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26 06, 2014

Case-Shiller: Home Price Growth Slows in April

Case Shiller Home Price Growth Slows in AprilThe S&P Case-Shiller Index for April shows that while home prices continue to grow, they are doing so at a slower pace as compared to April 2013. The Case-Shiller 20 city index reports that home prices expanded at a year-over-year annual rate of 10.80 percent as compared to 12.40 percent in April 2013.

Month-to-month data showed that home prices rose for the second consecutive month. The seasonally- adjusted month-to-month growth rate for the 20 city home price index was 0.20 percent against March’s month-to-month home price growth rate of 1.20 percent.

Slower Home Price Growth: A Silver Lining?

According to the Case-Shiller 20-City Home Price Index 19 of 20 cities posted slower growth rates for home prices in April. Analysts say that this may not be all bad news as rapidly rising home prices, a shortage of available homes and stringent mortgage credit requirements have caused would-be buyers to be sidelined. Inventories of available homes are increasing which should help more buyers enter the market.

David M. Blitzer, chair of the S & P Dow Jones Indices Committee said that last year, some sun belt cities posted annual home price growth rates near 30 percent, but this year, the maximum annual home price growth rates are lower than 20 percent for all cities on a seasonally adjusted annual basis.

Month-to-month price growth was described as seasonally strong. Five cities posted month-to-month price gains of two percent or more.

Seven of the 20 cities included in the 20-city index posted slower rates of home price growth in April than for March: Cleveland, Ohio, Las Vegas, Nevada, Los Angeles California, Miami, Florida, Phoenix, Arizona and San Diego, California were included in this group. Boston, Massachusetts posted a 2.70 percent gain in home prices between March and April; this was the city’s largest month-to-month gain since the inception of the 20-City Index.

Lower mortgage rates, more homes on the market, and a recent statement by the Federal Reserve that it did not expect to raise its target federal funds rate until mid-2015 are seen as factors that are helping to stabilize housing markets.

FHFA Reports Home Price Gain Rate Unchanged in April

The Federal Housing Finance Agency (FHFA) that oversees Fannie Mae and Freddie Mac reported that home prices connected with mortgages owned or backed by Fannie Mae and Freddie Mac rose by 0.70 percent, which was the same pace in month-to-month home price growth as for March. Year-over-year, home prices rose by 5.90 percent.

On a seasonally-adjusted month-to-month basis, home prices ranged from -1.3 percent in the New England division to +0.60 percent in the East South Central division. Year-over-year, home prices in the nine census divisions increased at rates between 1.70 percent for the Mid-Atlantic division to 10.70 percent for the Pacific division.

The peak home-buying season during spring and summer months and labor market performance will likely be strong influences on home price growth in the coming months.

2 06, 2014

What’s Ahead For Mortgage Rates This Week – June 2, 2014

What's Ahead For Mortgage Rates This Week – June 1, 2014Last week’s economic news was fairly quiet due to the Memorial Day holiday on Monday and no scheduled news released on Wednesday.

Home Prices Post Modest Gains, But Growth Rate of Home Prices Slows

Tuesday’s release of the S&P Case-Shiller Home Price Index for March showed that home prices are edging up, but at a slower pace than last year. Home prices increased by 12.40 percent year-over-year as compared to February’s reading of 12.90 percent year-over-year.

Analysts expected prices to fall as construction picks up and more homes are listed for sale. Lower demand due to strict mortgage lending standards and high home prices continued to keep many moderate-income and first-time home buyers on the sidelines.

FHFA Reports Home Prices Increased By Over 6 Percent

FHFA, the agency that oversees Fannie Mae and Freddie Mac also released its home price index for properties connected with Fannie Mae or Freddie Mac owned or guaranteed loans. As of March, FHFA reported that home prices increased by 6.50 percent year-over-year as compared to February’s year-over-year reading of 6.90 percent.

Consumer confidence rose by 1.30 percent for May with a reading of 83.0, which matched expectations.

Last Thursday’s news included the weekly Jobless Claims report, which showed 22,000 fewer jobless claims than expected with a reading of 300,000 new jobless claims reported. Thursday’s reading was also lower than the prior reporting period’s reading of 327,000 new jobless claims filed.

The four-week rolling average of jobless claims also showed improvement with 11,250 fewer claims filed and an average reading of 311,500 new weekly jobless claims filed. This was the lowest number of jobless claims filed since August 2007. Analysts look to the four-week rolling average as more accurate than the weekly readings, which can be volatile.

U.S. jobs have increased by 200,000 jobs per month over the last three months reported.

Pending Home Sales Up for Second Consecutive Month

Pending home sales in April rose by 0.40 percent from the March reading of 97.4 to 97.8. The April reading was the highest for pending home sales since November. Pending home sales provide an estimate of future home sales.

Lower mortgage rates likely supported expanded home sales. Freddie Mac reported that the average rate for a 30-year fixed rate mortgage was 4.12 percent, a drop of two basis points from last week. The rate for a 15-year fixed rate mortgage fell by four basis points to 3.21 percent.

The average rate for a 5/1 adjustable rate mortgage was unchanged at 2.96 percent. Discount points were unchanged at 0.60 for a 30-year fixed rate mortgage and 0.50 percent for a 15 year mortgage. Discount points dropped from 0.40 to 0.30 percent for a 5/1 adjustable rate mortgage.

What’s Ahead

In addition to construction spending for April, this week’s economic news includes several reports that can provide insight about employment and consumer spending.

News events include Motor Vehicle Sales for May, The Fed’s Beige Book report, and Thursday’s usual release of Freddie Mac’s average mortgage rates and weekly Jobless Claims. Non-farm Payrolls and the national unemployment rate for May are also scheduled for release

28 05, 2014

FOMC Minutes: Committee Discusses “Normalizing” Policy

FOMC Minutes: Committee Discusses “Normalizing” PolicyApril’s meeting of the Fed’s Federal Open Market Committee was held along with the Board of Governors of the Federal Reserve System.

Meeting minutes released Wednesday indicated the committee’s interest in “normalizing” its monetary policy. This included the FOMC’s ongoing commitment to tapering its asset purchases under its quantitative easing program.

The committee agreed to taper the Fed’s monthly asset purchases by $10 billion to $45 billion per month. Committee members discussed raising the target federal funds rate, which now stands at 0.00 to 0.25 percent, but the minutes clearly stated that this topic was undertaken as part of “prudent planning, and did not indicate that normalization would necessarily begin sometime soon.”

The FOMC minutes reflected the committee’s concern with achieving a balance between normalizing the Fed’s monetary policy and keeping short-term interest rates under control.

Meeting attendees considered methods for managing interest rates and considered potential impact of each method discussed on overall financial stability.

Importance Of Early Communication

Meeting participants discussed the importance of early communication of pending changes to the Fed’s monetary policy, and agreed that advising the public “well before the first steps in normalizing policy become appropriate.”

Early communication to the public of planned changes was viewed as a means of providing clarity and credibility to FOMC policy decisions and help FOMC achieve its statutory goals of maximum employment, stable pricing and moderate long term interest rates.

Potential Impact Of Achieving Normalcy

 FOMC members discussed the possible impact of tools considered for use in normalizing the economy on the following:

  • Fed control over short-term interest rates
  • The Fed’s balance sheet and Treasury remittances
  • Functionality of Federal Funds Market
  • Financial stability in normal times and times of stress

The minutes noted that the Fed has never used any of the methods discussed while the Fed held a large balance sheet, and recommended that flexibility in using tools for achieving normal fiscal policy.

No decision was made about normalizing current monetary policy; FOMC and Fed Board members agreed that further study and analysis were needed before any decisions would be made.

Fed: Mortgage And Refinance Applications “Tepid”

The FOMC minutes characterized the level of mortgage and refinance applications through March as tepid, due to increasing mortgage rates and home prices.

While a survey of senior loan officers revealed that mortgage credit had been loosened for applicants with prime credit, mortgage credit remained tight for those with less than excellent credit.

The unemployment rate held steady at 6.70 percent and remained above the FOMC’s benchmark of 6.50 percent. There was some good news as the workforce expanded and the ranks of the long-term unemployed decreased.

Stable employment is important to potential home buyers; if unemployment levels continue to fall, numbers of home buyers are likely to increase.

27 05, 2014

What’s Ahead For Mortgage Rates This Week – May 27, 2014

What’s Ahead For Mortgage Rates This Week – May 19, 2014Last week’s economic news was dominated by speeches given by Federal Reserve presidents, the minutes from April’s FOMC meeting and commencement address given by Fed Chair Janet Yellen. The latest readings for new and existing home sales were also released.

Federal Reserve Speeches Suggest Concerns Over Monetary Policy Dependence, Low Inflation

Here are highlights of comments made by each of the Fed presidents’ speeches. Richard Fisher, president of the Dallas Fed, and John Williams, President of the San Francisco Fed, spoke at a conference held at the Bush Institute.

Mr. Fisher said that 98 percent of jobs lost during the recession had been recovered, and that other jobs had been added. He also cited “bad fiscal policies,” and said he is worried about dependence on the Fed’s monetary policy when “Congress and the Executive Branch have put on the brakes.” 

John Williams, president of the San Francisco Fed, said that he was concerned about slowing momentum in housing markets, although he noted that housing had driven economic recovery in the aftermath of the recession.

The inflation rate has remained well below the Federal Reserve’s target rate of 2.00 percent, and Mr. Williams said that the Fed is paying close attention to this. His remarks were supported in Wednesday’s release of the FOMC minutes of its April meeting.

Charles Plosser, the Philadelphia Fed’s president, took an optimistic tone at a speech given before the Women in Housing Foundation on Tuesday. He said that the national unemployment rate could fall below 6.00 percent by the end of 2014 and that he expects the housing market to bounce back as well.

This makes sense, as strong labor markets are known to influence consumer decisions to buy a home.

New York Fed President William Dudley spoke before the New York Association for Business Economics, and said that there would be “a considerable period of time” between when the current asset purchase program ends and the first Fed rate hike would occur.

He also indicated that he expected longer-term interest rates (which include mortgage rates) to be “well below” a historical average of 4.25 percent.

Minneapolis Fed President Narayana Kocherlakota said that the Fed should consider targeting price levels rather than the current policy of targeting the inflation rate. He said that this was not likely to occur any time soon, but noted that current Fed policy is “undershooting” the central bank’s goals for unemployment and inflation.

Fed Chair Janet Yellen cited her predecessor, Ben Bernanke as a positive example when she spoke at New York University’s commencement. She noted that he took “courageous actions unprecedented in ambition and scope” and that his “grit willingness to take a stand” had directed his decisions during the recession.

Mortgage Rates Down, Existing Home Sales Up

Freddie Mac reported that average mortgage rates dropped last week. The average rate for a 30-year fixed rate mortgage fell to 4.14 percent, a drop of six basis points. The rate for a 15-year fixed rate mortgage fell by four basis points to 3.25 percent.

The average rate for a 5/1 adjustable rate mortgage dropped by five basis points to 2.96 percent. Discounts were unchanged at 0.60 percent for 30-year mortgages and 0.40 for 5/1 adjustable rate mortgages, but dropped to 0.50 percent for 15-year mortgages.

Sales of existing homes rose to their highest level in four months according to the NAR. Month-to-month sales of previously-owned homes rose by 1.63 percent in April to a seasonally adjusted annual rate of 4.65 million sales as compared to March’s reading of 4.59 million sales. This was the first rise in sales of existing homes in 2014, and nearly met expectations of 4.66 million sales.

This Week

After the Memorial Day holiday, this week’s economic news includes the Case-Shiller Home Price Index, FHFA’s house price index and consumer confidence index.

Pending home sales, jobless claims and Freddie Mac’s mortgage rates report along with the University of Michigan consumer sentiment index round out the week’s scheduled events.

19 05, 2014

What’s Ahead For Mortgage Rates This Week – May 19, 2014

What's Ahead For Mortgage Rates This Week - May 19, 2014Last week’s economic news was relatively flat, but highlights include the NAHB Housing Market Index for May, which posted its lowest reading since May 2013. Although analysts expected a May reading of 48, the May 2014 index reading was 45 as compared to April’s reading of 46.

The NAHB reported that rising home prices and unpredictable job markets were factors in builders’ loss of confidence. Although the economy is growing stronger, many would-be homebuyers remain skeptical of economic conditions and remain on the sidelines.

NAHB: Stronger Builder Confidence Expected in Coming Months

Builder confidence in market conditions for single family homes within the next six months were higher at 57, a one-point improvement over April’s reading. Builder confidence in buyer foot traffic increased by two points to 33; this was likely a result of warmer weather. David Crowe, chief economist of the NAHB, said that builder confidence is expected to improve as consumers grow more secure about their employment.

Economy: Retail Sales Slow

Retail sales for April posted a gain of 0.10 percent over the March reading of an upwardly revised 1.50 percent and expectations of 0.40 percent for April. The Commerce Department reported that without the automotive sector, April’s retail sales were unchanged. The difference between March and April retail sales readings was attributed to a burst of spending after severe winter weather and the Easter holiday.

Mortgage Rates, Jobless Claims Lower

Freddie Mac reported lower average mortgage rates across the board, with the average rate for a 30-year fixed rate mortgage one basis point lower at 4.20 percent. The average rate for a 15-year mortgage was three basis points lower at 3.29 percent. Discount points for 30 and 15-year mortgages were unchanged at 0.60 percent. The average rate for a 5/1 adjustable rate mortgage fell by four basis points to 3.01 percent. Discount points dropped from 0.50 percent to 0.40 percent. 

New Jobless claims fell from the prior week’s reading of 321,000 to 297,000. Analysts had expected jobless claims to be unchanged from the prior week’s reading.

Manufacturing Sector Shows Strength

The Empire State Index, which measures manufacturing growth in New York rose to 19.0 in May against an expected reading of 5.0 and April’s reading of 1.3. The Philly Fed Index, another indicator of manufacturing, surpassed its expected reading of 14.3 and came in at 15.4, but May’s reading was lower than April’s 16.6.

This Week

This week’s scheduled economic news includes the release of the minutes of the last FOMC meeting, New Jobless Claims, Freddie Mac’s report on mortgage rates, Existing Home Sales, New Home Sales and Leading Indicators. 

12 05, 2014

What’s Ahead For Mortgage Rates This Week – May 12, 2014

What's Ahead For Mortgage Rates This Week - May 12, 2014Results from a Federal Reserve survey of senior bank loan officers indicated that lenders have held the line on prime lending standards and have raised standards for sub-prime and non-traditional home loans.

Survey respondents represented 74 U.S. banks and 23 foreign banks. Survey respondents also said that demand for mortgage loans was lower; this could be an unintentional result of tight credit standards for mortgage loans.

Analysts said that tight credit requirements and less demand for home loans could mean more trouble for the housing industry.

Home Prices Rise In March, But At Slower Rate

The annual rate of increase for national home prices was 11.10 percent as compared to February’s 11.80 percent year-over-year rate of increase.

February’s reading was the fastest pace of home price growth in eight years, but March’s slower level of home price appreciation was the lowest month-to-month reading in three years. Fewer affordable homes were cited as a reason for slower growth in housing markets.

CoreLogic reported that home prices rose by 1.40 percent in March, and that Arkansas was the only state that posted a drop in home prices. Several states, including North Dakota and Texas, achieved new peaks in home prices due to strong job growth.

The slow-down in home price growth isn’t necessarily all bad news; analysts said that home prices could not continue to climb when household incomes aren’t keeping up.

Many first-time buyers have been sidelined with a combination of slow job growth, higher home prices and tight mortgage credit. CoreLogic reported that these factors contributed to their forecast for home prices to grow by about 6.70 percent in 2015.

Mortgage Rates Fall, Fed Chair Speaks

Freddie Mac reported lower average mortgage rates on Thursday. The rate for a 30-year fixed rate mortgage was 4.21 percent as compared to last week’s reading of 4.29 percent. Discount points dropped from 0.70 to 0.50 percent. The average rate for a 15-year mortgage was 3.32 percent and six basis points lower than the prior rate of 3.38 percent.

Discount points were unchanged at 0.60 percent. The rate for a 5/1 adjustable rate mortgage was unchanged at 3.05 percent, but discount points dropped from 0.50 to 0.40 percent.

Janet Yellin, chair of the Federal Reserve, spoke before the Senate Budget Committee on Thursday and said that the Fed can shrink its current balance sheet of $4.3 trillion by not reinvesting proceeds from its portfolio of maturing bonds.

This is directly connected to the Fed’s tapering of its quantitative easing (QE) program, which is currently at a level of $45 billion per month in mortgage backed securities (MBS) and treasury securities.

Some analysts believe that members of the Fed’s FOMC meeting discussed the end of QE in their last meeting, but this cannot be verified until the minutes of the meeting are released May 21.

The end of QE could cause higher mortgage rates as the program’s purpose is to hold down long-term interest rates.

Weekly Jobless claims fell to a new low of 319,000 against predictions for 325,000 new jobless claims and 345,000 new claims for the prior week. Seasonal anomalies caused by the Easter holiday and spring break schedules were cited as causes for ups and downs in new jobless claims in recent weeks.

What’s Next

This week’s scheduled economic news includes several consumer-related reports including Retail sales, Consumer Price Index, core CPI, Homebuilder’s Index, and Housing Starts.

5 05, 2014

What’s Ahead For Mortgage Rates This Week – May 5, 2014

What’s Ahead For Mortgage Rates This Week – May 5, 2014Last week’s economic news included several reports related to housing and mortgages. The NAR started the week on a positive note with its Pending Home Sales Index released Monday. Pending home sales in March were higher with an unexpected increase of 3.40 percent over February for an index reading of 97.40.

This is encouraging news for home sales that were severely affected by a hard winter in many areas, and suggests that as warmer weather approaches, home sales will pick up. Analysts do not expect the rapid rate of price appreciation seen in 2013. The Fed’s tapering of its “quantitative easing” program has caused mortgage rates to rise, and last year’s rapid run-up of home prices has made affordability an issue in many areas.

The S&P Case-Shiller Home Price Index for February performed slightly better than expected with a seasonally-adjusted month-to-month reading of 0.80 percent. The expected reading was 0.70 percent.

The year-over-year reading fell short of January’s reading of 13.20 percent and the expected reading of 13.00 percent at 12.90 percent. Analysts noted the continuing trend of slowing momentum in home price growth, but seem confident that home prices will continue to increase over the spring months.

Fed Continues Tapering Of QE, Mortgage Rates Mixed

Wednesday brought the FOMC’s customary statement after its two-day meeting concluded. There were no surprises as the statement verified another monthly tapering of $10 billion from the Fed’s quantitative easing (QE) program of asset purchases.

The tapering was evenly divided with $5 billion less in MBS purchased and $5 billion less in treasury securities purchased. The ongoing tapering was seen as contributing to rising mortgage rates, but the Fed asserted that its asset purchases remain sufficient to dampen rapid increases in long-term interest rates, which include mortgage rates.

The Fed repeated its usual reminder that its decisions are not on a pre-set course and that the committee members would closely monitor economic and financial developments as guidance for future decisions.

Freddie Mac reported mixed results for mortgage rates on Thursday. Average rates rose by four basis points to 4.29 percent for a 30-year fixed rate mortgage with discount points of 0.70 percent.

The average rate for a 15-year fixed rate mortgage dropped by one basis point to 3.38 percent; discount points steady at 0.60 percent. The average rate for a 5/1 adjustable rate mortgage rose by two basis points to 3.05 percent; discount points dropped from 0.50 to 0.40 percent.

Weekly jobless claims made an unexpected jump to 344,000 as compared to the prior week’s revised figure of 329,000 jobless claims and an expected reading of 320,000 new jobless claims.

Analysts note that week-to-week figures continued to show volatility, but said that on balance, the rolling average for jobless claims appeared consistent with moderate growth in labor markets.

This Week

This week’s scheduled economic news shows no events related to housing and mortgages. Highlights include Fed Chair Janet Yellen’s appearance before the Joint Economic Committee in Washington, D.C. and the usual releases of mortgage rates and new jobless claims on Thursday. 

28 04, 2014

What’s Ahead For Mortgage Rates This Week – April 28, 2014

What's Ahead For Mortgage Rates This Week - April 28, 2014Last week’s economic news supported recent reports that home sales were fewer and home prices increased, but did so at a slower pace.

The NAR reported a slower pace of existing home sales, and FHFA reported a slower year-over-year rate of growth for home prices on properties financed by Fannie Mae and Freddie Mac.

The U.S. Commerce Department reported that new home sales fell to their lowest level since July 2013. Mortgage rates rose for fixed rate mortgages, but were unchanged for 5/1 adjustable rate mortgages. Here are the details:

Existing Home Sales Slow, Moderate Growth In Home Prices

March sales of existing homes dipped by 0.20 percent according to the NAR. 4.59 million previously owned homes were sold on a seasonally adjusted annual basis against projections of 4.55 million sales and February’s reading of 4.60 million pre-owned homes sold.

Rising home prices contributed to the slowdown in sales, which started last summer. Rapidly rising home prices due to short supplies of available homes and high demand for homes caused some buyers to leave the market. The national average price for existing homes was $198,500 in March, which represented a year-over-year increase of 7.90 percent.

The Federal Housing Finance Agency, which governs Fannie Mae and Freddie Mac, reported that home prices for homes financed with Fannie Mae and Freddie Mac owned mortgages rose by approximately 7.0 percent year-over-year as of February.

Severe winter weather was cited as a possible factor in slowing home sales, but as the peak home buying season gets underway, analysts forecast that some sales lost may be recovered in warmer weather.

 Mortgage Rates Rise, New Home Sales At Lowest Level In 21 Months

Freddie Mac reported that average mortgage rates for fixed rate mortgages rose. The rate for a 30-year fixed rate mortgage rose by six basis points to 4.33 percent; the rate for a 15-year fixed rate mortgage also rose by six basis points to 3.39 percent.

The average rate for a 5/1 adjustable rate mortgage was unchanged at 3.03 percent. Discount points were also unchanged at 0.60,.60 and 0.50 percent respectively.

Sales of new single-family homes slumped to their lowest level in since July 2012 according to the U.S. Department of Commerce. The median price of a new single family home rose to $290,000, which represented a 12.60 percent increase year-over-year.

Analysts noted that month-to-month home sales numbers are not as reliable as sales trends measured over months, but 384,000 March sales of new homes fell markedly short of expectations of 450,000 new home sales and February’s upwardly revised reading of 440,000 new homes sold.

Unemployment Ups And Downs Contribute To Buyer Uncertainty

New jobless claims rose to 329,000 against expectations of 315,000 new jobless claims and the prior week’s reading of 305,000 new jobless claims. The Labor Department said that seasonal adjustments were incomplete due to the Easter holiday, which occurs on different dates.

As labor and other sectors of the economy endure ups and downs during the economic recovery, it is reasonable to expect some home buyers to put off buying homes.

This Week 

This week’s scheduled economic news includes Pending Home Sales, Case-Shiller’s Housing Market Index, the FOMC meeting and statement and Construction Spending. The Bureau of Labor Statistics will release April’s Non-Farm Payrolls Report and National Unemployment Report on Friday.

21 04, 2014

What’s Ahead For Mortgage Rates This Week – April 21, 2014

What's Ahead For Mortgage Rates This Week - April 21, 2014Last week’s economic news supported the general outlook for moderate economic growth. Housing related news included the National Association of Home Builders / Wells Fargo Housing Market Index for April and Housing Starts for March.

NAHB: Builder Confidence Holds Steady Amid Concerns

The NAHB/Wells Fargo HMI for April ticked upward by one point to a reading of 47 against the March revised reading of 46. Home builders surveyed expressed concerns about high home prices, a lack of available lots for development and a labor shortage. Some desirable markets have been held back due to low inventories of available and/or affordable homes.

Builders surveyed for the HMI were asked to rate three components used in compiling the monthly index; these include current market conditions, market conditions expected over the next six months, and buyer foot traffic in newly built homes. April’s readings were 51, 57 and 32 respectively.

Readings for current market conditions and buyer foot traffic were unchanged from March, but builder confidence for market conditions in the next six months rose by four points.

Any reading above 50 indicates that more builders are confident about market conditions for newly-built single-family homes than not. 

Housing Starts Pick Up After Winter Storms, But Fall Short Of Expectations

March Housing Starts rose by 2.80 percent at a seasonally adjusted annual rate of 946,000 starts as compared to expectations of 990,000 and February’s reading of 920,000 housing starts, which was revised from 907,000 starts.

The March reading represented a 5.90 percent decrease from March 2013, and is consistent with concerns expressed by home builders surveyed for the NAHB HMI for April.

Building permits issued for March were also lower by 2.40 percent at a rate of 990,000 permits issued. This slippage was largely due to the falling rate of building permits issued for apartment construction.

Higher home prices and mortgage rates along with inconsistent (but improving) labor markets were cited as reasons for builder pessimism, but analysts said that projects delayed by severe weather are expected to pick up in the coming months.

Mortgage Rates Fall, Discount Points Hold Steady

Last week’s average mortgage rates fell across the board according to Freddie Mac’s weekly Primary Mortgage Market Survey. The rate for a 30-year fixed rate mortgage fell by seven basis points to 4.27 percent. 15-year mortgages had an average rate of 3.33 percent as compared to the prior week’s reading of 3.38 percent. 5/1 adjustable rate mortgages had an average rate of 3.03 percent, down from 3.09 percent the previous week. Discount points were unchanged at 0.70, 0.60 and 0.50 percent respectively.

Fed Chair Upbeat In New York Speech

Federal Reserve Chair Janet Yellen struck a positive note in a speech given before the Economic Club of New York last Wednesday. She indicated that the Fed and many economists expect a return to full employment and stable prices by the end of 2016. Analysts characterized Yellen’s speech as upbeat on economic recovery and inflation, while “dovish” on monetary policy.

Ms. Yellen reiterated the Fed’s intention to monitor current and developing economic situations before making changes to its current monetary policy. She acknowledged that “twists and turns” in the economy could occur, and that Fed policy would shift as needed to address changes.

The Fed also released its Beige Book Report last Wednesday. This report indicated that the economy is recovering in most areas of the U.S.

This Week

This week’s scheduled economic news includes Leading Economic Indicators, Existing Home Sales for March, FHFA House Price Report for February and New Home Sales for March. The University of Michigan Consumer Sentiment report for April rounds out this week’s news. 

 

14 04, 2014

What’s Ahead For Mortgage Rates This Week – April 14, 2014

What's Ahead For Mortgage Rates This Week 4-14-14While little housing-related news was released, last week’s economic news showed signs of a brighter economic picture.

Labor statistics were stronger, with job openings up and new jobless claims filed lower than expected.

Mortgage rates fell, and the University of Michigan’s Consumer Sentiment Index was higher than expected.

More Jobs Available, Fewer New Jobless Claims

The Bureau of Labor Statistics (BLS) reported that February job openings rose to 4.20 million, which exceeded January’s reading of 3.9 million jobs. New jobless claims were lower than expected with 300,000 new jobless claims filed against expectations of 316,000 new jobless claims and the prior week’s reading of 332,000 new jobless claims filed.

The Federal Open Market Committee (FOMC) of the Federal Reserve released minutes of its meeting held March 18 and 19. The minutes noted that payroll jobs expanded, but the unemployment rate remained elevated, and inflation was below the committee’s goal of 2.00 percent. Indicators of longer-run inflation expectations were seen as stable.

Severe winter weather was viewed as a cause for slowing economic activity. FOMC noted that it would be difficult to determine the effects of winter weather on the economy as opposed to slower economic growth caused by unemployment or other negative factors.

Housing Starts and Building Permits were lower, but FOMC noted the impact of winter weather on these reports. FOMC asserted its intention to continue reducing its monthly asset purchases by $10 billion per month as economic conditions permit.

The FOMC emphasized its commitment to continuous review of financial and economic news as it makes month-to-month decisions concerning asset purchases.

Mortgage Rates Fall, Consumer Sentiment Rises

Freddie Mac reported lower average mortgage rates last week. The rate for a 30-year fixed rate mortgage fell from 4.41 to 4.34 percent. The rate for a 15-year fixed rate mortgage dropped from 3.47 to 3.38 percent, and the rate for a 5/1 adjustable rate mortgage fell by three basis points from 3.12 percent to 3.09 percent.

Discount points were unchanged at 0.70, 0.60 and 0.50 percent respectively. Lower mortgage rates may encourage more buyers into the market as the spring and summer buying season gets under way.

The University of Michigan’s Consumer Sentiment Index for April rose to 82.60 percent against the March reading of 80.00 percent and the projected reading of 80.80 percent. If expectations prove correct, this week’s economic reports are expected to bring more good news.

Whats Coming Up This Week

This week’s scheduled economic news includes Retail Sales for March, which are expected to show a gain, the Consumer Price Index which is expected to hold steady, and the Home Builder Index, which is expected to rise.

Projections for Housing Starts are also higher. Fed Chair Janet Yellen is set to give a speech in New York on Wednesday, and the Fed Beige Book report will also be released. This week’s economic reports will wrap up Friday with Leading Economic Indicators. 

 

7 04, 2014

What’s Ahead For Mortgage Rates This Week – April 7, 2014

What's Ahead For Mortgage Rates This Week - April 7, 2014Last week’s economic news included readings on February construction spending and multiple reports on employment data.

Private sector employment was higher in March, but The Bureau of Labor Statistics reported that Non-Farm Payrolls for March fell short of expectations. According to Freddie Mac, mortgage rates ticked upward.

Employment And Unemployment News

ADP’s payrolls report for March was higher than February’s reading, with 191,000 new private sector jobs added. In February, 178,000 jobs were added. February’s reading originally showed 138,000 new jobs added.

While analysts were confident that private-sector employment was showing signs of stability, the U.S. Bureau of Labor Statistics swamped excess confidence in labor markets Friday with its March reading for Non-Farm Payrolls.

192,000 jobs were added in March against predictions of 200,000 jobs added and February’s reading of 197,000 jobs added.

The news was not all bad as job gains for January and February were revised upward. January’s job gains were revised from 129,000 to 144,000 and February’s reading was revised from 175,000 to 197,000 jobs added. The revised readings represent a total of 37,000 more jobs added.

As data impacted by severe winter weather “shakes out,” it would not be surprising to see a revision to March’s new jobless claims reading as well.

Unemployment Rate Holds Steady, Workforce Numbers Higher

While readings on employment have been up and down in recent months, the national unemployment rate has held relatively steady, with last week’s reading at 6.70 percent. 503,000 workers joined the workforce this increased the labor participation rate for March from 63 percent to 63.20 percent.

Mortgage rates were incrementally higher last week according to Freddie Mac. The average rate for a 30-year fixed rate mortgage increased by one basis point to 4.41 percent; discount points moved from 0.60 percent to 0.70 percent.

The average rate for a 15-year fixed rate mortgage rose by five basis points to 3.47 percent with discount points unchanged at 0.60 percent. 5/1 adjustable rate mortgages had an average rate of 3.12 percent, which was two basis points higher than the previous week. Discount points for 5/1 adjustable rate mortgages were unchanged at 0.50 percent.

This Week’s Economic News Highlights

Job openings for February, FOMC minutes and the University of Michigan consumer sentiment index for March are set for release this week. As usual, Freddie Mac will post results of its latest Primary Mortgage Market Survey and weekly unemployment claims will also be reported.

2 04, 2014

Are Interest Rates On The Rise – What’s The Next Move?

Interest Rates on the Rise What's the Next MoveAs the federal reserve continues to taper quantitative easing measures, financial experts project mortgage interest rates will climb in the next two years. Could this be the much awaited ray of light at the end of the proverbial tunnel for builders and investors or will it drive hesitant home buyers to dig in and shelter in place?

Homeowners who are vacillating between refinancing for a lower interest rate and staying the course may find the time has come to make a decision.

Shrinking unemployment numbers and rising retail sales figures signal that the economy is improving. Even if no one is ready to label the US economy as recovered, Fed Chairman Janet Yellen’s decision to follow through on tapering plans reinforces other market indicators that the economy is gaining strength.

What’s The Next Move

Bob Moulton, president of Americana Mortgage, told BankRate that people thinking of buying in the next year should move quickly if they find a property they like. Inventory is still fairly tight. Although there is no guarantee that rates will suddenly escalate, Moulton recommends locking in a property as soon as possible.

Harris Interactive reported that 39% of homeowners who planned to invest in renovations to increase property values in 2013 did not follow through with their plans. If upgrades and renovations are on the agenda, homeowners should evaluate how a 1% or 2% increase in interest rates will affect their budget.

Mortgage rates are still historically low based on the average over the past couple of decades. As the economy strengthens and mortgage lenders lose a steady stream of customers seeking home equity loans, less-stringent lending requirements emerge.

Forbes reported that as much as 80% of mortgage activity in late 2012 was refinancing applications. Consumers with lower credit scores and budgetary constraints have a better chance of securing a loan with a higher rate.

Refinance Or Pay Down The Mortgage

Deciding whether to refinance or pay down the mortgage quicker is tricky for some homeowners. Cost of financing isn’t the only consideration. It is essential to consider long-term goals and risks. If doubling up on the mortgage compromises retirement planning, it defeats the purpose.

Likewise, refinancing to gain a lower interest rate within one or two years of plans to sell the home would probably produce insignificant financial gains.

31 03, 2014

What’s Ahead For Mortgage Rates This Week – March 31, 2014

What's Ahead For Mortgage Rates This Week March 31,2014

Last week’s economic news includes several reports about housing markets.

The S&P Case-Shiller 10 and 20 city housing market indices, the FHFA House Price Index, New Home Sales and Pending Home sales reports suggest that the national housing market continues to grow, but at lower rates.

Regional readings varied and suggested that winter weather was a negative influence on affected markets.

In a press conference held on March 19 Federal Reserve Chair Janet Yellen said that severe winter weather had interfered with the Fed’s ability to get a clear reading on economic developments.

The Case-Shiller 10 and 20-City Home Price Indices for January showed year-over-year growth of 13.50 and 13.20 percent respectively. The 20-City Home Price Index reported that 12 of 20 cities reported slower rates of home price appreciation.

The 10-City Index ticked upward, but was little changed. The 20-City index posted its third consecutive month-to-month decline in home prices with a reading of -0.10 percent.

Las Vegas, Nevada led cities posting gains with a month-to-month reading of +1.10 percent, but home values remain 45 percent below peak prices achieved in August 2006.

David M. Blitzer, chair of the Index Committee at S&P Dow Jones Indices, noted that home prices were up 23 percent over their lows in 2012.

FHFA Data Reflects Slower Growth in Home Prices

The FHFA House Price Index reports home price trends for sales of homes with mortgages owned or guaranteed by Fannie Mae or Freddie Mac. January’s data reported a year-over-year gain of 7.40 percent, which is approximately 8.0 percent below its peak in April 2007.

Month-to-month home prices varied within the nine U.S. Census regions and ranged from -0.30 percent to +1.30 percent.

FHFA reported that year-over-year, all nine regions reported gains in home prices that ranged from +3.20 percent in the Middle Atlantic region to 14.0 percent home price growth in the Pacific region.

New and Pending Home Sales Slow

According to the U.S. Department of Commerce, February sales of new homes matched projections at 440,000 as compared to January’s revised reading of 455,000 new homes sold, which was a year-over-year high.

New home sales improved by 37 percent in the Midwest, but fell in the Northeast, South and West. This suggests that while winter weather played a role, but that housing markets are cooling in general.

Rising mortgage rates and concerns over new lending standards likely contributed to the drop in sales.

Pending home sales slumped in February according to the National Association of REALTORS®.

February’s index reading of 93.9 as compared to January’ index reading of 94.7 represented the eighth consecutive monthly drop for pending home sales and was the lowest reading since October 2011.

Pending home sales indicate future completed sales. Lawrence Yun, the NAR’s chief economist, noted that home sales delayed by winter weather may be completed this spring.

Mortgage Rates Rise, Jobless Claims Lower Than Predicted

Freddie Mac reported that average mortgage rates rose across the board last week with the rate for a 30-year fixed rate mortgage rising eight basis points to 4.40 percent. 15-year fixed mortgage rates rose 10 basis points to 3.42 percent.

Average rates for a 5/1 adjustable rate mortgage rose from 3.02 percent to 3.08 percent.

Discount points for fixed rate mortgages were unchanged at 0.60 percent and ticked upward from 0.40 to 0.50 percent for 5/1 adjustable rate mortgages.

What’s Coming Up This Week

This week’s scheduled economic news includes Construction Spending for March,  ADP payrolls for March along with Freddie Mac’s PMMS weekly report on mortgage rates and the BLS Non-Farm Payrolls report. 

24 03, 2014

What’s Ahead For Mortgage Rates This Week – March 24, 2014

What's Ahead For Mortgage Rates This Week - March 24, 2014Last week’s economic news included several housing-related reports including the Housing Market Index (HMI) for March, a report on housing starts, and building permits for February.

The National Association of REALTORS® also released its Existing Home Sales report for February and the Federal Reserve issued its first FOMC statement under the helm of Fed Chair Janet Yellen.

Home Builders Conservative On Housing Market Conditions

The National Association of Home Builders Wells Fargo Housing Market Index rose by one point to a reading of 47 in March against a reading of 46 in February and against an expected reading of 50. Readings above 50 signify that more builders have a positive view of housing market conditions than not.

Conditions contributing to the sluggish reading included a lack of lots for development and labor shortages. The NAHB also cited rising home prices and mortgage rates as reasons for builders’ conservative outlook.

Commerce Department: Housing Starts And Building Permits

The U.S. Commerce Department released reports on Housing Starts and Building Permits Issued for February. Housing starts dipped to 907,000 in February against expectations of 908,000 expected housing starts and January’s reading of 909,000 housing starts. Severe winter weather froze construction and transport of building supplies.

Building permits issued increased to 1.02 million on a seasonally adjusted basis against January’s reading of 945,000 building permits issued.

February’s reading represents a 7.70 percent increase over January’s permits issued and was attributed to a sharp rise in plans for condominiums and rental housing projects.

407,000 permits for multi-unit buildings were issued in February and represented a 24.3 percent increase on an annualized basis. Analysts saw the increase in building permits as a sign that construction will pick up as warmer weather arrives.

Existing Home Sales Fall, Rising Home Prices And Mortgage Guidelines Cited

The National Association of REALTORS® reported a decrease of 0.40 percent in sales of existing homes from January’s reading. February’s reading of 4.60 million homes sold on a seasonally-adjusted annual basis was lower than January’s reading of 4.62 million existing homes sold, but exceeded expectations of 4.58 million existing homes sold.

Analysts identified familiar causes such as high mortgage rates and home prices, bad weather and a short supply of available homes for the dip in existing home sales. New standards for “qualified mortgages” became effective in January and were seen as a possible obstacle to would-be home buyers as mortgage lenders keep a tight rein on mortgage credit policies.

Federal Open Market Committee Statement Details $10 Billion Dollar Change

Reports indicate that Fed Policy is expected to stay much the same as it was under its previous chairman. FOMC approved an additional $10 billion reduction in asset purchases designed to keep long term interest rates low.

The Fed will now purchase $55 billion monthly in mortgage-backed securities and treasury bonds as compared to its original level of $85 billion monthly.

Wall Street did not respond well to FOMC’s revised projections for short-term interest rates, which were revised from 1.75 percent by the end of 2016 to a possible short-term rate of 2.25 percent.

FOMC removed the benchmark 6.50 percent national unemployment rate for raising the federal funds rate, which is currently 0.250 percent. Instead, the Fed will review a wide range of economic indicators before changing monetary policy.

Janet Yellen, in her first press conference as fed chair, said that the Fed may consider rising short-term interest rates a few months before its original target of October to December of 2015.

Mortgage Rates Drop

Mortgage rates dropped last week according to Freddie Mac. Average mortgage rates fell from 4.37 percent to 4.32 percent for 30-year fixed rate loans. Rates for 15-year mortgages dropped from 3.38 percent to 3.32 percent.

The average rate for a 5/1 adjustable rate mortgage fell from 3.09 percent to 3.02 percent. Discount points were unchanged at 0.60 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

What’s Ahead This Week

Scheduled economic reports for this week include the Case-Shiller and FHFA Home Price Indexes for January. New Home Sales and Pending Home Sales will also be released.

17 03, 2014

What’s Ahead For Mortgage Rates This Week – March 17th, 2014

What's Ahead For Mortgage Rates This Week March 17 2014Last week’s economic reports provided rays of light as compared to the recent slump in positive economic news.

Unusually severe winter weather conditions affected housing-related indicators as home builders and home buyers stayed on the sidelines.

With spring on the horizon, last week’s economic news showed welcome signs of growth.

Job Openings Up, New Jobless Claims Fall

Employment is a major factor in the decision to buy a home; would-be home buyers received a vote of confidence last week as January’s job openings increased by one million to 40 million as compared to December’s reading of 39 million job openings.

February’s reading will likely reflect a lull in activity due to winter weather conditions in much of the U.S.

Weekly jobless claims fell from 324,000 to 315,000. The Bureau of Labor Statistics reported expectations of 330,000 new jobless claims, so the latest report was good news.

Weekly reports are more volatile than monthly statistics; analysts typically track employment trends by reviewing rolling averages of several weeks’ new jobless claims data.

Mortgage Rates, Retail Sales Rise

Freddie Mac reported that average mortgage rates rose last week. The rate for a 30-year fixed rate mortgage rose by nine basis points to 4.37 percent. 15-year fixed rate mortgages had an average rate of 3.38 percent; this was an increase of six basis points

The average rate for a 5/1 adjustable rate mortgage was 3.09 percent, up from the previous week’s reading of 3.03 percent.

Discount points dipped from 0.70 to 0.60 percent for a 30-year fixed rate mortgage, were unchanged for 15-year and 5/1 adjustable rate mortgages at 0.60 and 0.40 percent.

Retail sales increased for the first time in three months according to the Commerce Department.

February retail sales surpassed expectations of a 0.20 percent gain and came in at 0.30 percent. January figures were downwardly adjusted to -0.60 percent. Retail sales exclusive of automotive sales were also higher at 0.30 percent than expectations of 0.10 percent.

The University of Michigan Consumer Sentiment index for mark was slightly lower at 79.9 than expectations of 80.8.

This was the lowest reading in four months, and was attributed in part to higher gas prices and consumer concerns over developments in Ukraine.

What’s Coming Up

This week’s economic news includes several housing-related reports.

The NAHB Home Builder Index for March, Housing Starts and Building Permits for February, and Existing Home Sales are set for release.

On Wednesday, the Fed’s FOMC statement will be released and Fed Chair Janet Yellen will give a press conference. The Fed is expected to continue its ongoing tapering of quantitative easing.

Leading economic indicators will be released along with the Weekly Jobless Claims report and Freddie Mac’s Primary Mortgage Market Survey.

10 03, 2014

What’s Ahead For Mortgage Rates This Week – March 10, 2014

Whats Ahead For Mortgage Rates March 10 2014Last week’s economic news included construction spending and the CoreLogic Home Price Index for January.  Reports for February included ADP Employment, Non-Farm Payrolls and national unemployment data.

The Federal Reserve’s Beige Book report and weekly reports on mortgage rates and new unemployment claims rounded out the week’s economic news.

Highlights for last week include:

Consumer spending gained 0.40 percent for January. The expected reading was 0.20 percent and the reading for December was flat.

The Commerce Department reported that increased spending was less an indicator of consumer discretionary spending than an indicator of high utility costs caused by severe winter weather.

Construction spending ticked upward in January with gain of 0.10 percent as compared to expectations of -0.40 percent and the prior month’s reading of 0.10 percent.

January’s reading translates to a seasonally adjusted annual figure of $943.1 billion.  

Federal Reserve: Winter Weather Obscures Accurate Economic Outlook

According to the Fed’s Beige Book report, much of the U.S. economy was impacted by severe winter weather. The report is based on anecdotal information provided by business contacts and industry leaders throughout the 12 regions of the U.S. Federal Reserve System.

Eight regions reported slow economic growth. Janet Yellen, chairwoman of the Fed, noted that winter weather was not expected to alter the Fed’s plan to continue reducing its asset purchases under its quantitative easing program. She also said that it may be months before accurate economic readings can be obtained in the aftermath of winter weather conditions.

Freddie Mac’s Primary Mortgage Market Survey brought good news on Thursday as mortgage rates fell across the board and discount points were also lower in most cases.

Average mortgage rates were down nine basis points for a 30-year fixed rate mortgage at 4.28 percent. The average rate for a 15-year fixed rate mortgage was 3.32 percent, a decrease of seven basis points.

The rate for a 5/1 adjustable rate mortgage was 3.03 percent, down by two basis points from the prior week. Discount points were unchanged for 30-year fixed rate mortgages at 0.70 percent, but dropped to 0.50 percent for 15-year fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

Employment Sector: Surprise Results

The ADP payroll report showed a reading of 139,000 jobs added in February as compared to the prior month’s 127,000 jobs. ADP tracks private sector jobs. The BLS released its Non-Farm Payrolls report for February, which also surpassed expectations.

175,000 jobs were added against expectations of 140,000 jobs added and January’s reading of 129,000 jobs added. The national unemployment rate rose to 6.70 percent against an expected drop to 6.50 percent from January’s reading of 6.60 percent. Once again, foul weather was seen as a major influence.

Whats Ahead This Week

This week’s economic news schedule is relatively light with no releases set for today.

Mortgage rates will be released by Freddie Mac on Thursday, along with weekly jobless claims. Retail sales and the University of Michigan consumer sentiment index round out next week’s schedule. 

3 03, 2014

What’s Ahead For Mortgage Rates This Week – March 3, 2014

2014-03-03-WhatsAheadThisWeekLast week’s economic news was mixed, with new home sales increasing and weekly jobless claims higher than expected.

Case-Shiller and FHFA home price reports reflected slower growth in home prices. Mortgage rates moved higher for the third consecutive week.

Weakness in the jobs sector and harsh winter weather were seen as factors contributing to economic events, but sales of new homes jumped unexpectedly to their highest since 2008.

Case-Shiller, FHFA Report Slower Growth for Home Prices

The Case-Shiller composite home price index for December reported that home prices declined by 0.10 percent in December, which was the second consecutive monthly decline.

On a seasonally adjusted basis, home prices rose 0.80 percent in December as compared to November’s reading of 0.90 percent. Year-over-year, home prices grew at a rate of 13.40 percent, their fastest pace since 2005.

The momentum of year-over-year home prices declined in December as compared to November’s year-over-year reading of 13.70 percent. 11 of 20 cities included in the Case-Shiller composite index declined.

Analysts said that low inventories of available homes, higher mortgage rates and severe winter weather contributed to slower growth in home prices.

FHFA’s quarterly House Price Index for the fourth quarter of 2013 posted its tenth consecutive gain in quarterly home prices. Seasonally adjusted home prices rose by 0.80 percent from November to December 2013.

FHFA, which oversees Fannie Mae and Freddie Mac, reported that home prices increased by 7.70 percent from the fourth quarter of 2012 to the same period in 2013. Adjusted for inflation, the agency reported a year-over-year increase of 7.0 percent.

FHFA House Price Index data is based on sales information for homes with mortgages held or securitized by Fannie Mae and Freddie Mac.

Fixed Mortgage Rates, New and Pending Home Sales Rise

Freddie Mac reported that average rates for fixed-rate mortgages rose last week, with the rate for a 30-year fixed rate mortgage rising 4 basis points to 4.37 percent.

The rate for a 15-year mortgage also increased by 4 basis points to 3.39 percent. The average rate for a 5/1 adjustable rate mortgage fell by 3 basis points to 3.05 percent. Discount points were unchanged at 0.7 0 percent for fixed rate mortgages and 0.50 percent for a 5/1 adjustable rate mortgage.

Weekly jobless claims also rose to 348,000 against projections for 335,000 new jobless claims. The four-week average for new jobless claims remained steady at 338,250.

The Department of Labor noted that weekly readings are more volatile than the four -week average reading. Poor winter weather and a softer labor market were cited as possible causes for the jump in new claims.

New home sales provided unexpected good news; they jumped by 9.60 percent in January, to a seasonally-adjusted annual rate of 468,000 sales against expected sales of 405,000.

December’s reading was upwardly revised from 414,000 to 427,000 new homes sold.

January’s reading was the largest increase in new home sales since July 2008, and there may be more positive housing news ahead as builders said that some of the sales lost during winter months may be recouped during spring.

Pending home sales increased by 0.10 percent in January to an index reading of 95 as compared to December’s reading of 94.9, which was the lowest reading since November 2011.

Whats Coming Up

This week’s scheduled economic news includes construction spending, the Federal Reserve’s beige book report, weekly jobless claims, and Freddie Mac’s report on mortgage rates.

On Friday, the Bureau of Labor Statistics releases its Non-Farm Payrolls and National Unemployment reports for February.

24 02, 2014

What’s Ahead For Mortgage Rates This Week – February 24, 2014

What's Ahead For Mortgage Rates This Week February 24, 2014Last week’s economic data supported recent reports indicating that housing markets are slowing, The National Association of Home builders/Wells Fargo Home Builders Index (HBI) dropped by 10 points to a reading of 46 for February.

Home builder confidence dropped to its lowest reading in nine months,  and fell below the benchmark of 50, which indicates that more builders are pessimistic about current market conditions than not.

Severe weather was blamed for the lower builder confidence reading, which fell below the expected reading of 56.

Regional readings of builder confidence were also lower:

  • Northeast: Builder confidence fell from 41 to 33 points. This suggests that weather is a major concern as this area has experienced a series of nasty winter storms.
  • South: The HBI reading fell from 50 in January to 46 in February and was the smallest decline among the four regions. Fewer index points lost in the South appears to support builder’s concerns about bad weather in other regions.
  • Midwest: Builder confidence dropped from 59 points to a reading of 50.
  • West: Builder confidence fell by 14 points to February’s reading of 57. Desirable areas in the West had been leading the nation in home price appreciation. February’s reading may signal an easing of buyer enthusiasm as rapidly rising home prices have reduced affordable options for first-time and moderate income buyers.

Builders also cited concerns over labor and supplies as reasons for lower confidence readings.

Housing Starts Lower, Mortgage Rates Higher

On Wednesday, Housing Starts for January were released. Although analysts predicted a figure of 945,000 housing starts as compared to an upwardly adjusted 1.05 million housing starts in December, only 880,000 housing starts were reported for January.

The Department of Commerce also cited extreme winter weather as a cause for the drop in housing starts, which reached their fastest pace since 2008 in November. There is some good news. Economists said that housing starts delayed during winter could begin during spring.

According to Freddie Mac’s weekly survey, average mortgage rates rose across the board. The rate for a 30-year fixed rate loan rose by 5 basis points to 4.33 percent. The average rate for a 15-year fixed rate mortgage rose by two basis points to 3.35 percent.

The average rate for a 5/1 adjustable rate mortgage moved up by three basis points to an average rate of 3.08 percent. Discount points for all three products were unchanged with readings of 0.70 for 30-year and 15-year fixed rate mortgages and 0.50 percent discount points for 5/1 adjustable rate mortgages.

The Bureau of Labor Statistics reported that weekly jobless claims came in at 336,000 against expectations of 335,000 new jobless claims. The prior week’s reading was for 339,000 new jobless claims. Analysts said that job growth may be slowing after last year’s growth, but also noted that winter weather had slowed hiring in labor sectors such as construction and manufacturing.

Existing home sales fell by 5.10 percent in January according to the National Association of REALTORS®, which reported a seasonally-adjusted annual rate of home sales at 4.62 million sales against expectations of 4.65 million and December’s reading of 4.87 million sales of pre-owned homes. The national average home price rose to $188,900, which was 10.70 percent higher year-over-year.

January’s inventory of available existing homes was 1.9 million homes; this represented a 4.90 month supply of existing homes for sale. Real estate pros prefer to see at least a six month inventory of available homes for sale.

What’s Ahead

Next week brings a series of economic reports and opportunities for good news. The Case Shiller Home Price Indices, FHFA Home Price Index will be released. Consumer Confidence and the University of Michigan’s Consumer Sentiment report along with New and Pending Home Sales reports round out next week’s scheduled news.

18 02, 2014

What’s Ahead For Mortgage Rates This Week – February 18, 2014

What's Ahead For Mortgage Rates This Week - February 18, 2014Last week’s economic news was dominated by the first address by the new Fed chairperson, Janet Yellen.

Tuesday’s news included the Jobs Openings report for December 2013, which matched November’s reading of 4.0 million jobs available.

This information was taken from a gauge of competition for available jobs; in December, competition for job openings fell to its lowest level in five years.

Fed Chair Janet Yellens First Address to House

Janet Yellen addressed the House Financial Services Committee for the first time on Tuesday as Chair of the Federal Reserve.

Ms. Yellen indicated that she expected “a great deal of continuity” in terms of Federal Open Market Committee (FOMC) monetary policy direction, and noted that markets should expect the FOMC to continue its support of low interest rates.

Chairman Yellen emphasized that the FOMC’s current tapering of its quantitative easing program was expected to continue, but is not on a pre-determined course.

If economic conditions change, the Fed’s monetary policy would be adjusted according to such developments.

Mortgage Rates Mixed According To Freddie Mac

According to Freddie Mac’s weekly Primary Mortgage Market Survey (PMMS), the average rate for a 30-year fixed rate mortgage rose to 4.28 percent from the prior week’s 4.23 percent.

The average rate for 15-year fixed rate mortgage mortgages was unchanged at 3.33 percent. The average rate for a 5/1 adjustable rate mortgage dropped from 3.08 percent to 3.05 percent.

Discount points for each category were unchanged at 0.70 percent for fixed rate mortgages and 0.50 percent for 5/1 adjustable rate mortgages.

In other news, Weekly Jobless Claims were higher last week at 339,000 against a forecast of 330,000 new jobless claims and the prior week’s reading of 331,000 new jobless claims.

Analysts cited bad weather and the possibility of slower economic growth as factors, but said that it was too soon to tell if economic growth is slowing down.

The University of Michigan’s Consumer Sentiment Index beat expectations with a reading of 81.2 against expectations for a reading of 80.0. February’s reading was unchanged from January.

Whats Coming Up

This week’s economic news includes the NAHB Home Builder’s Housing Market Index on Tuesday. Wednesday’s events include Housing Starts and the minutes from January’s FOMC meeting.

In addition to Freddie Mac’s PMMS, Thursday’s scheduled reports include Weekly Jobless Claims, the Consumer Price Index (CPI) and Core CPI. Leading Economic Indicators (LEI) for January will also be released.

The National Association of REALTORS® will release data for existing home sales in January on Friday.

10 02, 2014

What’s Ahead For Mortgage Rates This Week – February 10, 2014

What's Ahead For Mortgage Rates This Week - February 10, 2014Residential Construction Spending Up

Last week’s mortgage and housing-related reports began with Construction Spending for December, with a reading of 0.10 percent or a seasonally adjusted $930.5 billion. December’s reading fell short of an expected increase of 0.40 percent.

Spending for private sector projects rose by 1.00 percent; of this amount, residential construction spending increased by 2.60 percent and private sector spending for non-residential construction fell by -0.70 percent.

Although construction spending posted a fractional gain, the good news is that construction spending is currently dominated by residential construction and that due to inclement winter weather, any gain in construction spending during December could be considered positive.

Jobs and Unemployment Data Mixed

Employment related reports dominated the week’s economic reports. The ADP employment report for January indicated that only 175,000 new private sector jobs were added for the lowest reading in five months.

December saw 227,000 new jobs. Severe weather conditions were the cause of lower than expected jobs growth. Month-to-month job reports can be unpredictable, but quarterly results provided positive information as the three month period ended in January 2014 saw average monthly job growth of 230,000 jobs as compared to an average reading of 220,000 jobs added during the same period a year ago.

New Jobless Claims came in at 331,000, significantly less than the prior week’s reading of 351,000 new jobless claims, and also lower than the forecast reading of 337,000 new jobless claims. Analysts said that these readings supported gradual improvement in the economy.

The Bureau of Labor Statistics (BLS) released its Non-Farm Payrolls report for January, which indicated that 113,000 new jobs were added during the first month of 2014.

This reading was better than December’s reported 75,000 jobs added, and suggested to economists that bad weather was not the underlying cause of the dip in jobs growth. Healthcare and government sectors cut jobs in January.

With lower job growth, a higher unemployment rate would seem likely, but the national unemployment rate dropped to 6.60 percent from last week’s reading of 6.70 percent.

The Federal Reserve’s FOMC Committee has established a benchmark reading of 6.50 percent as one of the economic indicators it uses in decisions concerning federal stimulus programs.

Readings for labor and unemployment are important for the overall economy and housing markets; consumers worried about jobs that they might lose or jobs they cannot find likely won’t be buying homes in the near term.

Mortgage Rates Drop

According to last week’s Freddie Mac’s Primary Mortgage Market Survey, average mortgage rates dropped across the board. The reported rate for a 30-year fixed rate mortgage was 3.23 percent, down from the prior week’s 3.32 percent. Discount points were unchanged at 0.70 percent.

The rate for a 15-year fixed rate mortgage fell by seven basis points to 3.33 percent. Discount points ticked upward from 0.60 to 0.70 percent. The rate for a 5/1 adjustable rate mortgage fell by four basis points to 3.08 percent with discount points unchanged.

Whats Coming Up This Week

This week’s scheduled economic news includes Weekly Jobless claims, Freddie Mac’s report on average mortgage rates, along with retail sales and retail sales except automotive sales.

The University of Michigan Consumer Sentiment report will be released Friday.

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