Feb 3, 2014 | Mortgage Rates
Last week brought mixed news; while the Department of Commerce reported a dip in new home sales, mortgage rates also fell. The Federal Reserve’s FOMC statement revealed that quantitative easing would be further reduced by an additional $10 billion monthly.
New Home Sales: Y-O-Y Reading Best Since 2008
December’s reading of 414,000 for new home sales fell short of November’s revised reading of 445,000 new homes sold as well as expected sales of $455,000. The consensus figure was based on November’s original sales reading of 464,000 new homes sold.
The inventory of new homes available rose from last month’s level of 4.70 month supply to a 5 month supply in December. Cold weather was cited as a cause of lower new home sales.
New home sales increased by 4.50 percent year-over-year; this was the highest reading since 2008. The median price of a new home rose by 0.60 percent in December to $270,299.
The national median home price was $265,800 in 2013, an annual growth rate of 8.40 percent and the highest annual growth rate for median home prices since 2005.
Economists cited rising mortgage rates, new mortgage rules and a lagging labor market as signs that slower home sales could be expected in 2014.
Pending home sales echoed the slowing trend in home sales; the index reading fell by -8.70 percent to a reading of 92.4 in December.
All Four Regions Reported A Drop In Pending Sales As Compared To November:
Northeast -10.30 percent
West -9.80 percent
South -8.80 percent
Midwest -6.80 percent
This was the lowest reading for pending home sales since October 2011.
Case-Shiller: Home Prices Up 13.7%
The Case-Shiller 10 and 20 city home price indices for November reported a 13.70 percent gain in home prices year-over-year. This was the fastest annual growth rate in home prices since 2006. Further evidence of slower growth in home prices was evident as nine of 20 cities tracked reported lower home prices.
Fed Continues Stimulus Reduction
Wednesday’s FOMC statement confirmed expectations that the Fed would continue tapering its monthly asset purchases made under its quantitative easing program.
Monthly purchases of mortgage-backed securities and Treasury securities will be reduced from January’s level of $75 billion to $65 billion in February. Economists expected this reduction to occur.
Freddie Mac’s Primary Market Survey reported lower average mortgage rates. The rate for a 30-year fixed rate mortgage fell by 7 basis points to 4.32 percent with discount points unchanged at 0.7 percent.
15-year mortgage rates also fell to 3.40 percent with discount points lower at 0.60 percent. The average rate for a 5/1 adjustable rate mortgage fell by 3 basis points to 3.12 percent with discount points unchanged at 0.50 percent.
This was welcome news as homebuyers and mortgage lenders have felt the effects of higher home prices and new mortgage rules that became effective January 10.
New Jobless Claims Higher
Weekly jobless claims jumped to 348,000 from the prior week’s 339,000 new jobless claims. This was the highest level of new jobless claims in six weeks. Reasons for increased claims were unclear, but were possibly caused by lingering influences of the holiday season or a sinking labor market.
Consumer confidence rose in January to a reading of 80.7 as compared to December’s reading of 77.5 as compared to January 2012’s reading of 58.4.
This Week
This week’s scheduled economic and housing news includes construction spending, non-farm payrolls and the national unemployment rate. Freddie Mac’s PMMS report and weekly jobless claims will be released as usual on Thursday.
Jan 27, 2014 | Mortgage Rates
Last week was an action-packed week for economic news, and all of it was packed into Thursday:
Weekly Jobless claims came in at 326,000 which was lower than the expected 330,000 new claims. This week’s claims were higher than the prior week’s 325,000 new jobless claims filed.
The NAR released its Existing Home Sales Report for December; sales of existing homes sold at a seasonally adjusted annual rate of 4.86 million.
December’s reading fell shy of estimates of 490 million existing home sales, but the estimate was based on November sales that were later adjusted downward to 4.82 million sales of existing homes. Existing home sales for 2013 came in at 5.09 million sales, a 9.10 percent increase over 2012 sales.
The median price of a pre-existing home reached $198,000 in December, with the median price for all of 2013 at $197,100, which was an increase of 11.50 percent over the average price for an existing home in 2012.
Pent-up demand and a lingering shortage of available homes likely contributed to last year’s rapid rise in home prices.
Mortgage Rates Mixed, FHFA Reports Slower Gain For Home Prices
Freddie Mac reported mixed results for average mortgage rates in its weekly PMMS report. The rate for a 30-year fixed rate mortgage fell from last week’s 4.41 to 4.39 percent.
The average rate for a 15-year mortgage dipped by one basis point to 3.44 percent; discount points for both 30 and 15-year mortgages were unchanged at 0.70 percent.
The average rate for a 5/1 adjustable rate mortgage rose from 3.10 to 3.15 percent with discount points unchanged at 0.50 percent.
FHFA, the agency that oversees Fannie Mae and Freddie Mac, released its Home Price report for November 2012. This report is based on information gathered about homes with mortgages owned or backed by the two firms. According to FHFA, home prices increased by 7.60 percent year-over-year.
Home prices moved up by 0.10 percent in November as compared to a rate of 0.50 percent in October.
Leading Economic Indicators Suggest Economy Strengthening
The Leading Economic Indicators report for December moved up by 0.10 percent, which pushed the index to a reading of 99.4. December’s reading represented the sixth consecutive month that the index gained ground.
Economists associated with the LEI report note that while steady growth is expected during the spring, the economy will likely encounter a few obstacles including rising interest rates and possible political gridlock over raising the national debt ceiling.
This Week
This week’s economic news is set to include New Home Sales, the Consumer Confidence Index, and Weekly Jobless Claims. Freddie Mac’s PMMS mortgage rates and reports on consumer spending and consumer sentiment round out the week’s news.
The FOMC statement expected after the committee concludes its meeting on Wednesday is expected to provide news of the Fed’s plan for further tapering of its quantitative easing program.
Jan 20, 2014 | Mortgage Rates
Welcome news arrived last week as lower mortgage rates and a higher number of housing starts were reported. Other economic news was mixed:
The Federal Reserve released its Beige Book Report released last Tuesday indicated modest economic growth throughout the 12 Federal Reserve districts. Analysts predicted that this would cause the Fed to further reduce the volume of monthly asset purchases made under its quantitative easing program.
The Atlanta, Cleveland and Kansas City districts reported slower home sales, which supported recent expectations of slowing gains in home prices.
Mortgage Rates Dip, Housing Starts Up
According to Freddie Mac, average mortgage rates fell last week. The rate for a 30-year fixed rate mortgage dropped from 4.51 to 4.41 percent with discount points unchanged at 0.70 percent. The rate for a 15-year fixed rate mortgage was 3.45 percent as compared to the prior week’s reading of 3.56 percent.
Discount points rose from 0.60 to 0.70 percent. The average rate for a 5/1 adjustable rate mortgage dropped from 3.15 to 3.10 percent; discount points rose from 0.40 to 0.50 percent.
The National Association of Home Builders/Wells Fargo Home Builders Confidence Index dropped slightly in January. Although expectations were for a reading of 59, January’s reading was 56 and lower than December’s revised reading of 57.
The NAHB Index has increased by 19 percent year-over-year and is expected to continue rising in 2014 due to relatively lower mortgage rates, and pent-up demand for homes.
Housing starts for December came in at 999,000 against expectations of 985,000 and November’s revised reading of 1.11 million. Cold weather and concerns over rising mortgage rates in 2014 were cited as causing fewer housing starts. As the Fed tapers its QE program, mortgage rates are expected to rise.
Consumer sentiment toward the economy was lower than expected according to the University of Michigan Consumer Sentiment Index for January. The confidence index was expected to rise to 84.0 based on December’s reading of 82.5, but only achieved a reading of 80.4.
Higher gasoline prices and a slower labor market likely contributed to wavering consumer sentiment; rising inflationary expectations were also considered a cause.
This Week
This week’s scheduled economic news includes an action-packed Thursday as today is Martin Luther King Jr. Holiday and no economic reports are scheduled for Tuesday, Wednesday or Friday.
Thursday’s reports include Weekly Jobless Claims, Freddie Mac’s PMMS, along with Existing Home Prices, FHFA Home Prices and Leading Economic Indicators.
Jan 13, 2014 | Mortgage Rates
The first post-holiday week of 2014 brought mixed economic and housing-related news. CoreLogic reported via its Housing Market Index that November home prices grew by 11.80 percent year-over-year.
This was just shy of October’s year-over-year reading of 11.90 percent. As with Case-Shiller’s recently reported Home Price Indices, a slower rate of home price growth suggested to analysts that the housing market is cooling down.
The Federal Reserve’s Federal Open Market Committee released the minutes from its December meeting. The minutes reiterated the Committee’s decision to begin tapering its asset purchases this month.
The Fed announced that it would reduce its monthly asset purchases by $10 billion to $75 billion. As always, the Fed indicated that it would continue monitoring economic data for determining future actions concerning monetary policy.
Mortgage Rates Mixed
Freddie Mac’s Primary Market Survey reported mixed results for average mortgage rates last week. The rate for a 30-yer fixed rate mortgage dropped to 4.51 percent from 4.53 percent with discount points lower at 0.70 percent; the rate for a15-year fixed rate mortgage was 3.56; this was one basis point higher than for last week.
Discount fell from 0.70 to 0.60 percent. The rate for a 5/1 adjustable rate mortgage jumped by 10 basis points to 3.15 percent with discount points unchanged at 0.50 percent.
Employment, Unemployment Data Mixed
The week’s jobs-related readings provided mixed readings for the labor sector. The ADP Employment report for December showed 238,000 private sector jobs added and matched expectations of 215,000 new private sector jobs. December’s reading also exceeded November’s reading of 229,000 jobs added.
The Bureau of Labor Statistics released the Non-Farm Payrolls report for December; it reported 74,000 jobs added in December against expectations of 193,000 new jobs and November’s reading of 241,000 jobs added.
The sharp drop in new jobs during December was partially blamed on poor weather, but analysts also said that it could be a sign of further ups and downs in the U.S. economy.
In a statement given in connection with the December Non-Farm Payrolls report, St. Louis Federal Reserve Bank President James Bullard, a member of the FOMC, said that he did not expect the Fed to stop tapering its asset purchases due to December’s sharp drop in new jobs.
The national unemployment rate improved to a reading of 6.70 percent. This was the lowest reading in five years and only two-tenths of a percent above the FOMC’s targeted unemployment rate of 6.50 percent. 347,000 workers left the workforce, which helps to explain the discrepancy between the lower number of new jobs and the lower unemployment rate.
This Week
This week’s scheduled economic news includes retail sales and retail sales except autos, the Federal Reserve’s Beige Book report, Weekly Jobless Claims, Freddie Mac’s PMMS. The NAHB Home Builders HMI and the Housing Starts report will also be released. Friday’s release of the University of Michigan’s consumer sentiment index rounds out the week.
Jan 6, 2014 | Mortgage Rates
The last week of 2013 brought relatively good news in view of the economic roller coaster rides caused by legislative impasse. A brief shutdown of federal government agencies, and nail-biting suspense over if and when the FOMC of the Federal Reserve would taper its quantitative easing program.
Last week’s news was not high in volume due to the New Year holiday, but it does suggest that a general economic recovery is progressing and that housing markets are leading the “charge!”. Here are the details:
The NAR’s data of month-to-month reading of 0.20 percent showed an increase of 0.20 percent over October’s reading of -1.20 percent, which was the lowest reading for pending home sales in five months.
Lawrence Yun, chief economist for NAR, said that “…the positive fundamentals of job creation and household formation are likely to foster a fairly stable level of contract activity in 2014.”
November’s year-over-year reading for pending home sales was 101.7 against a reading of 103.3 for November 2013. The good news is that November’s reading exceeded a 10-month low of 101.50 for October 2013.
Rapid Rises In Home Prices May Have Peaked
The S&P Case-Shiller 10 and 20- city home price indices for October was released Tuesday with positive results for both indices showing year-over-year gains in average home prices at 13.60 percent.
On an un-adjusted basis, the 10 and 20 city indices each gained 0.20 percent between September and October. The indices each showed a 1.00 percent gain in home prices on a seasonally adjusted annual basis. Case-Shiller cautioned that home prices are expected to rise at single-digit rates during 2014.
Consumer Confidence Rises, Housing And Manufacturing Sectors Improve
December’s consumer confidence reading gained 6.1 points for a reading of 78.1. This also exceeded the expected reading of 76.2.
The prior two months had shown decreased in readings thought to have been caused by the government shutdown in October. Consumers indicated that they are more confident about the economy than they have been in five and a half years.
Housing and manufacturing are leading the recovery, which reflects stronger housing, production and possibly manufacturing jobs, which have lagged behind increased production.
The national unemployment rate stood at 7.00 percent last week, which remains 0.50 percent above the Federal Reserve’s targeted rate of 6.50 percent.
Weekly jobless claims came in lower than expectations of 342,000 jobless claims at 339,000 new jobless claims. The prior week’s reading showed 341,000 new jobless claims.
Although a small decrease in new claims, last week’s reading further suggested that the economic recovery is on track.
Mortgage Rates
Thursday’s mortgage interest rate survey showed incremental increases in mortgage rates; concerns over continued tapering of the Fed’s QE program may have been a factor in the slight uptick in last week’s rates.
Average rates for mortgage loans rose as follows. The rate for a 30-year fixed rate mortgage increased from 4.48 to 4.53 percent with discount points rising from 0.70 percent to 0.80 percent.
The rate for a 15-year fixed rate mortgage was 3.55 percent with discount points unchanged at 0.70 percent. The rate for a 5/1 adjustable rate mortgage rose by five basis points to 3.05 percent with discount points unchanged at 0.40 percent.
Economists seem to agree on continued improvement in the economy for 2014, however rising mortgage rates and high unemployment remain as obstacles for faster economic recovery.
Dec 30, 2013 | Mortgage Rates
The University of Michigan’s Consumer Sentiment Index was improved for December at 82.5, after the November reading was adjusted from 82.5 to 75. Analysts noted that consumers were relieved when legislative gridlock ended.
Durable goods orders reached their highest level since May with November’s reading of + 3.5 percent. Without the volatile transportation sector, the reading for November was +1.2 percent.
This could be a sign of economic recovery for manufacturing, as more orders are being placed. Economists expected an overall increase of 2.0 percent for overall durable goods orders.
The U.S. Commerce Department provided housing markets with good news with its New Home Sales report for November. 464,000 new homes were sold in November against expectations of 440,000 new homes sold.
This expectation was based on the original reading of 444,000 new homes sold in October, which has been revised to 474,000 new homes sold. The latest reading for October is the highest since July of 2008.
While rising mortgage rates slowed home purchases during the summer, analysts note that home buyers seem to be adjusting for higher mortgage rates by purchasing smaller homes in less costly areas.
Home Builder Confidence recently achieved its highest reading since 2005, a further indication of overall economic recovery and housing markets in particular.
After Wednesday’s holiday, the Weekly Jobless Claims report came in with a reading of 338,000 new jobless claims filed. This reading was lower than expectations of 345,000 new jobless claims and significantly lower than the previous week’s report of 380,000 new jobless claims.
This was the largest decrease in new jobless claims since the week of November 17, 2012. After seasonal volatility associated with the holidays, analysts expect new jobless claims to decrease at a slower rate in early 2014,
Freddie Mac released its Primary Mortgage Market Survey on Thursday. Although some economic analysts had expected a jump in mortgage rates after the Fed announced its plan to begin tapering its monthly securities purchases in January, mortgage rates showed little change.
The average rate for a 30-year fixed rate mortgage rose by one basis point to 4.48 percent with discount points unchanged at 0.70 percent. Average 15-year mortgage rates also rose by one basis point to 3.52 with discount points moving up from 0.60 to 0.70 percent.
The average rate for a 5/1 adjustable rate mortgage rose by 4.00 basis points to 3.00 percent, with discount points unchanged at 0.40 percent.
2014 shows promise of a steady economic improvements, and given the latest New Home Sales report, it’s possible that improving housing markets will continue leading the way.
What’s Ahead
As with last week, this week’s schedule of economic events is reduced due to the New Year holiday. Pending home sales for November will be released Monday, Tuesday’s economic reports include The Case/Shiller Housing Market Indices and the Consumer Confidence report.
After the holiday on Wednesday, Thursday’s scheduled reports include the Weekly Jobless Claims and Freddie Mac PMMS on mortgage rates. Construction Spending will also be released. There is no housing or mortgage-related economic reports set for release on Friday.
