05 Mar 2018
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – March 5th, 2018

Financial Reports

Whats Ahead For Mortgage Rates This Week – March 5th 2018Last week’s economic releases included readings on new home sales, pending home sales and Case-Shiller Home Price Indices. Construction spending and consumer sentiment reports were also released, along with weekly readings on average mortgage rates and new jobless claims.

New Home Sales Drop in January

New home sales were reported at a seasonally-adjusted annual rate of 593,000 sales in January according to the Commerce Department. Analysts expected a rate of 693,000 sales based on December’s upwardly revised rate of 643,000 sales of new homes. January’s reading was 7.80 percent lower than for December; January’s reading was one percent lower than for January of 2017.

The average price of a new home was $323,000, which was 2.40 percent higher than for January 2017. The current supply of new homes for sale is 15 percent higher year-over-year, which is expected to ease low inventories of available homes.

Meanwhile, pending home sales were 4.70 percent lower in January than for December, which was unchanged as compared to November. Analysts said that sales activity, which is typically slow in January, was not likely a concern overall.

Case-Shiller Reports Higher Home Prices in December

Home prices were 6.30 percent higher year-over -year in December according to Case-Shiller’s 20-city home price index and were 0.60 percent higher month-to-month. The top three cities leading year-over-year home price growth were Seattle, Washington at 12.70 percent, Las Vegas, Nevada with 11.10 percent growth and San Francisco, California with 9.20 percent growth in home prices.  

None of the 20 cities in the index saw home prices fall in 2017 even after adjustments for inflation.

Construction spending was unchanged in January as compared to analyst estimates of 0.40 percent growth in spending. Builders cited concerns over higher materials prices and shortages of lots and skilled labor. Winter weather was also a factor in lower construction spending.

Mortgage Rates Rise New Jobless Claims Fall

Freddie Mac reported higher average rates for fixed rate mortgages last week; rates for 5/1 adjustable rate mortgages were lower on average. Mortgage rates for a 30-year fixed rate mortgage averaged three basis points higher at 4.43 percent. Rates for a 15-year fixed rate mortgage averaged 3.90 percent and were five basis points higher.

The average rate for a 5/1 mortgage was three basis points lower at 3.62 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages. Mortgage rates rose for the eighth consecutive week, which caused concerns about affordability for first time and moderate-income home buyers. Combined effects of rapidly rising home prices and higher mortgage rates may sideline buyers.

New jobless claims fell by 10,000 to 210,000 first-time claims filed last week. Analysts expected 226,000 new claims based on the prior week’s reading of 220,000 new claims filed. In other news, the University of Michigan reported a lower reading for consumer sentiment in February with an index reading of 99.7 against an expected reading of 100.0 and January’s reading 0f 99.9.

What‘s Ahead

This week’s scheduled economic news includes multiple readings from the labor sector along with weekly reports on mortgage rates and new jobless claims.

 

26 Feb 2018
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – February 26th, 2018

Market Outlook

Whats Ahead For Mortgage Rates This Week – February 26th 2018Last week’s economic releases included minutes from the most recent FOMC meeting, a report on January sales of pre-owned homes and weekly readings on mortgage rates and new jobless claims.

FOMC Minutes: Economic Strength Hints at More Rate Hikes

Minutes of the January 30-31 meeting of the Fed’s Federal Open Market Committee indicated that most Committee members believe that inflation will reach the Fed’s goal of 2.00 percent. Members found that the economy was stronger since 2017 and expected “a gradual upward trajectory of the federal funds rate would be appropriate.”

While analysts expect three rate hikes in 2018, the FOMC voted to hold the federal funds rate at 1.25 to 1.50 percent. Most FOMC members expected that the goal of 2 percent inflation was within reach in 2018.

Analysts were not as confident about reaching to Fed’s inflation goal. Instead, the said that in response to tax cuts, the labor market could exceed full employment and lead to higher wages and surging inflation.

A minority of FOMC members said that inflation could fall short of the Fed’s goal as retailers would compete by lowering prices.

Existing Home Sales Drop in January

According to the National Association of Realtors®, sales of previously-owned homes dipped from a seasonally-adjusted annual rate of 5.56 million sales to 5.38 million sales in January. This reading was the lowest in more than three years; it could indicate that the shortage of homes for sale has reached critical mass.

Months of short supplies of homes for sale have caused rapidly rising home prices, buyer competition and fewer choices of homes for would-be buyers. Real estate pros have repeatedly said the only solution to shortages of available homes is that builders must build more homes but increasing materials costs and labor shortages have caused construction pace to lag demand for homes. Affordability continued to weigh on moderate-income and first-time buyers.

Mortgage Rates Rise for 7th Consecutive Week

Freddie Mac reported higher mortgage rates on average last week. The average rate for a 30-year fixed rate mortgage was two basis points higher at 4.40 percent; rates for a 15-year fixed rate mortgage averaged one basis point higher at 3.85 percent. The average rate for a 5/1 adjustable rate mortgage was two basis points higher at 3.65 percent.

New jobless claims dropped by 7000 first-time claims and regained a 45-year low. 222,000 new claims were filed last week as compared to expectations of 229,000 new claims and 230,000 new claims filed the prior week. Real estate pros and analysts cite strong labor markets as driving housing markets and high demand for homes. Workers with job security and options for advancement in their careers are more likely to consider investing in a home than paying rising rents.

What‘s Ahead

This week’s scheduled economic releases include Case-Shiller Home Price Indices, readings on new and pending home sales and construction spending. Weekly readings on mortgage rates and new jobless claims will be released along with a report on consumer sentiment.

20 Feb 2018
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – February 20th, 2018

Financial Reports

What’s Ahead For Mortgage Rates This Week – February 20th, 2018Last week’s weeks economic releases included readings on the NAHB Housing Market Index, housing starts and building permits issued and consumer sentiment. Weekly readings on mortgage rates and new jobless claims were also released.

NAHB: Builder Confidence in Housing Market Holds Steady in February

The National Association of Home builders reported an index reading of 72 for its Housing Market Index in February. January’s reading was also 72; readings over 50 indicates that more builders than fewer are confident about housing market conditions.

Three readings comprising the overall NAHB HMI reading include builder confidence in current market conditions, which was one point lower in February at 78. Builder confidence in housing market conditions in the next six months rose two points to an index reading of 80.

This was the highest reading for future housing market conditions since before the recession. Builder confidence in buyer traffic in new housing developments was unchanged at 54.

Builders surveyed cited strong labor markets and short supplies of pre-owned homes as fueling confidence in current market conditions, but identified ongoing labor and lot shortages and rising materials costs as concerns for builders.

Housing Starts, Building Permits Issue Rise in January

High builder confidence was reflected in readings for housing starts and building permits issued in January. Housing starts rose to their highest level in more than 10 years. The annual pace of housing starts reached 1.326 million starts.

January’s reading exceeded expectations of 1.324 million starts and December’s reading of 1.209 million housing starts. January’s starts reflect strong builder confidence readings and may also signal future relief for short supplies of available homes and high demand for homes in many metro areas.

High demand for homes has caused rapid appreciation in home values and sidelined first-time and moderate-income buyers in areas with high home values. According to the Commerce Department, building permits issued rose to 1.396 million from December’s1.380 million starts annually.

The University of Michigan reported the second highest reading for consumer sentiment in 14 years. February’s reading of 99.9 was higher than expectations for a reading of 95.3 and January’s reading of 95.7Analysts said that recent tax cuts likely stabilized consumer outlook in spite of volatile financial markets.

Mortgage Rates, New Jobless Claims Rise

Freddie Mac reported higher mortgage rates for all three types of mortgages it tracks in its Primary Mortgage Market Survey. Rates for a 30-year fixed rate mortgage rose an average of six basis points to 4.38 percent.

The average rate for a 15-year fixed rate mortgage was seven basis points higher at an average of 3.84 percent. Rates for a 5/1 adjustable rate mortgage averaged 3.63 percent, which was six basis points higher than the prior week.

New jobless claims were higher last week with 230,000 new claims filed, which matched expectations and exceeded 223,000 new jobless claims filed the prior week.

What‘s Ahead

This week’s economic releases include readings on existing home sales along with weekly readings on mortgage rates and new jobless claims. Financial markets were closed on Monday for President’s Day.

12 Feb 2018
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – February 12th, 2018

Market Outlook

Whats Ahead For Mortgage Rates This Week – February 12th 2018Jerome “Jay” Powell was sworn in as Chair of the Federal Reserve amidst wild fluctuations in U.S. stock markets. Analysts attributed sliding stock prices to fears over inflation.

Mr. Powell, who follows former Fed Chair Janet Yellen, introduced himself via a video clip on the Fed’s website. Weekly readings on mortgage rates and new jobless claims were also released.

New Fed Chair Promises “Transparency“ in Video Introduction

In a video introduction posted on the Fed’s website, new Fed Chair Jay Powell promised that the Fed would explain “what we are doing and why we are doing it.” Mr. Powell did not address stock market volatility but said that monetary policy decisions would be made based on the Fed’s dual mandate of achieving maximum employment and price stability along with economic growth.

Mr. Powell took leadership of the Fed as the national unemployment rate dipped to 4.10 percent.

Mr. Powell is an attorney by profession and is the first Fed Chair not to hold a PhD in economics in more than 30 years.

Former Treasury Secretary Advises Against Raising Rates Too Fast

Former Obama administration Treasury Secretary Larry Summers cautioned against raising rates too fast: “If the Fed raises rates sufficiently to assure financial stability, there is a risk that the economy will slow too much.

When the Federal Reserve raises its target federal funds rate financial institutions, mortgage lenders and retail lenders usually follow suit.

Mortgage Rates Rise, New Jobless Claims Fall

Freddie Mac reported higher mortgage rates last week. The average rate for a 30-year fixed rate mortgage was 10 basis points higher at 4.32 percent; the average rate for a 15-year fixed rate mortgage rose by nine basis points to 3.77 percent.

The average rate for a 5/1 adjustable rate mortgage gained four basis points to 3.57 percent. Discount points averaged 0.60 percent, 0.50 percent and 0.40 percent respectively.

New jobless claims fell to their lowest level since the 1970s. 221,000 first-time claims were filed as compared to 232.000 new claims expected and the prior week’s reading of 230,000 new claims filed.

What‘s Ahead

This week’s economic news releases include readings on inflation, retail sales and the National Association of Home Builders Housing Market Indices. Readings on housing starts and building permits issued will also be released, along with weekly readings on mortgage rates and new unemployment claims.