Jun 18, 2018 | Financial Reports
Last week’s economic reports included the post-meeting statement by the Fed’s Federal Open Market Committee along with readings on retail sales and inflation. Weekly reports on mortgage rates and new jobless claims were also released.
Fed Raises Key Interest Rate on Strong Economic Indicators
The post-meeting announcement by the Federal Open Market Committee of the Federal Reserve indicated that committee members voted to raise the target federal funds rate to 0.175 to 2.00 percent from the prior rate of 1.50 to 1.75 percent.
The post-meeting announcement cited strong economic conditions and stated that FOMC had altered their outlook from three rate increases in 2018 to four increases. This news is significant to consumers as banks and credit card companies typically raise lending rates in response to Federal Reserve actions.
Committee members were closely divided on interest rate forecasts for 2018. Eight members said that the Fed rate would likely increase four times in 2018 while seven members said three rate increases would be appropriate. The post-meeting statement also cited concerns over inflation and Fed Chair Jerome Powell said that raising interest rates too fast could increase the risk of recession.
Consumer Price Index, Retail Sales Rise in May
The Consumer Price Index rose from 0.10 percent in April to 0.20 percent in May according to the Commerce Department. The Core CPI, which excludes volatile food and fuel sectors, was unchanged at 0.20 percent against expectations of 0.20 percent growth and 0.20 percent in April.
Retail sales rose 0.80 percent in May as compared to expectations of 0.40 percent growth and April’s growth rate of 0.40 percent. Retail sales excluding the automotive sector rose 0.90 percent in May; analysts expected a reading of 0.50 percent based on April’s reading of 0.40 percent growth.
Mortgage Rates Rise, New Jobless claims Fall
Freddie Mac reported higher mortgage rates last week. The average rate for a 30-year fixed rate mortgage averaged eight basis points higher at 4.60 percent; the average rate for a 15-year fixed rate mortgage rose six basis points to 4.07 percent.
Rates for a 5/1 adjustable rate mortgage were nine basis points higher at 3.83 percent on average. Freddie Mac analysts said that demand for homes is holding steady despite higher mortgage rates.
First-time jobless claims fell by 4,000 new claims to 218,000 new claims filed. Analysts expected 225,000 new claims to be filed based on the prior week’s reading of 222,000 new jobless claims filed.
What‘s Ahead
This week’s scheduled economic reports include NAHB Housing Market Indices, Commerce Department readings on housing starts and building permits issued and National Association of Realtors® reports on sales of previously-owned homes. Weekly readings on mortgage rates and new jobless claims will also be released.
Jun 11, 2018 | Financial Reports
Last week’s economic reports included analyst assertions that U.S. housing markets are overvalued in over 50 percent of markets. Weekly reports on mortgage rates and first-time jobless claims were also released.
CoreLogic: Over Half of Top 50 U.S. Housing Markets Overvalued
Rapidly rising home prices are causing some U.S. markets to be overvalued, which means that home prices are higher than a community’s ability to sustain. What goes up must come down in such scenarios, but home prices continue to grow in many areas.
While Boston, Massachusetts and San Francisco, California continued to see rapidly rising home prices, analysts said that residents of the two cities had incomes sufficient to meet the cost of homes. Examples of cities where home prices were overvalued in April included os Angeles, California, Denver, Colorado and Washington, D.C. Supplies of available homes have fallen over the last three years. Real estate pros and analysts continue to cite building more homes is the only solution to the shortage.
The National Association of Realtors® said that although supplies of new homes have increased in recent months, most newly built homes are priced for move-up buyers. Moderate-income and first-time buyers haven’t seen much improvement in available affordable homes. Rising mortgage rates in recent months also presented an obstacle to finding affordable homes.
Mortgage Rates, New Jobless Claims Fall
Freddie Mac reported lower average mortgage rates last week. Rates for a 30-year fixed rate mortgage fell two basis points to 4.54 percent; rates for a 15-year fixed rate mortgage were five basis points lower at an average rate of 4.01 percent. Rates for a 5/1 adjustable rate mortgage averaged 3.74 percent and were six basis points lower. Discount points for 30-year fixed rate mortgages averaged 0.50 percent; discount points for 15-year fixed rate mortgages and 5/1 adjustable rate mortgages averaged 0.40 percent.
First-time jobless claims fell last week despite predictions that they would rise. 222,000 new claims were filed as compared to expectations of 225,000 new claims and the prior week’s reading of 223,000 new claims.
What’s Ahead
This week’s scheduled economic releases include the post-meeting statement from the Federal Reserve’s Federal Open Market Committee, readings on consumer prices and retail sales. Mortgage rates and new jobless claims will also be released.
Jun 4, 2018 | Financial Reports
Last week’s economic reports included readings on Case-Shiller home prices, pending home sales and construction spending. Weekly readings on mortgage rates and new jobless claims were released, along with monthly labor-related reports on job creation and the national unemployment rate.
Case-Shiller: Home Prices Maintain Rapid Growth
S&P Case-Shiller home price indices for March showed home prices continued to grow at blazing rates. Seattle, Washington held on to first place with a seasonally-adjusted annual rate of 13.00 percent; Las Vegas, Nevada reported 12.40 percent growth in home prices in March.
Analysts said Las Vegas markets benefitted from homebuyers relocating from high-priced coastal areas. Las Vegas home prices were 25 percent below their housing bubble peak. San Francisco reported year-over-year home price growth of 11.40 percent
Home prices were driven by short supplies of homes for sale and high demand among buyers, which led to bidding wars in high-demand areas. Rapidly rising home prices sideline first-time and moderate-income buyers who face hurdles of affordability and strict mortgage approval requirements.
While real estate pros and economic analysts expected home price growth to reach a tipping point where demand for homes would slow down, it hasn’t happened yet. Strong economic conditions and jobs data provided first-time buyers incentives to transition from renting to owning.
Pending Home Sales Slow in April
Pending home sales, which are sales under contract but not yet closed, dropped by -1.30 percent in April as compared to the March reading of 0.60 percent. Severe winter weather contributed to the lag, but analysts said severe shortages if available homes squeezed would-be buyers to the sidelines as they waited for more buying options. The National Association of Realtors® said that April’s reading was the third consecutive month of lower pending home sales.
Construction spending rose by 1.80 percent in April and surpassed expectations of a one percent increase and the negative March reading of -1.70 percent. This could be a hopeful sign if accelerated spending is due to growing construction projects, but ongoing concerns over increased materials and labor costs may have contributed to builders’ cash outlay.
Mortgage Rates, Weekly Jobless Claims Fall
Mortgage rates eased last week, with average rates lower across the board. Freddie Mac reported the rate for a 30-year fixed rate mortgage fell by 10 basis points to 4.56 percent. The average rate for a 15-year fixed rate mortgage was nine basis points lower at 4.06 percent; rates for 5/1 adjustable rate mortgages averaged 3.80 percent and were seven basis points lower. Discount points averaged 0.40 percent for fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.
First-time jobless claims fell last week to 221,000 claims filed. Analysts expected 225,000 new claims filed based on the prior week’s reading of 234,000 new claims filed. May payroll reports supported stronger labor markets as ADP reported 178,000 jobs added as compared to 163,000 private-sector jobs added in April. Non-farm payrolls, which measure private and public-sector job growth, rose by 223,000 jobs in May as compared to 159,000 jobs added in April. The highlight of May labor reports was an 18-year low of 3.80 percent national unemployment rate for May.
What‘s Ahead
This week’s scheduled economic reports include readings on job openings, mortgage rates and new jobless claims.
May 21, 2018 | Financial Reports
Last week’s economic releases included the National Association of Home Builders Housing Market Index for May, Commerce Department reports on housing starts and building permits issued. Weekly readings on mortgage rates and first-time jobless claims were also released.
Home Builder Confidence Rises in May
According to the National Association of Home Builders, home builders surveyed indicated higher confidence in housing market conditions for May. April’s reading was downwardly revised to an index reading of 68; analysts expected a reading of 69. May’s home builder confidence reading was 70. Any reading over 50 indicates that more builders consider housing market conditions to positive.
Three-month rolling readings for regions showed mixed results in May. Northeast and Western regions were unchanged with index readings of 55 and 76 respectively. Midwestern and Southern regions posted a one-point drop with respective index readings of 65 and 92. The NAHB cited high lumber prices as a concern and said that rising materials costs were impacting builders’ ability to produce affordable housing for first-time buyers.
Both housing starts and building permits issued were lower in April than for March; The Commerce Department reported1.287 million housing starts in April as compared to 1.336 million starts in March. Housing starts are calculated on a seasonally-adjusted annual basis. Although housing starts were 3.70 percent lower in April, analysts said there was little concern as the rate of housing starts remained near the highest levels in 11 years.
April’s decline in housing starts was attributed to volatile multi-unit projects; construction rates for single-family homes were little changed. The South reported an increase in housing starts as all other regions reported fewer housing starts. Builders said that labor shortages continue to impact construction rates. Analysts expected construction rates to expand throughout 2018 as demand for homes rises. Building permits issued fell in April to a seasonally-adjusted annual rate of 1.352 million from the March reading of 1.377 million permits issued.
Mortgage Rates, New Jobless Claims
Mortgage rates rose to their highest level in seven years. Rates for a 30-year fixed rate mortgage were six basis points higher and averaged 4.61 percent. The average rate for a 15-year fixed rate mortgage was seven basis points higher at 4.08 percent. Mortgage rates for a 5/1 adjustable rate mortgage averaged five basis points higher at 3.82 percent. Discount points averaged 0.40 percent for fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.
First-time jobless claims rose to 222,000 new claims last week as compared to 211,000 new claims filed the prior week. Analysts expected 215,000 new claims filed.
What‘s Ahead
This week’s economic releases include readings on sales of new and previously-owned homes and consumer sentiment. Weekly readings on mortgage rates and new jobless claims will also be released.
May 7, 2018 | Financial Reports
Last week’s economic releases included readings on inflation, construction spending and private and public- sector payrolls. Weekly readings on mortgage rates and first-time jobless claims were also posted.
Inflation Meets Fed Goal, Construction Spending Lower
March inflation reached a year-over-year rate of two percent, which is the Federal Reserve’s goal for inflation. Inflation rose by 0.20 percent in March to 0.40 percent; analysts expected inflation to rise 0.50 percent. Core inflation, which excludes volatile food and energy sectors, met expectations with 0.20 percent growth.
Construction spending was lower in March with a negative reading of -1.70 percent. Analysts predicted an increase of 0.50 percent based on February’s one percent increase in construction spending. Construction costs were five percent higher year-over-year, and builders cited long-standing concerns with lot shortages. Tariffs on building materials fueled rising materials costs. Analysts said construction spending remains strong.
Mortgage Rates, Jobs Data Mixed
Freddie Mac reported lower mortgage rates last week as the average rate for a 30-year fixed rate mortgage dropped three basis points to 4.55 percent. Rates or a 15-year fixed rate mortgage were one basis point higher at 4.03 percent. Rates for a 5/1 adjustable rate mortgage averaged five basis points lower at 3.69 percent.
The Federal Reserve’s Federal Open Market Committee elected not to raise the target federal funds rate from its current range of 1.50 to 1.75 percent; when fed rates are raised, private lenders including mortgage banks typically raise home loan rates.
New jobless claims were lower last week with 211,000 new claims filed. Analysts expected 225,000 new claims based on the prior week’s reading of 209,000 new jobless claims.
ADP Payrolls reported 204,000 private-sector jobs added in April as compared to the March reading of 228,000 jobs added. The Commerce Department reported 164,000 public and private sector jobs added in April, which was lower than expectations of 184,000 jobs added. The national unemployment rate for April dipped to 3.90 percent as compared to expectations of 4.0 percent and March’s reading of 4.10 percent.
What‘s Ahead
This week’s economic readings include job openings, mortgage rates and new jobless claims. The University of Michigan will also release its monthly Consumer Sentiment Index.
