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What’s Ahead For Mortgage Rates This Week – February 22, 2016

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What's Ahead For Mortgage Rates This Week - February 22, 2016Last week’s economic news included the NAHB Housing Market Index, Commerce Department releases on housing starts and building permits and minutes of the most recent meeting of the Fed’s FOMC meeting.

Home Builder Confidence Falls in February

According to the National Association of Home Builders (NAHB), home builders had less confidence in market conditions for newly built homes. The reading for February was three points lower at 58 than the upwardly adjusted reading for January. Analysts had expected a reading of 59; any reading over 50 indicates that more builders are confident about conditions than those who are not.

Builder confidence was mixed for the three components used to calculate the NAHB Wells Fargo Housing Market Index reading. Confidence in current market conditions was lower by three points to 65, but builder confidence in future market conditions rose one point to 65. The reading for buyer foot traffic in new housing developments hasn’t topped the benchmark of 50 since the peak of the housing bubble; in February, the reading for buyer foot traffic dropped five points to 39.

NAHB Chief Economist David Crowe said that builder confidence is likely to improve in 2016 due to low mortgage rates, stable job markets and pent-up demand for homes. Mr. Crowe also said that shortages of available land and labor were concerns for builders.

Housing Starts,Building Permits Issued Lower

Commerce Department reports on housing starts and building permits issued also showed lower readings for January than for December. Housing starts reached 1.099 million starts in January as compared to an expected reading of 1.165 million starts and December’s reading of 1.145 million starts.  Winter weather likely contributed to fewer housing starts.

Fewer building permits were issued in January than in December. January’s reading was 1.202 million permits issued as compared to December’s reading of 1.143 million building permits issued. Building permits issued for single family homes dropped by 1.60 percent to 731,000 permits issued. While lower month-to-month readings for current conditions may seem discouraging, the pace of single-family home building grew steadily during 2015 and is expected to do likewise in 2016.

FOMC Minutes: Policy Makers Eye Economic Developments

Minutes of January’s Federal Open Market Committee meeting indicate that members will closely monitor developing economic conditions as part of any future decision to raise the target federal funds rate from its current range of 0.250 to 0.500 percent. The Fed raised this rate in December, but did not increase the federal funds rate at its January meeting. Fed Chair Janet Yellen emphasized that decisions to raise the federal funds rate were not on a pre-determined course and that developing economic trends would continue to inform FOMC decisions.

Mortgage Rates and Weekly Jobless Claims

Average rates for fixed rate mortgages were unchanged last week according to Freddie Mac. The average rate for a 30-year fixed rate mortgage was 3.65 percent and the average rate for a 15-year fixed rate mortgage was 2.95 percent with Discount points averaged 0.50 percent for both types of fixed rate mortgages. The average rate for a 5/1 adjustable rate mortgage rose by two basis points to 2.85 percent with average discount points at 0.40 percent.

Analysts have consistently cited stronger labor markets as a factor driving U.S. housing markets. New weekly jobless claims dropped last week and added evidence of expanding job markets. 262,000 new jobless claims were filed last week; the reading was lower than expectations of 275,000 new claims and the prior week’s reading of 269,000 new jobless claims. Stable job markets are important to would-be home buyers; as labor conditions improve more buyers are likely to enter the housing market.

What‘s Ahead

This week’s scheduled economic news includes reports on sales of new and pre-owned homes and the Case-Shiller 10 and 20 City Home Price Indices. Reports on consumer sentiment and inflation will also be released.

What’s Ahead For Mortgage Rates This Week – March 16, 2015

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What's Ahead For Mortgage Rates This Week March 16 2015Last week’s economic reports included job openings, retail sales, retail sales except automotive, consumer sentiment for March and the usual reports on weekly jobless claims and mortgage rates.

Job Openings Highest in 14 Years

The Labor Department reported that job openings reached their highest level in 14 years in January, and rose by 2.50 percent over December 2014 job openings. On a seasonally adjusted basis, there were five million job openings in January. Job openings rose by 28 percent year-over-year.

Hiring rose by 3.50 percent to 5.24 million, but analysts said that employers continue to have difficulty in finding workers with skills needed to fill their job openings. Winter weather was also mentioned as contributing to lower hiring rates.

Stable full-time employment is a key requirement for qualifying for a home loan. Inconsistent, part-time and self-employment typically make it more difficult to qualify for mortgages in today’s conservative lending environment.

Retail Sales Lower

Retail sales fell by –0.60 percent in February against an expected reading of +0.30 percent and January’s reading of -0.80 percent. This was the third consecutive drop in retail sales volume and suggests that consumers are not confident about spending. Retail sales except automotive were also lower with a February reading of -0.10 percent against an expected reading of +0.40 percent and January’s reading of -1.10 percent.

Mortgage Rates Rise, Weekly Jobless Claims Fall

According to Freddie Mac average mortgage rates rose across the board with the rate for a 30-year fixed rate mortgage at 3.86 percent, an increase of 11 basis points. The average rate for a 15-year mortgage rose by seven basis points to 3.10 percent. The average rate for a 5/1 adjustable rate mortgage rose five basis points to 3.01 percent. Discount points were unchanged at 0.60 percent for fixed rate mortgages and 0.50 percent for a 5/1 adjustable rate mortgage.

Weekly jobless claims fell to 389,000 against expectations of 310,000 new jobless claims filed and the prior week’s reading of 325,000 new claims filed. This was good news after a spike in new jobless claims that was likely caused by bad weather. Although week to week data tends to be more volatile than month-to-month trends, there was good news in that new jobless claims fell below a benchmark of 300,000 new claims filed. Readings of 300,000 or fewer new jobless claims filed represent strong labor market conditions.

What’s Ahead

This week’s economic reports include the NAHB Wells Fargo Housing Market Index, federal reports on housing starts and building permits and the Federal Reserve’s FOMC meeting statement. Fed Chair Janet Yellen is scheduled to present a press conference, which analysts will watch closely for any indication of when the Fed will raise interest rates.