 24th, 2018

Financial Reports

What’s Ahead For Mortgage Rates This Week – September 25th, 2018Last week’s economic releases included readings on the NAHB Housing Market Index, sales of pre-owned homes, and housing starts. Weekly readings on mortgage rates and first-time jobless claims were also released.

NAHB: Home Builder Confidence in Market Conditions Holds Steady

The National Association of Home Builders reported an index reading of 67 for September, which matched August’s reading. Growing concerns over impacts of tariffs on building material costs have slowed builders’ confidence in current and future market conditions.

Components of the NAHB Housing Market Index include readings on current conditions, which gained one point to 74; builder confidence in market conditions over the next six months gained two points to a reading of 74. The HMI reading for buyer traffic in new housing developments was unchanged with a reading of 49. Readings for buyer traffic are typically below the benchmark index reading of 50. Readings over 50 indicate that most home builders are confident about housing market conditions.

Builder confidence is considered an indication of future housing supplies as builders may adjust their construction plans on market conditions and building costs. The Commerce Department reported higher housing starts in August with a seasonally-adjusted annual rate of 1,282 million starts. Analysts predicated a rate of 1.249 million starts based on July’s reading of 1.168 million starts.

Sales of Previously-Owned Homes Unchanged

The National Association of Realtors® reported sales of previously-owned homes held steady in August, with homes sold at a seasonally-adjusted annual rate of 5.34 million sales. Analysts expected a reading of 5.37 million sales. Home sales have faced headwinds in recent years with high demand and low inventories of available homes driving up home prices faster than inflation and wage growth. Recently rising mortgage rates also impacted affordability and sidelined would-be buyers with moderate incomes.

Mortgage Rates Rise; New Jobless Claims Fall

Freddie Mac reported higher rates for fixed-rate mortgages with the average rate for a 30-year fixed rate mortgage rose five basis points to 4.65 percent. The average rate for 15-year mortgages also rose by five basis points to 4.11 percent. Rates for 5/1 adjustable rate mortgages dipped by one basis point to 3.92 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 to 201,000 claims filed as compared to expectations of 208,000 new claims filed and the prior week’s reading of 204,000 new claims filed. This was a 49-year low; analysts cited Hurricane Florence and overall economic expansion.

What‘s Ahead

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

 

17 Sep 2018
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – September 17th, 2018

Financial Reports

What’s Ahead For Mortgage Rates This Week – September 17th, 2018 Last week’s economic news included readings on consumer credit, inflation and consumer sentiment. Weekly readings on mortgage rates and first-time jobless claims were also released.

Fed Reports Consumer Credit Jumps in July

The Federal Reserve reported that consumer credit rose from $9 billion in June to $17 billion in July. Analysts said a majority of consumer credit was issued for education loans and auto loans. June’s reading was revised downward to $8.50 billion from the original reading of $10.2 billion.

Credit card debt increased by 1.50 percent in July after declining by – 1.40 percent in June. Non-revolving consumer debt rose by 6.40 percent in July after growing 4.0 percent in June. July’s reading was the largest increase in eight months. The Fed’s Consumer Credit report does not include mortgage loans.

Inflation increased by 0.20 percent in August, which fell short of analyst expectations of 0.30 percent growth. Core inflation, which excludes volatile food and fuel sectors, rose by -0.10 percent and was lower than the expected reading of 0.20 percent growth. July readings for inflation and core inflation were 0.20 percent.

Mortgage Rates and Consumer Sentiment Rise as New Jobless Claims Fall

Freddie Mac reported higher average mortgage rates for the third consecutive week. Rates for a 30-year fixed rate mortgage rose six basis points to an average of 4.60 percent; rates for 15-year fixed rate mortgages averaged seven basis points higher at 4.06 percent and mortgage rates for 5/1 adjustable rate mortgages averaged 3.93 percent and were unchanged from the prior week. Discount rates were reported at 0.50 percent for fixed-rate loans and 0.30 percent for 5/1 adjustable rate mortgages.

First-time jobless claims fell last week to 204,000 claims filed against expectations of 210,000 new claims filed and the prior week’s reading of 205,000 first-time jobless claims filed.

Consumer sentiment rose in September. The University of Michigan reported an index reading of 100.8, which surpassed the expected index reading of 97.0 and the August reading of 96.2.

What‘s Ahead

This week’s scheduled releases include readings from the National Association of Home Builders, The National Association of Realtors® on sales of pre-owned homes and Commerce Department readings on housing starts and building permits issued. Weekly readings on mortgage rates and new jobless claims will also be released.

10 Sep 2018
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – September 10th, 2018

Financial Reports

What’s Ahead For Mortgage Rates This Week – September 10th, 2018Last week’s economic news included readings on construction spending, along with public and private-sector jobs growth. The national unemployment rate, weekly reports on mortgage rates and new jobless claims were also released.

Construction Spending Rises in July

July construction spending ticked up to 0.10 percent from June’s negative reading of -0.80 percent. Year-over-year, construction spending was 5.80 percent higher than for July 2017.Public-sector construction accounted for most of the growth and increased by 0.70 percent as private-sector construction projects decreased by -0.10 percent.

Month-to-month spending readings can be volatile, but analysts said that construction spending for the first seven months of 2018 were up 5.20 percent from the same period in 2017. July’s slower spending rate suggested that construction projects are slowing.

Given ongoing shortages of available homes, this is not good news for housing markets. High demand has driven home prices up, but affordability has become an issue in areas where home prices outpace inflation and wage growth.

Mortgage Rates Rise as New Jobless Claims Fall

Freddie Mac reported higher average mortgage rates last week; the rate for a 30-year fixed rate mortgage rose two basis points to 4.54 percent. Rates for 15-year fixed rate mortgages averaged 3.99 percent and were two basis points higher.

Rates for a 5/1 adjustable rate mortgage averaged eight basis points higher at 3.93 percent. Analysts said that home prices continued to rise as demand for homes softened Higher home prices and mortgage rates sidelined first-time and moderate-income home buyers as slim inventories of homes for sale sidelined buyers who could not find homes they wanted to buy.

First-time jobless claims were lower last week with 213,000 claims filed. Analysts expected 212,000 new claims to be filed based on the prior week’s reading of 213,000 first-time filings. The national unemployment rate held steady at 3.90 percent.

ADP payrolls dropped to 163,000 private-sector jobs in August as compared to 217,000 private-sector jobs added in July. The Commerce Department’s Non-Farm Payrolls reported 201,000 public and private-sector jobs added in August, which fell short of the expected reading of 212,000 jobs added and the prior month’s reading of 213,000 jobs added.

What‘s Ahead

This week’s economic readings include reports on inflation, retail sales and the Federal Reserve’s Beige Book report. Weekly readings on mortgage rates and new jobless claims will also be released.