Aug 19, 2013 | Housing Analysis
Last week wasn’t kind to stock market investors, but weekly jobless claims fell to an unexpected low of 320,000 new jobless claims filed, the lowest level in nearly six years.
Here is a review of the major events of the week.
Monday: The federal budget for July shows an increase in its deficit to -$98 billion, a deficit increase of $28 billion over June’s figure of -$70 billion. The good news is that the deficit for the first 10 months of the fiscal year is $38 billion less than during the same period of the prior fiscal year.
Thursday: Thursday was a busy day for economic news. The weekly jobless claims report came in lower than expected with 320,000 new jobless claims filed. This was lower than the expected.
While this is a strong sign for the economy that would typically boost stock prices, the markets fell. Analysts cite a good news/bad news scenario in describing what happened. The good news was that jobless claims fell to a new low, but the bad news is that investors feared that this may give the Fed a signal to begin tapering its quantitative easing (QE) program.
The Fed is expected to begin tapering its monthly purchases of $85 billion in treasury securities and mortgage-backed securities as early as next month. The QE purchases are intended to help hold down long term interest rates including mortgage rates.
The fall in stock prices on Thursday and Friday suggested that fear of the Fed ending QE is more compelling than the lowest number of new jobless claims since October 2007.
Freddie Mac reported that the average rate for a 30-year fixed rate mortgage remained unchanged at 4.40 percent with 0.7 percent in discount points. The average rate for a 15-year fixed rate mortgage ticked upward by one basis point from 3.43 to 3.44 percent.
Discount points fell from 0.70 percent the prior week to 0.60 percent last week.
The average rate for a 5/1 adjustable rate mortgage (ARM) rose from 3.19 to 3.23 percent with discount points unchanged at 0.50 percent. The 5/1 ARM provides an alternative to higher fixed rates for borrowers seeking lower mortgage rates and payments.
Friday: Included Housing Starts for July, which came in at 896,000 as compared to expectations of 915, 00 0 and June’s figure of 846,000 housing starts. Building permits issued in July came in at 943,000, and surpassed June’s reading of 918,000 building permits.
Increasing home values, buyer demand and a short supply of available homes were seen as motivating factors for builders to construct more homes.
Looking Ahead
This week’s schedule of economic news is set to include the Chicago Fed’s National Activity Index on Tuesday. The FOMC minutes will be released on Wednesday along with Existing Home Sales.
Thursday will bring Weekly Jobless Claims, Freddie Mac’s survey of mortgage rates and the FHFA home price index. Friday will finish the week with a New Home Sales report.
Aug 12, 2013 | Housing Analysis
Highlights of economic news from last week, include a survey of senior loan officers from U.S. and foreign banks doing business in the U.S.
They indicated that banks were gradually easing lending standards for business and consumer loans, but viewed lending criteria for home loans as more restrictive than other types of loans.
According to CoreLogic, U.S. home prices increased at their fastest pace since February 2006. Mortgage rates rose incrementally, and the Weekly Jobless Claims report came in lower than the expected 339,000 at 333,000 new jobless claims.
Monday: Bank loan officers surveyed indicated that while mortgage lending requirements have been eased for low risk mortgage loans, it remains challenging for those with less-than-stellar credit to qualify for home loans.
Bankers noted some concern that easing credit standards may signal to the Fed that it’s time to taper the quantitative easing program that’s designed to keep long term interest rates, including mortgage rates, low.
Tuesday: The CoreLogic Home Prices report for June showed that home prices rose 1.90 percent in June, and rose by 11.88 percent year-over-year. 48 states showed rising home prices while only Mississippi and Delaware showed a decline.
Nevada led the list of higher home prices with a 27.00 percent gain year-over-year; Nevada home values were among the hardest-hit in the economic downturn.
Thursday: Weekly Jobless Claims came in at 333,000, which were higher than last week’s reading of 328,000 new jobless claims. The four-week average is considered a less volatile indicator of unemployment trends.
The four week rolling average for new jobless claims decreased by 6250 to 335,000. This was the lowest reading for the four-week rolling average since November 2007.
Freddie Mac’s weekly report on mortgage rates brought not-so-good news; the average rate for 30-year fixed rate mortgages rose by one basis point to 4.40 percent, while the average rate for a 15-year fixed mortgage was unchanged at 3.43 percent. The average rate for a 5/1 adjustable-rate mortgage rose by one basis point to 3.19 percent.
Discount points for 30-year fixed rate mortgages and 15-year fixed rate mortgages were unchanged at 0.7 percent, while average discount points for a 5/1 adjustable rate mortgage dropped to 0.5 percent.
What’s Coming Up
This week’s economic news includes the federal budget for Monday. Retail Sales and Core Retail Sales will be reported on Tuesday; the Producers Price Index (PPI) and Core PPI will be out on Wednesday.
Thursday’s news includes weekly jobless claims and Freddie Mac’s mortgage rates update. The Consumer Price Index (CPI) and Core CPI (excluding volatile food and energy sectors) will also be released. The NAHB Home Builders Housing Market Index (HMI) is also due Thursday.
Friday’s scheduled economic news includes Housing Starts, Building Permits and Consumer Sentiment for July.
Aug 8, 2013 | Housing Analysis
U.S. housing markets continue to drive the economic recovery according to data released by RealtyTrac Inc.
National home prices rose by 11.90 percent year-over-year for June.
48 states reported rising home prices with only Delaware and Mississippi reporting lower home prices. Nevada led the states with a 26.50 percent gain over June 2012.
Cities also fared well on housing prices; 99 of the 100 largest U.S. cities reported gains in home prices.
Rising Home Prices And Mortgage Rates, Short Supply Of Homes
According to Mark Fleming, chief economist for CoreLogic, home price trends are rising at their fastest pace since 1977. While good news for sellers, homebuyers may find fewer affordable options over time while also contending with rising mortgage rates.
In spite of rapidly rising home prices, national home prices remain about 19 percent below their peak in April 2006.
Why The Shortage Of Available Homes?
Some homeowners are hoping to recoup losses on their homes before listing them for sale. This could be a risky decision, as many economists have previously characterized the last peak of the housing market to be a “bubble,” or an abnormal spike in home values.
In some markets cash buyers are snapping up homes and making it difficult for mortgage-dependent homebuyers to compete.
Another common scenario that presents challenges to home buyers in areas where homes are in high demand occurs when there are multiple purchase offers for one home.
Buyers who rely on mortgage loans for financing their home purchase can improve their chances by being pre-approved for a mortgage before shopping for a home.
Fewer Foreclosed Homes Contribute To Rising Home Prices
RealtyTrac estimates that 500,000 home mortgages will be foreclosed this year. This is approximately 25 percent lower than the number of 2012 residential foreclosures.
Bank-owned homes are typically offered at lower prices and with incentives such as direct financing, but most are sold as-is with no warranties or guarantees as to their condition. Multiple foreclosed homes within a community can drag down home prices, so fewer foreclosed homes is positive for homeowners and communities alike.
Want To Buy A Home? Don’t Give Up
Rising mortgage rates and home prices can present challenges, but working with your local real estate professional can help with finding an affordable home. Programs are available for assisting eligible first-time buyers with their down payment and closing costs.
Adjustable-rate mortgage loans that provide a low fixed rate for a specified introductory period provide an alternative to higher payments required of a fixed-rate mortgage. An adjustable-rate mortgage may be a good option for first-time buyers who plan to “move up” within a few years.
For assistance in finding an affordable home please feel free to reach out to your trusted real estate professional today.
Aug 5, 2013 | Housing Analysis
The past week brought encouraging economic news from several sources.
The FOMC statement indicated that the Federal Reserve has not set a date for rolling back its quantitative easing program and ADP reported more private sector jobs added than expected.
While weekly jobless claims were fewer than expected, the national unemployment rate remained elevated:
Monday: Pending Home Sales: The National Association of REALTORS reported that sales contracts fell in June due to rising mortgage rates and a tight inventory of available homes.
Tuesday: The S&P Case-Shiller Home Price Indices showed that national home prices increased by 12.2 percent annually.
All 20 cities used in the 10 and 20 city home price indices posted gains in average home prices. Average U.S. home prices remained approximately 25 percent below their peak in 2006.
Consumer confidence dropped in July to a reading of 80.3 as compared to a revised reading of 82.1 in June. Higher mortgage rates and stubbornly high unemployment rates likely contributed to a cooling of consumer enthusiasm.
Wednesday: The Federal Open Market Committee (FOMC) said in its statement that based on its reading of current economic conditions,the committee had not set a date for beginning to reduce the Fed’s monthly asset purchase of $85 billion in Treasury securities and MBS.
The program, known as quantitative easing (QE), is intended to keep long-term interest rates including mortgage rates lower.
ADP reported that job growth for private-sector jobs exceeded expectations for July; the adjusted reading of 200,000 for July beat expectations of 185,000 jobs added and also surpassed June’s reading of 198,000 new jobs added.
The ADP jobs report is viewed by economists as a preview of the Bureau of Labor Statistics’ Non-farm Payrolls and National Unemployment reports, which are collectively known as the “Jobs Report.”
Thursday: Weekly jobless claims came in at 326,000. This was lower than expectations and the previous week’s reading, both of which were reported at 345,000 jobless claims.
Freddie Mac reported that mortgage rates rose, with the average rate for a 30-year fixed rate mortgage coming in at 4.39 percent as compared to last week’s 4.31 percent.
Average rates for a 15-year fixed rate mortgage came in at 3.43 percent over last week’s 3.39 percent. The average rate for a 5/1 adjustable rate mortgage was 3.18 percent and two basis points higher than the previous week’s 3.16 percent.
Friday: The July Non-farm Payrolls report showed that only 162,000 jobs were added as compared to expectations of 180,000 jobs added and June’s reading of 188,000 jobs added. While housing markets are showing strong improvement, high unemployment continues to be a drag on the economy.
The national unemployment rate for July was 7.40 percent and was lower than expectations of 7.50 percent and June’s reading of 7.60 percent.
What’s Coming Up This Week
This week’s economic news includes the Senior Loan Officer Survey set for Monday, the U.S. Trade Deficit and Job Openings reports for June on Tuesday.
On Wednesday, a report on Consumer Credit will be released and the Weekly Jobless Claims will be out Thursday, along with Freddie Mac’s mortgage rates report. No mortgage or related news is scheduled for Friday.
Jul 31, 2013 | Housing Analysis
The S&P/Case-Shiller Home Price Index (HPI) released Tuesday presented solid evidence that the housing recovery continued during the month of May.
The Case-Shiller 20-City Index showed increasing home prices for all 20 cities.
Highest Year-Over-Year Gains Included Theses Cities:
- San Francisco, CA 24.50 percent
- Las Vegas, NV 23.30 percent
- Phoenix, AZ 20.60 percent
- Atlanta, GA 20.10 percent
- Los Angeles, CA 19.20 percent
In surprising news, Dallas, TX and Denver, CO posted record year-over-year price gains that surpassed their pre-crisis peaks.
Year-over-year home prices in Dallas increased by 7.60 percent and Denver home prices increased by 9.70 percent year-over-year in May.
Home prices grew by 12.20 percent on a year-over year basis in May; this reading fell short of expectations of 12.40 percent, but moved slightly ahead of April’s reading of a 12.10 percent year-over year increase.
The Case-Shiller HPI is based on a three-month rolling year-over-year average of home prices in the cities surveyed.
Cities Post Month-To- Month Price Gains
On a seasonally-adjusted month-to-month basis, home prices rose by 1.00 percent in May as compared to April. Expectations were for a 1.40 percent increase over April’s reading, which came in at 1.70 percent.
Top Gains From April To May Were Posted By These Cities:
- San Francisco, CA 4.30 percent
- Chicago, IL 3.70 percent
- Atlanta, GA 3.40 percent
- San Diego, CA 3.10 percent
- Seattle, WA 3.10 percent
Analysts noted that home prices for two metro areas in Florida surpassed year-over-year gains in Washington, D.C.; this illustrates home values shifting geographically.
Miami home prices posted a month-to gain of 2.00 percent and a year-over-year gain of 14.20 percent.
Tampa, FL home prices posted a month-to-month gain of 1.80 percent on a year-over-year gain of 10.90 percent.
Washington, D.C. home prices gained 2.00 percent month-to-month in May, but only gained 6.50 percent year-over-year.
Rising Mortgage Rates Could Slow Price Momentum
It’s important to understand that the data in the Case-Shiller HPI lags a couple of months behind current market conditions; the latest numbers were compiled prior to mortgage rates spiking. Economists expect that the impact of higher mortgage rates won’t be seen in home prices until fall.
Higher mortgage rates are expected to slow home sales. If the demand for homes falls due to higher mortgage rates, inventories of available homes would expand, which would create competition among home sellers and potentially lead to lower home prices.
For any questions regarding your mortgage rate and buying a home feel free to contact your trusted real estate professional today.
Jul 29, 2013 | Housing Analysis
Last week brought a mixed bag of economic news, but most notably, average mortgage rates fell.
New home sales surpassed expectations and consumer sentiment rose for July; these readings among others suggest that the economy continued to improve and that consumer confidence in the economy improved as well.
Monday: Existing home sales in June were reported at 5.08 million on a seasonally-adjusted annual basis. While this fell short of expectations of 5.25 million existing homes sold, the expectation was based on the original reading of 5.18 million existing homes sold for May; this was later revised to 5.14 million homes existing homes sold in May.
Tuesday: FHFA reported that May prices for homes with mortgages held by Fannie Mae or Freddie Mac remained consistent with April’s reading of a 7.30 percent increase on a seasonally adjusted annual basis. Home prices rose by 0.70 percent in May as compared to April’s revised reading of 0.50 percent.
Wednesday: The U.S. Census Bureau revealed that June sales of new homes came in at 497,000, which surpassed both expectations of 483,000 new homes sold and May’s reading of 449,000 new homes sold.
Thursday: Freddie Mac reported that mortgage rates fell last week; the average rate for a 30-year fixed rate mortgage fell by six basis points to 3.31 percent with 0.8 percent in discount points.
The average rate for a 15-year mortgage was 3.39 percent with discount points of 0.8 percent as compared to last week’s report of 3.41 percent. Average rates for a 5/1 adjustable rate mortgage dropped by one basis point from 3.17 percent to 3.16 percent; discount points moved from 0.60 percent to 0.70 percent.
In other economic news, June’s report for Durable Goods Orders nearly doubled to 4.20 percent over expectations of 2.30 percent.
Friday: Consumer Sentiment for July rose to 85.1 as compared to expectations of 84.0 and June’s reading of 83.90 percent. That consumers continued gaining confidence in the economy could indicate that more would-be home buyers will become active homebuyers seeking to buy amidst a short inventory of available homes.
This Week’s Busy Economic Calendar
Readings for several significant economic and housing related indicators will be released this week.
Pending Home Sales are due out today; Tuesday brings the Case-Shiller Home Price Index and the Consumer Confidence Index. Wednesday’s news includes the ADP report (useful for tracking private sector job growth) and an FOMC statement after its meeting ends.
Fed Chairman Ben Bernanke is also scheduled to give a press conference Wednesday. As always, any remarks concerning projected changes to the Fed’s quantitative easing program (QE) could impact financial markets and mortgage rates.
On Thursday, construction spending data will be released in addition to Freddie Mac’s weekly report on average mortgage rates.
Friday’s news includes several employment-related reports. The monthly Non-Farm Payrolls and Unemployment report will be released; collectively these two reports are frequently called the Jobs Report.
Data on personal income and consumer spending will round out the week’s economic news.
