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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

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. 

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