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What’s Ahead For Mortgage Rates This Week – April 25, 2016

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What's Ahead In Mortgage News

Last week’s economic releases included Existing Home Sales, Commerce Department Releases on Housing Starts and Building Permits and the National Association of Home Builders/Wells Fargo Housing Market Index. Mortgage rates and new jobless claims were released according to their weekly schedule.

Home Builder Confidence Holds Firm in April

According to April’s National Association of Home Builders/Wells Fargo Housing Market Index, home builder confidence held steady with a reading of 58 for the third consecutive month. Analysts viewed April’s reading as a sign of steady expansion for home building, but builders noted concerns over labor shortages. NAHB Chief Economist Robert Dietz said that builders were “cautiously optimistic” concerning housing market conditions.

The National Association of Realtors® reported a jump in sales of previously owned homes in March. The seasonally-adjusted annual rate of sales rose to 5.33 million and surpassed expectations of 5.30 million sales and February’s reading of 5.07 million sales of pre-owned homes.Mr. Lawrence Yun, chief economist for NAR, said that demand is increasing and noted that the national average home price increased more than twice as fast as average wages.

In other housing-related reports, the Commerce department reported slower growth in housing starts, which reached 1.089 million starts in March. Analysts expected 1.170 million starts based on March’s reading of 1.194 housing starts. Building permits were also lower with 1.086 million building permits issued as compared to 1.177 million building permits issued in March.

National Association of Realtors®: Sales of Pre–Owned Homes Exceed Expectations

March sales of previously owned homes reached a seasonally-adjusted annual rate of 5.33 million sales against predictions of 5.30 million sales and February’s reading of 5.07 million sales. While March sales of pre-owned homes coincide with the approaching peak home selling season, high demand for homes and low supplies of homes for sale could slow sales. Inventories of available homes are currently at a 4.5 month supply; a six month supply of available homes indicates a normal reading for available homes.

Mortgage Rates Mixed, Jobless Claims Lowest Since 1973

Freddie Mac reported mixed results for last week’s average mortgage rates. The rate for a 30-year fixed rate mortgage was one basis point higher at 3.59 percent. The rate for a 15-year fixed rate mortgage was one basis point lower at 2.85 percent while the average rate for 5/1 adjustable rate mortgages fell by three basis points to 2.81 percent. Discount points averaged 0.60 percent for fixed rate mortgages and 0.50 percent for 5/1 adjustable rate mortgages.

Weekly jobless claims dropped to their lowest level since 1973 with a reading of 247,000 new claims filed. Analysts expected a reading of 265,000 new claims filed based on the prior week’s reading of 253,000 new claims filed. Strong labor markets can be an incentive to home buyers to move up to larger homes or transition from renting to owning, but short supplies of available homes and rapidly rising home prices present obstacles. First-time buyers account for approximately 30 percent of home sales; their participation could diminish unless available homes increase and demand for homes eases.

What‘s Ahead

This week’s scheduled economic reports include the S&P Case-Shiller Home Price Indices along with new and pending home sales reports. Weekly reports on mortgage rates and new jobless claims will be released on schedule.

What’s Ahead For Mortgage Rates This Week – April 18, 2016

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What's Ahead For Mortgage Rates This Week - April 18, 2016

Last week’s scheduled economic releases included reports on retail sales, inflation and the Federal Reserve’s Beige Book report. Weekly reports on mortgage rates and new jobless claims were also released. The Consumer Financial Protection Bureau announced a limited program for reducing principal on eligible mortgages held by Fannie Mae and Freddie Mac. This program is intended to resolve remaining “underwater” mortgages on homes worth less than their current mortgage amounts.

Retail Sales Fall, Inflation Rises

Retail sales fell in March to close out a weaker than expected first quarter 2016. Retail sales fell 0.30 percent in March as compared to expectations of a 0.10 percent increase and February’s flat reading. Analysts said consumers were reluctant to spend in spite of improving job markets and household finances. Retail sales rose by 1.70 percent year-over-year, a reading categorized as “weak” by analysts.

Hiring for lower wages and fewer hours worked was seen as contributing to consumers’ reluctance to spend, especially on big-ticket items including vehicles. Retail sales excluding auto sales were 0.20 percent higher than in February, but did not meet the expected reading of 0.50 percent and incrementally exceeded February’s reading, which was unchanged from January.

Inflation rose by 0.10 percent in March against expectations of 0.20 percent and February’s negative reading of -0.70 percent. Core inflation readings that exclude volatile food and energy sectors mirrored the Consumer Price Index with 0.10 percent growth against an expected reading of 0.20 percent and February’s Core Consumer Price Index reading of 0.30 percent. Lagging inflation is largely attributed to lower fuel prices, but this doesn’t impact the Core CPI reading.

Fed Beige Book: Economy Recovering at Modest to Moderate Rate

According to the Federal Beige Book report for March, business contacts surveyed by the Federal Reserve suggested that increases in wages and oil prices should bump up the economy, but the Fed expects economic expansion to increase at a “modest to moderate” rate for the long term. Employers noted difficulties in hiring for low and high skilled jobs in some areas, and retailers were optimistic about sales for the rest of 2016.

In general, the Fed has adopted a cautious approach to raising its target federal funds rate. Fed Chair Janet Yellen repeatedly cited concerns over global risks for scaling back Fed rate increases from four to two in 2016.

Mortgage Rates, Jobless Claims Fall

Freddie Mac reported the lowest mortgage rates for 2016; rates were also their lowest since May 2013. The average rate for a 30-year fixed rate mortgage fell one basis point to 3.58 percent; the average rate for a 15-year fixed rate mortgage fell two basis points to 2.86 percent. The average rates for a 5/1 adjustable rate mortgage also slipped two basis points to 2.84 percent. Discount points were 0.50, 0.40 and 0.50 percent respectively.

In unrelated mortgage news, the Consumer Financial Protection Bureau announced a limited program for reducing mortgage balances for eligible mortgages owned by Fannie Mae and Freddie Mac that exceed home values. Mortgage lenders will notify eligible homeowners by December 31.While limited in scope, this program is expected to prevent foreclosure of eligible properties that cannot be sold or refinanced.

Jobless claims fell to 253,000 new claims last week, which was lower than the expected reading of 270,000 new jobless claims and the prior week’s reading of 266,000 new claims. Coupled with the Beige Book findings that employers are facing shortages of qualified workers, this low reading appears to further support improving economic conditions.

What‘s Ahead

Next week’s scheduled economic releases include the National Association’s Home Builders Housing Market Index along with Commerce Department reports on housing starts and building permits. The National Association of Realtors® will also release its Existing Home Sales Report.

What’s Ahead For Mortgage Rates This Week – April 11, 2016

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What’s Ahead For Mortgage Rates This Week – April 11, 2016Last week’s economic news included minutes of the most recent Federal Open Market Committee (FOMC) meeting. Weekly reports on mortgage rates and new jobless claims were also released.

FOMC Minutes Indicate Fed Not Pressing Rate Increases

Minutes of the FOMC meeting held March 15 and 16 suggest that FOMC members are easing their enthusiasm for raising the target federal funds rate. In recent months, the committee has indicated that it was leaning toward raising rates on a slow but steady pace. Ongoing concerns over changing global economic and financial conditions contributed to FOMC’s decision not to raise the key federal funds rate. Low energy prices continue to cause U.S. inflation to stay below the Fed’s goal of two percent, which suggests that the economy is not recovering as fast as originally expected.

Labor markets continued to improve as the national unemployment rate held steady at 4.90 percent in February. FOMC noted that the labor force participation rate and employment to population ratio increased. The four-week moving average of new jobless claims fell in March after increasing in February. These readings support continued expansion of labor markets.

Housing markets and household spending improved. Committee members characterized developments in labor and housing markets as “broadly consistent” with earlier expectations. Some housing markets connected with energy production weakened. FOMC members elected to maintain the target federal funds rate at a range of 0.25 to 0.50 percent. Global financial and economic developments were cited as contributing to the Committee’s decision not to raise its target rate.

Mortgage Rates, Weekly Jobless Claims Lower

Mortgage rates fell across the board last week. According to Freddie Mac’s weekly survey of mortgage rates, the average rate for a 30-year fixed rate mortgage dropped to 3.59 percent from the previous week’s reading of 3.71 percent. The average rate for a 15-year fixed rate mortgage dropped 10 basis points to 2.88 percent; the average rate for a 5/1 adjustable rate mortgage dropped to 2.82 percent from 2.90 percent. Average discount points held steady at 0.50, 0.40 and 0.50 percent respectively. Last week’s mortgage rates were the lowest in 14 months.

Analysts said this news was positive in the sense that lower rates make mortgages more affordable, but more home buyers entering the market would further increase demand for homes. Low inventories of homes and high demand have fueled higher home prices in many areas.

Weekly jobless claims fell to 267,000 new claims against expectations of 268,000 new claims and the prior week’s reading of 276,000 new jobless claims. New jobless claims remained below the benchmark of 300,000 new claims for the 57th consecutive week.

What’s Ahead This Week

This week’s scheduled economic news releases include retail sales, the Fed’s Beige Book report, the consumer price index and core consumer price index. Weekly jobless claims and Freddie Mac’s mortgage rates report will be released as usual on Thursday.

What’s Ahead For Mortgage Rates This Week – April 4, 2016

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What's Ahead For Mortgage Rates This Week - April 4, 2016Last week’s economic calendar was full of new releases including pending home sales, Case-Shiller Home Price Indices and construction spending. Labor related reports including ADP payrolls, federal Non-farm payrolls, and the national unemployment rate were also released along with reports on consumer confidence and weekly reports on mortgage rates and new unemployment claims.

Case-Shiller: January Home Prices Up 5.7% Year-Over-Year

According to the S&P Case-Shiller 20-City Home Price Index for January, home prices increased by 5.70 percent year-over-year. The West led price increases with double-digit price gains posted for San Francisco, California, Portland, Oregon and Seattle, Washington. Denver, Colorado also posted a double-digit gain, but dropped its recent lead for metro areas tracked by the 20-City Index.

The National Association of Realtors (NAR) reported better than expected growth in February pending home sales. Low mortgage rates pushed pending home sales to their highest rate in seven months. Pending home sales rose 3.50 percent in February, which exceeded the expected reading of 1.80 percent and January’s reading of 03.00 percent. NAR Chief Economist Lawrence Yun said that February’s reading indicated that housing markets may be recovering after choppy winter sales. Mr. Yun also noted a “slight uptick in inventory,” which is good news for housing markets currently experiencing low inventories of homes for several months or more.

S&P Index Committee Chair David M Blitzer echoed Mr. Yun’s remarks about the impact of low inventories of homes for sale. While higher home prices driven by low inventories benefit home sellers, there comes a point where potential buyers cannot find and / or afford available homes. Constructing new homes is the only immediate solution to increasingly limited supplies of homes for sale.

Construction spending slipped in February from January’s upwardly revised $1.150 trillion on a seasonally-adjusted annual basis. February’s reading was $1.144 trillion. Construction spending fell 0.50 percent as compared to analysts’ expectations of 0.20 percent. Year-over-year, construction spending was 10.30 percent higher in February.

Mortgage Rates Mixed, New Jobless Claims Rise

Freddie Mac’s weekly mortgage rates survey reported mixed results last week. The average rate for a 30-yar fixed rate mortgage held steady at 3.71 percent; the average rate for 15-year fixed rate mortgages rose by two basis points to 2.98 percent and the rate for 5/1 adjustable rate rose by one basis point to 2.90 percent. Average discount points were unchanged across the board at 0.50, 0.40 percent and 0.50 percent respectively.

New unemployment claims rose to 276,000 against an expected reading of 270,000 new claims and 265,000 new claims the prior week.

The Bureau of Labor Statistics reported fewer jobs created in March than for February. 215,000 jobs were added in March as compared to the expected reading of 203,000 new jobs and February’s reading 245,000 new jobs. ADP reported a lower reading of 200,000 private sector jobs added as compared to expectations of 205,000 jobs added and February’s reading of 205,000 private sector jobs added. The national unemployment rate ticked up to 5.0 percent over February’s reading of 4.90 percent.

Consumer confidence rose over two percent in March with a reading of 96.20 percent. Analysts expected a reading of 94.20 based on February’s reading of 94.00.

What’s Ahead This Week

Economic reports scheduled this week include job openings and weekly reports on mortgage rates and new jobless claims.

What’s Ahead For Mortgage Rates This Week – March 28, 2016

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What's Ahead For Mortgage Rates This Week - March 28, 2016Increasing Home Prices Good For Sellers

The National Association of Realtors (NAR) reported lower sales of pre-owned homes in February. Would-be buyers were discouraged by rapidly rising home prices. Short supplies of available homes sidelined potential buyers as higher home prices and cash buyers squeeze out buyers who need mortgages to buy homes. Multiple offers resulting in bidding wars have also deterred buyers in high demand markets. According to NAR’s February report, sales of existing homes fell 7.10 percent to their lowest level since November.

NAR has predicted that rapidly rising home prices would eventually damage housing markets. While analysts weren’t certain whether February’s report indicated a temporary lull due to weather and anomalies related to new closing regulations and seasonal influences, NAR Chief Economist Lawrence Yun said, “The main issue continues to be a supply and affordability problem. Finding the right property at an affordable price is burdening many potential buyers.”

During the housing bubble, buyers jumped into the market as speculators or to buy before home prices increased beyond their reach. NAR surveyed renters last week and found that the percentage of renters who believed that it’s currently a good time to buy a home decreased.

Respondents to Fannie Mae’s February Home Purchase Sentiment Index forecasted a 1.70 percent increase in home prices year-over-year. One year ago, respondents expected home prices to increase by 2.50 percent year-over-year. This may suggest that home prices are cooling. This can be expected as the number of buyers declines as home prices become increasingly unaffordable.

New Home Sales Up in February

New home rose in February according to the Commerce Department. Based on a revised reading of 502,000 new home sales in January, February’s reading was 2.00 percent higher than January’s reading, but was 6.10 percent lower than for February 2015.

Builders have held back on increasing construction due to concerns about ups and downs in the economic recovery. Short supplies of labor and available land have also kept home builders from meeting current demand.

Mortgage Rates Trend Lower

According to Freddie Mac, average mortgage rates fell across the board last week. The rate for a 30-year fixed rate mortgage fell by two basis points to 3.71 percent; the rate for a 15-year fixed rate mortgage fell three basis points to 2.96 percent and the rate for a 5/1 adjustable  rate mortgage fell four basis points to 2.89 percent.

New jobless claims rose to 265,000 from the prior week’s reading of 259,000 new claims. Last week’s reading matched analyst expectations.

What‘s Ahead This Week

This week’s scheduled economic news includes reports on inflation, pending home sales, Case-Shiller’s Home Price Index reports and government and private sector employment data. Weekly reports on mortgage rates and new jobless claims are also scheduled. 

What’s Ahead For Mortgage Rates This Week – March 14, 2016

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What's Ahead For Mortgage Rates This Week - March 14, 2016Last week’s economic news included Fannie Mae’s Home Purchase Sentiment Index along with weekly reports on mortgage rates and new jobless claims. The City of Detroit also announced a program to help would-be buyers purchase homes that do not qualify for mortgage loans due to severe damage.

Fannie Mae: Home Buyer Sentiment Index Rises

Fannie Mae’s Home Buyer Sentiment Index (HBSI) gained 1.20 percent for an overall reading of 82.70 percent for February. The index reading is calculated using responses to several questions contained in Fannie Mae’s National Housing Survey. HBSI components include consumer responses to questions about whether it’s a good or bad time to sell or buy a home, consumer expectations concerning whether home prices and mortgage rates will rise, whether respondents expected to keep or lose their jobs, and consumer outlook for their income to significantly increase year-over-year.

The HBSI is designed to assess consumer attitudes about housing markets and their decisions about buying a home.

Mortgage Rates Rise, Weekly Jobless Claims Fall

Freddie Mac reported that average mortgage rates rose across the board last week. The average rate for a 30-year fixed rate mortgage rose four basis points to 3.68 percent; the average rate for a 15-year mortgage rose two basis points to 2.96 percent and the average rate for a 5/1 adjustable rate mortgage was eight basis points higher at 2.92 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

New jobless claims dropped to a five-month low last week with a reading of 259,000 new claims filed as compared to expectations of 275,000 new claims and the prior week’s reading of 277,000 new claims. New claims readings under 300,000 new claims indicate a healthy labor market; new claims readings have held below the 300,000 benchmark for more than a year. The lowest reading of 256,000 new jobless claims occurred in October 2015.

City of Detroit Addresses Problems with Ravaged Homes

The City of Detroit announced a program designed to facilitate the purchase and rehabilitation of vacant and damaged homes that do not meet appraisal requirements for traditional home loans. While many markets have recovered from the Great Recession, housing markets such as Detroit have languished due to the lack of financing options. The program offers mortgages to cover the home purchase and second mortgages up to $75,000 for repairs and renovation. Program administrators say they plan to issue 1000 loans over the next three years. This type of program may help struggling housing markets recover while providing homeownership opportunities to those who could not otherwise afford to buy a home.

What’s Ahead This Week

This week’s scheduled economic events include the National Association of Home Builders/Wells Fargo Housing Market Index, federal reports on housing starts and building permits issued. The Federal Reserve will release its usual post-meeting statement after its Federal Open Market Committee meeting. Fed Chair Janet Yellen will also hold a press conference.