Last week’s economic news included readings from the National Association of Home Builders on housing markets along with Commerce Department readings on housing starts and building permits issued. Fed Chair Jerome Powell appeared on 60 Minutes. Weekly readings on mortgage rates and jobless claims were also released.
NAHB: Homebuilder Confidence Ticks Up
The National Association of Home Builders reported that home builders’ confidence in housing market conditions rose one point to an index reading of 83. Builder confidence readings over 50 indicate that most builders consider housing market conditions as positive.
Component readings used for the NAHB Housing Market Index were varied. Builder confidence in current market conditions rose one point to 88 and home builders’ confidence in housing markets over the next six months fell two points to 83. The index reading for home buyer traffic in new housing developments rose three points to 75. Homebuilders faced ongoing challenges including supply chain problems, rising materials prices, and meeting the need for affordable homes.
In related news, the Commerce Department reported a seasonally adjusted annual pace of 1.74 million housing starts in March. 1.77 million building permits were issued at a seasonally adjusted annual pace in March.
Mortgage Rates, New Jobless Claims Fall
Freddie Mac reported lower average mortgage rates last week as the rate for 30-year fixed-rate mortgages dropped by nine basis points to 3.04 percent; rates for 15-year fixed-rate mortgages dropped by seven basis points to 2.35 percent. Rates for 5/1 adjustable rate mortgages averaged 2.80 percent and were 12 basis points lower. Discount points for fixed-rate mortgages averaged 0.70 percent for fixed-rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.
New jobless claims fell to 576,000 claims filed last week as compared to 769,000 initial claims filed the previous week. Ongoing jobless claims were unchanged from the prior week at 3.73 million claims filed.
The Commerce Department released inflation data for March. The Consumer Price Index rose by 0.60 percent as compared to February’s growth rate of 0.40 percent; analysts expected a March reading of 0.50 percent. Core inflation, which excludes volatile food and fuel sectors rose 0.30 percent in March and exceeded expectations of 0.20 percent growth. Core inflation rose by 0.10 percent in February.
Fed Chair Jerome Powell appeared on 60 Minutes on Sunday; he said that that the global economy would not return to normal until the COVID pandemic is controlled, but he presented a brighter picture for the U.S. economy. He said that the national economy is expected to grow between six to seven percent and that the national unemployment rate could fall to four or five percent from its current rate of six percent.
This week’s scheduled economic news includes readings on readings on sales of new and previously-owned homes and weekly readings on mortgage rates and jobless claims.
Last week’s economic reporting included readings from the Federal Reserve’s Federal Open Market Committee and a speech given by Fed Chair Jerome Powell. Weekly reports on mortgage rates and jobless claims were also released.
FOMC Minutes: Fed’s Monetary Policy Stance to Remain “Accommodative”
The Federal Open Market Committee of the Federal Reserve released minutes of its meeting held March 16 and 17. The meeting minutes indicated split opinions on the U.S. economy’s outlook. Several members expected inflation to rise due to constricted supply chains and high demand for goods and services. This scenario resembles trends in residential real estate where supplies of available homes are far lower than buyer demand. Other FOMC members expected continued downward pressure on inflation. Members expected inflation to rise to 2.40 percent in 2022 but expected the inflation rate to ease to 2.10 percent by 2023.
The Federal Reserve has a dual legal mandate to achieve an inflation rate of 2.00 percent and maximum employment. While inflation is expected to exceed 2.00 percent in 2022 and beyond, unemployment remains above pre-pandemic levels. FOMC members did not raise the Fed’s key interest rate range from 0.00 to 0.25 percent.
In related news, Fed Chair Jerome Powell spoke at a webinar hosted by the International Monetary Fund. He emphasized the potential threat of COVID to the U.S. and global economy and encouraged everyone to get vaccinate and said, “Until the world is vaccinated, we’re all going to be at risk of new mutations and we won’t be able to resume activity all around the world.”
Mortgage Rates, Jobless Claims Show Mixed Readings
Fixed mortgage rates were lower last week according to Freddie Mac. The average rate for 30-year fixed-rate mortgages fell by five basis points to 3.13 percent; the average rate for 15-year fixed-rate mortgages fell by three basis points to 2.42 percent. Rates for 5/1 adjustable rate mortgages averaged 2.92 percent and rose by eight basis points. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages and 0.60 percent for 15-year fixed-rate mortgages. Discount points averaged 0.10 percent for 5/1 adjustable rate mortgages.
Initial jobless claims rose to 744,000 claims filed as compared to the prior week’s reading of 728,000 first-time jobless claims filed. Analysts expected 694,000 new claims for last week. Continuing jobless claims were lower last week with 3.73 million ongoing claims filed. There were 3.75 million continuing jobless claims in the prior week.
This week’s economic reporting includes readings from the National Association of Home Builders, Commerce Department readings on housing starts and building permits issued, and inflation. Weekly readings on mortgage rates and jobless claims will also be released.
Last week’s economic reports included readings on home prices, pending home sales, and construction spending. Data on public and private-sector employment and the national unemployment rate were published along with weekly readings on mortgage rates and jobless claims.
Case-Shiller: Record Home Price Growth in Phoenix, but Will it Last?
Case-Shiller Home Price Indices indicated fast growth in home prices as the national home price growth rate for January grew to 11.20 percent from December’s reading of 10.40 percent national home price growth. Case-Shiller’s 20-City Home Price Index reported 19 of 20 cities reported rising home prices in January, but Cleveland, Ohio home prices were lower. Detroit, Michigan resumed reporting to the 20-City Home Price Index after nearly a year’s absence.
Phoenix, Arizona led the January 20-City Home Price Index with a seasonally-adjusted annual pace of 15.80 percent; Seattle, Washington, and San Diego, California followed with home price growth of 14.30 percent and 14.20 percent.
Analysts expressed concerns that rapidly rising home prices are not sustainable in the long term and cited rising mortgage rates and skyrocketing home prices as obstacles to homebuying. As demand for homes eases, home price growth will slow.
The Commerce Department reported fewer pending home sales in February as pending home sales fell by 10.60 percent. Analysts expected pending home sales to fall to -3.10 percent; pending home sales dropped by -2.40 percent in January. Construction spending fell by -0.80 percent in February; it was expected to fall by one percent as compared to January’s positive reading of 1.25 percent growth in construction spending. Rising lumber prices and severe winter weather influenced construction spending in February.
Mortgage Rates Hold Steady, Jobless Claims Mixed
Freddie Mac reported little change in mortgage rates last week. The average rate for 30-year fixed-rate mortgages rose one basis point to 3.18 percent; Rates for 15-year fixed-rate mortgages averaged 2.45 percent and were unchanged. The average rate for 5/1 adjustable rate mortgages was also unchanged at 2.84 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages, 0.60 percent for 15-year fixed-rate mortgages, and 0.30 percent for 5/1 adjustable rate mortgages.
The Census Bureau reported 719,000 new jobless claims last week; this surpassed the prior week’s reading of 658,000 initial claims. Ongoing jobless claims fell to 3.79 claims filed as compared to the prior week’s reading of 3.80 million continuing jobless claims filed.
Private-sector jobs grew by 525,000 jobs in March but fell short of the expected 525,000 private-sector jobs added. Public and private-sector jobs also ramped up with 916,000 jobs added in March. Analysts expected 675,000 jobs added to the Non-Farm Payrolls report; 468,000 public and private-sector jobs were added in February. The national unemployment rate decreased to 6.00 percent from February’s reading of 6.20 percent.
This week’s scheduled economic releases include job openings and minutes of the recent Federal Open Market Committee meeting. Weekly readings on mortgage rates and jobless claims will also be reported.
The S&P Case-Shiller National Home Price Index posted its highest gain in nearly 15 years with a year-over-year home price growth rate of 11.20 percent in January. The December 2020 National Home Price Index reported 10.40 percent home price growth. The S&P Case-Shiller 20-City Home Price Index reported 11.10 percent year-over-year growth with 19 of 20 cities reporting higher home prices. Cleveland, Ohio was the only city reporting no home price growth in January. Detroit, Michigan reported home price growth data for the first time in nearly a year.
Phoenix, Seattle, and San Diego Home Prices are Hot, Hotter, and Hottest
Home prices in Phoenix, Arizona again topped Case-Shiller’s 20-City Home Price Index for January with a year-over-year home price growth rate of 15.80 percent. Seattle, Washington held its second-place position with home price growth of 14.30 percent, and San Diego, California held third position with year-over-year home price growth of 14.20 percent.
Rapidly rising home prices coupled with rising mortgage rates presented challenges for first-time and moderate-income buyers; some have revised their purchasing budgets downward while others have left the market. Analysts noted that buyers leaving the housing market could impact high demand and strong buyer competition which has fueled bidding wars and driven home prices ever higher in popular metro areas.
Craig Lazzara, managing director and head of index investment strategy at S&P Dow Jones Indices, said that January’s home price data supported the position that COVID encouraged buyers to leave congested urban areas for single-family homes in suburbia. He said that many of these households may have accelerated existing home-buying plans.
FHFA Posts 12 Percent Increase in Home Prices; Slowing Momentum
The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, reported a 12 percent year-over-year growth in prices of single-family homes owned or financed by the two government-sponsored mortgage companies. According to Lynn Fisher, FHFA’s deputy director of the division of research and statistics, home price growth slowed to its slowest pace since June. She wrote, “While house prices experienced historic growth rates in 2020 and into the New Year, the monthly gains appear to be moderating.”
Home prices are expected to continue growing in popular metro areas, but at a slower pace due to higher mortgage rates and would-be buyers leaving the market. Demand for homes may ease as COVID-driven flight from urban areas slows but families working from home and homeschooling their children also create demand for larger homes.
Last week’s economic news included readings on sales of new and previously-owned homes along with final March index readings on consumer sentiment. Weekly readings on mortgage rates and jobless claims were also released.
Sales of New and Pre-Owned Homes Fall in February
Weather-related problems disrupted sales of new and previously-owned homes in February as low inventories of homes for sale further stalled sales. The National Association of Realtors® said that sales of new and pre-owned homes were slowed by persistent shortages of homes on the market.
Shortages of available homes were common before the pandemic and are more pronounced now. Realtor.com estimates that 200,000 homeowners stayed out of the market in the past year; this contributed to the two-month supply of homes available in February. Real estate professionals consider a six-month supply of homes for sale to indicate a balanced market. Sales of previously-owned homes were 9.10 percent higher in February 2020.
High demand for homes fueled competition among buyers and drove home prices higher. Rising mortgage rates, short supplies of homes, and rising home prices presented obstacles for first-time and moderate-income home buyers as the national median price for previously-owned homes reached $313,000.
New homes sold at a seasonally-adjusted annual pace of 775,000 sales in February according to the Census Department and was 18.20 percent lower than the reading of 948,000 new home sales reported in January. The inventory of new homes available rose to a 4.80 month supply as buyers were sidelined by winter weather and rising mortgage rates. Analysts expect high demand for new homes to continue as buyers move out of crowded urban areas and seek larger homes that meet increasing needs for work-at-home space and up-to-date technology.
Mortgage Rates Rise as Jobless Claims Fall
Freddie Mac reported higher average mortgage rates last week as rates for 30-year fixed-rate mortgages jumped eight basis points to 3.17 percent; the average rate for 15-year fixed-rate mortgages rose five basis points to 2.45 percent and the average rate for 5/1 adjustable-rate mortgages rose five basis points to 2.84 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages and 0.60 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable-rate mortgages averaged 0.20 percent.
New jobless claims fell to 684,000 claims from the prior week’s reading of 781,000 first-time jobless claims. Ongoing claims were also lower with 3.87 million continuing claims filed as compared to the previous week’s reading of 4.13 million continuing claims filed.
The University of Michigan reported an index reading of 89.1 for its Consumer Sentiment Index in March. February’s reading was 83.0 and analysts expected an index reading of 83.7.
This week’s economic reporting includes readings from Case-Shiller Home Price Index and reporting on pending home sales. Private and public sector job growth and the national unemployment rate will be released along with weekly reports on mortgage rates and jobless claims.
Last week’s economic reports included readings from the National Association of Home Builders on housing markets and Commerce Department data on housing starts and building permits issued. Weekly reports on mortgage rates and jobless claims were also released.
NAHB: Builder Confidence Slips as Materials Costs Rise
The National Association of Home Builders reported that its Housing Market Index fell to an index reading of 82 in March as compared to February’s index reading of 84. Analysts forecasted a reading of 83. Builder concerns included rising materials costs and mortgage rates, which impact home pricing and affordability. Robert Dietz, Chief Economist for NAHB, said that lumber prices have more than doubled since August 2020 and have added $24,000 to the cost of a home on average.
Regionally, builder confidence in housing markets declined in the Midwest, Northeast, and West but remained unchanged in the South.
Demand for new homes remained high as shortages of existing homes for sale persisted. Homebuilder sentiment was unchanged in the South but declined in the Northeast, Midwest, and Western regions of the U.S.
According to Commerce Department reports for February, housing starts declined to 1.42 million starts n a seasonally-adjusted annual basis as compared to January’s reading of 1.58 million housing starts. Building permits issued also reflected growing builder concerns as permits issued fell to 1.68 million permits issued from 1.89 million building permits issued in January.
Mortgage Rates Rise, Jobless Claims Mixed
Freddie Mac reported higher average mortgage rates last week as rates for 30-year fixed-rate mortgages rose by four basis points to 3.09 percent; the average rate for 15-year fixed-rate mortgages rose by two basis points to 2.40 percent. Mortgage rates for 5/1 adjustable rate mortgages averaged 2.79 percent and rose by two basis points.
Discount points averaged 0.70 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.
770,000 first-time jobless claims were filed last week as compared to the prior week’s reading of 725,000 new jobless claims filed. Severe winter weather in Texas boosted new claims, which significantly exceeded analysts’ expectations of 700,000 new claims filed.
Continuing jobless claims fell to 4.12 million claims from the prior week’s reading of 4.14 million ongoing claims filed.
This week’s scheduled economic reporting includes readings on sales of new and previously-owned homes, inflation and consumer sentiment. Weekly readings on mortgage rates and jobless claims will also be released.