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Existing Home Sales Jump, Builder Confidence Holds Steady


2016
04.22

Home buyers kicked the spring home shopping season into gear and boosted sales of pre-owned homes in March. Existing home sales rose 5.10 percent in March according to the National Association of Realtors®. 5.33 million pre-owned homes were sold in March against expectations of 5.30 million sales and February’s reading of 5.07 million sales on a seasonally adjusted annual basis.

Demand for homes remains strong in spite of rapidly escalating prices in many areas. Short supplies of available homes continue to drive demand and home prices. Sales rose only 1.50 percent year-over-year, but during the first quarter of 2016, existing home sales rose by 4.80 percent as compared to the first quarter of 2015. Sales were 11.11 percent higher in the Northeast, which was a notable improvement over lagging sales in recent months.

There was a 4.50 month supply of available homes in March and the median price of an existing home rose 5.70 percent to $222,700. NAR Chief Economist Lawrence Yun noted that the annual increase in home prices was more than twice the rate of average wage increases. First-time home buyers represented 30 percent of buyers in March; this was the same percentage as February. First-time and moderate income buyers continue to face challenges due to rapidly rising home prices competition for available homes.

NAHB: Home Builder Confidence Unchanged in March

According to the National Association of Home Builders Housing Market Index for March, home builder confidence remained at 58 for the third consecutive months. Any reading over 50 indicates that more builders are confident about current market conditions than not.

Builder confidence in current market conditions fell two points to 63 while builder confidence rose 1 point to 62 for market conditions in the next six months. Builder confidence in buyer traffic for new home developments also rose one point to 44. Readings for buyer traffic have not exceeded 50 for approximately 10 years. NAHB Chief Economist Robert Dietz characterized home builder sentiment as “cautiously optimistic.”

Challenges facing home builders include a short supply of labor; the number of job vacancies reached a post-recession high in February. All four regional builder confidence readings declined in April; the Northeast lost two points for a reading of 44. The Midwest and South each lost one point for readings of 57 and 58 respectively. The Western region posted a loss of two points for a reading of 67.

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What’s Ahead For Mortgage Rates This Week – April 18, 2016


2016
04.18

What's Ahead For Mortgage Rates This Week - April 18, 2016

Last week’s scheduled economic releases included reports on retail sales, inflation and the Federal Reserve’s Beige Book report. Weekly reports on mortgage rates and new jobless claims were also released. The Consumer Financial Protection Bureau announced a limited program for reducing principal on eligible mortgages held by Fannie Mae and Freddie Mac. This program is intended to resolve remaining “underwater” mortgages on homes worth less than their current mortgage amounts.

Retail Sales Fall, Inflation Rises

Retail sales fell in March to close out a weaker than expected first quarter 2016. Retail sales fell 0.30 percent in March as compared to expectations of a 0.10 percent increase and February’s flat reading. Analysts said consumers were reluctant to spend in spite of improving job markets and household finances. Retail sales rose by 1.70 percent year-over-year, a reading categorized as “weak” by analysts.

Hiring for lower wages and fewer hours worked was seen as contributing to consumers’ reluctance to spend, especially on big-ticket items including vehicles. Retail sales excluding auto sales were 0.20 percent higher than in February, but did not meet the expected reading of 0.50 percent and incrementally exceeded February’s reading, which was unchanged from January.

Inflation rose by 0.10 percent in March against expectations of 0.20 percent and February’s negative reading of -0.70 percent. Core inflation readings that exclude volatile food and energy sectors mirrored the Consumer Price Index with 0.10 percent growth against an expected reading of 0.20 percent and February’s Core Consumer Price Index reading of 0.30 percent. Lagging inflation is largely attributed to lower fuel prices, but this doesn’t impact the Core CPI reading.

Fed Beige Book: Economy Recovering at Modest to Moderate Rate

According to the Federal Beige Book report for March, business contacts surveyed by the Federal Reserve suggested that increases in wages and oil prices should bump up the economy, but the Fed expects economic expansion to increase at a “modest to moderate” rate for the long term. Employers noted difficulties in hiring for low and high skilled jobs in some areas, and retailers were optimistic about sales for the rest of 2016.

In general, the Fed has adopted a cautious approach to raising its target federal funds rate. Fed Chair Janet Yellen repeatedly cited concerns over global risks for scaling back Fed rate increases from four to two in 2016.

Mortgage Rates, Jobless Claims Fall

Freddie Mac reported the lowest mortgage rates for 2016; rates were also their lowest since May 2013. The average rate for a 30-year fixed rate mortgage fell one basis point to 3.58 percent; the average rate for a 15-year fixed rate mortgage fell two basis points to 2.86 percent. The average rates for a 5/1 adjustable rate mortgage also slipped two basis points to 2.84 percent. Discount points were 0.50, 0.40 and 0.50 percent respectively.

In unrelated mortgage news, the Consumer Financial Protection Bureau announced a limited program for reducing mortgage balances for eligible mortgages owned by Fannie Mae and Freddie Mac that exceed home values. Mortgage lenders will notify eligible homeowners by December 31.While limited in scope, this program is expected to prevent foreclosure of eligible properties that cannot be sold or refinanced.

Jobless claims fell to 253,000 new claims last week, which was lower than the expected reading of 270,000 new jobless claims and the prior week’s reading of 266,000 new claims. Coupled with the Beige Book findings that employers are facing shortages of qualified workers, this low reading appears to further support improving economic conditions.

Whats Ahead

Next week’s scheduled economic releases include the National Association’s Home Builders Housing Market Index along with Commerce Department reports on housing starts and building permits. The National Association of Realtors® will also release its Existing Home Sales Report.

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What’s Ahead For Mortgage Rates This Week – April 11, 2016


2016
04.11

What’s Ahead For Mortgage Rates This Week – April 11, 2016Last week’s economic news included minutes of the most recent Federal Open Market Committee (FOMC) meeting. Weekly reports on mortgage rates and new jobless claims were also released.

FOMC Minutes Indicate Fed Not Pressing Rate Increases

Minutes of the FOMC meeting held March 15 and 16 suggest that FOMC members are easing their enthusiasm for raising the target federal funds rate. In recent months, the committee has indicated that it was leaning toward raising rates on a slow but steady pace. Ongoing concerns over changing global economic and financial conditions contributed to FOMC’s decision not to raise the key federal funds rate. Low energy prices continue to cause U.S. inflation to stay below the Fed’s goal of two percent, which suggests that the economy is not recovering as fast as originally expected.

Labor markets continued to improve as the national unemployment rate held steady at 4.90 percent in February. FOMC noted that the labor force participation rate and employment to population ratio increased. The four-week moving average of new jobless claims fell in March after increasing in February. These readings support continued expansion of labor markets.

Housing markets and household spending improved. Committee members characterized developments in labor and housing markets as “broadly consistent” with earlier expectations. Some housing markets connected with energy production weakened. FOMC members elected to maintain the target federal funds rate at a range of 0.25 to 0.50 percent. Global financial and economic developments were cited as contributing to the Committee’s decision not to raise its target rate.

Mortgage Rates, Weekly Jobless Claims Lower

Mortgage rates fell across the board last week. According to Freddie Mac’s weekly survey of mortgage rates, the average rate for a 30-year fixed rate mortgage dropped to 3.59 percent from the previous week’s reading of 3.71 percent. The average rate for a 15-year fixed rate mortgage dropped 10 basis points to 2.88 percent; the average rate for a 5/1 adjustable rate mortgage dropped to 2.82 percent from 2.90 percent. Average discount points held steady at 0.50, 0.40 and 0.50 percent respectively. Last week’s mortgage rates were the lowest in 14 months.

Analysts said this news was positive in the sense that lower rates make mortgages more affordable, but more home buyers entering the market would further increase demand for homes. Low inventories of homes and high demand have fueled higher home prices in many areas.

Weekly jobless claims fell to 267,000 new claims against expectations of 268,000 new claims and the prior week’s reading of 276,000 new jobless claims. New jobless claims remained below the benchmark of 300,000 new claims for the 57th consecutive week.

What’s Ahead This Week

This week’s scheduled economic news releases include retail sales, the Fed’s Beige Book report, the consumer price index and core consumer price index. Weekly jobless claims and Freddie Mac’s mortgage rates report will be released as usual on Thursday.

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What’s Ahead For Mortgage Rates This Week – April 4, 2016


2016
04.04

What's Ahead For Mortgage Rates This Week - April 4, 2016Last week’s economic calendar was full of new releases including pending home sales, Case-Shiller Home Price Indices and construction spending. Labor related reports including ADP payrolls, federal Non-farm payrolls, and the national unemployment rate were also released along with reports on consumer confidence and weekly reports on mortgage rates and new unemployment claims.

Case-Shiller: January Home Prices Up 5.7% Year-Over-Year

According to the S&P Case-Shiller 20-City Home Price Index for January, home prices increased by 5.70 percent year-over-year. The West led price increases with double-digit price gains posted for San Francisco, California, Portland, Oregon and Seattle, Washington. Denver, Colorado also posted a double-digit gain, but dropped its recent lead for metro areas tracked by the 20-City Index.

The National Association of Realtors (NAR) reported better than expected growth in February pending home sales. Low mortgage rates pushed pending home sales to their highest rate in seven months. Pending home sales rose 3.50 percent in February, which exceeded the expected reading of 1.80 percent and January’s reading of 03.00 percent. NAR Chief Economist Lawrence Yun said that February’s reading indicated that housing markets may be recovering after choppy winter sales. Mr. Yun also noted a “slight uptick in inventory,” which is good news for housing markets currently experiencing low inventories of homes for several months or more.

S&P Index Committee Chair David M Blitzer echoed Mr. Yun’s remarks about the impact of low inventories of homes for sale. While higher home prices driven by low inventories benefit home sellers, there comes a point where potential buyers cannot find and / or afford available homes. Constructing new homes is the only immediate solution to increasingly limited supplies of homes for sale.

Construction spending slipped in February from January’s upwardly revised $1.150 trillion on a seasonally-adjusted annual basis. February’s reading was $1.144 trillion. Construction spending fell 0.50 percent as compared to analysts’ expectations of 0.20 percent. Year-over-year, construction spending was 10.30 percent higher in February.

Mortgage Rates Mixed, New Jobless Claims Rise

Freddie Mac’s weekly mortgage rates survey reported mixed results last week. The average rate for a 30-yar fixed rate mortgage held steady at 3.71 percent; the average rate for 15-year fixed rate mortgages rose by two basis points to 2.98 percent and the rate for 5/1 adjustable rate rose by one basis point to 2.90 percent. Average discount points were unchanged across the board at 0.50, 0.40 percent and 0.50 percent respectively.

New unemployment claims rose to 276,000 against an expected reading of 270,000 new claims and 265,000 new claims the prior week.

The Bureau of Labor Statistics reported fewer jobs created in March than for February. 215,000 jobs were added in March as compared to the expected reading of 203,000 new jobs and February’s reading 245,000 new jobs. ADP reported a lower reading of 200,000 private sector jobs added as compared to expectations of 205,000 jobs added and February’s reading of 205,000 private sector jobs added. The national unemployment rate ticked up to 5.0 percent over February’s reading of 4.90 percent.

Consumer confidence rose over two percent in March with a reading of 96.20 percent. Analysts expected a reading of 94.20 based on February’s reading of 94.00.

What’s Ahead This Week

Economic reports scheduled this week include job openings and weekly reports on mortgage rates and new jobless claims.

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Case-Shiller Report Shows Home Prices Rose in January


2016
03.30

Case-Shiller Report Shows Home Prices Rose in JanuaryHome prices were 5.70 percent higher year-over-year in January according to S&P Case-Shiller’s 20-City Home Price Index. Top year-over-year gains were posted by Portland, Oregon at 11.80 percent, San Francisco, California at 10.80 percent and Seattle Washington posted a year-over-year gain of 10.70 percent. Denver, Colorado, which had top gains in recent months, posted year-over-year home price growth of 10.20 percent.

Lowest year over-year gains for January were posted by Chicago, Illinois at 2.10 percent, Washington, D.C at 2.20 percent and New York, New York at 2.80 percent.

Average home prices remained about 12 percent below their summer 2006 peak, but have recovered to 2007 levels.

Rising Home Prices and Short Inventory of Homes Impacts Buyers and Sellers

David M Blitzer, Managing Director and Chair of the S&P Indices Committee expressed concerns over rapidly rising home prices and the shortage of available homes. Mr. Blitzer said “would-be sellers seeking to trade up are having a hard time finding a new larger home.” Analysts also noted that home prices are escalating faster than wages, which were growing at a rate of 2.20 percent annually as of February.

New construction is not keeping up with demand; the current supply of available homes is below the normal six month inventory. Mr. Blitzer said that home building is the segment of the housing sector that creates economic growth.

Rapidly rising home prices and low inventories of available homes are potentially sidelining first-time and moderate income buyers. This trend also sandwiches homeowners who want to buy larger homes between a short supply of available homes and finding qualified buyers for their current homes. Mr. Blitzer said that high amounts of education debt and consumer debt are contributing to younger buyers’ inability to qualify for mortgages. Mortgage lenders have loosened mortgage qualification requirements somewhat, but Mr. Blitzer said that lenders haven’t forgotten what happened 10 years ago; they remain reluctant to further ease lending requirements.

Pending Home Sales Rise in February

In related news, the National Association of Realtors reported that pending home sales rose 3.50 percent in February as compared to an expected reading of 1.80 percent and January’s negative reading of -3.0 percent February’s reading for pending home sales was the highest in seven months.

Analysts and real estate pros use pending home sales readings s as indications of future closings and mortgage loan activity.

NAR Chairman Lawrence Yun cited lower mortgage rates as the driving force behind February’s jump in pending home sales. Mr. Yun said that building more homes is essential for boosting home sales; he cautioned that failure to increase the current supply of available homes could cause home sales to “plateau.”

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What’s Ahead For Mortgage Rates This Week – March 28, 2016


2016
03.28

What's Ahead For Mortgage Rates This Week - March 28, 2016Increasing Home Prices Good For Sellers

The National Association of Realtors (NAR) reported lower sales of pre-owned homes in February. Would-be buyers were discouraged by rapidly rising home prices. Short supplies of available homes sidelined potential buyers as higher home prices and cash buyers squeeze out buyers who need mortgages to buy homes. Multiple offers resulting in bidding wars have also deterred buyers in high demand markets. According to NAR’s February report, sales of existing homes fell 7.10 percent to their lowest level since November.

NAR has predicted that rapidly rising home prices would eventually damage housing markets. While analysts weren’t certain whether February’s report indicated a temporary lull due to weather and anomalies related to new closing regulations and seasonal influences, NAR Chief Economist Lawrence Yun said, “The main issue continues to be a supply and affordability problem. Finding the right property at an affordable price is burdening many potential buyers.”

During the housing bubble, buyers jumped into the market as speculators or to buy before home prices increased beyond their reach. NAR surveyed renters last week and found that the percentage of renters who believed that it’s currently a good time to buy a home decreased.

Respondents to Fannie Mae’s February Home Purchase Sentiment Index forecasted a 1.70 percent increase in home prices year-over-year. One year ago, respondents expected home prices to increase by 2.50 percent year-over-year. This may suggest that home prices are cooling. This can be expected as the number of buyers declines as home prices become increasingly unaffordable.

New Home Sales Up in February

New home rose in February according to the Commerce Department. Based on a revised reading of 502,000 new home sales in January, February’s reading was 2.00 percent higher than January’s reading, but was 6.10 percent lower than for February 2015.

Builders have held back on increasing construction due to concerns about ups and downs in the economic recovery. Short supplies of labor and available land have also kept home builders from meeting current demand.

Mortgage Rates Trend Lower

According to Freddie Mac, average mortgage rates fell across the board last week. The rate for a 30-year fixed rate mortgage fell by two basis points to 3.71 percent; the rate for a 15-year fixed rate mortgage fell three basis points to 2.96 percent and the rate for a 5/1 adjustable  rate mortgage fell four basis points to 2.89 percent.

New jobless claims rose to 265,000 from the prior week’s reading of 259,000 new claims. Last week’s reading matched analyst expectations.

Whats Ahead This Week

This week’s scheduled economic news includes reports on inflation, pending home sales, Case-Shiller’s Home Price Index reports and government and private sector employment data. Weekly reports on mortgage rates and new jobless claims are also scheduled. 

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What’s Ahead For Mortgage Rates This Week – March 21, 2016


2016
03.21

What's Ahead For Mortgage Rates This Week - March 21, 2016Housing Starts Up in February

Shortages of available homes are a major factor in rising home prices; shortages also make it more difficult for buyers to find homes they want. Housing starts in February rose, which is good news for the peak spring and summer home buying season. Other housing related news released last week included the Fed’s decision not to raise the target federal funds rate and Housing Starts and Building Permits reports issued by the Commerce Department. Consumer Sentiment was also released along with regularly scheduled releases on mortgage rates and weekly unemployment claims.

Builder Confidence Holds Steady, Real Estate Pros Call for More Construction

According to the NAHB/Wells Fargo Housing Market Index for March, home builder confidence held steady at a reading of 58. Analysts expected an uptick to 59 based on February’s reading of 58. Any reading above 50 indicates that more builders have confidence in housing market conditions than those who do not. The overall HMI reading is based on three components including builder perception of current market conditions, market conditions within the next six months and buyer foot traffic in new home developments.

Builder confidence in current market conditions held steady at a reading of 65. Builder confidence in market conditions within the next six months dropped three points to 65. Builder confidence in buyer foot traffic increased four points to a reading of 43. Confidence in buyer foot traffic has not topped a reading of 50 since 2005.

High demand for homes coupled with a short supply of affordable suburban single family homes compelled NAR Chief Economist Lawrence Yun to comment, “Imbalances in supply and demand and unhealthy levels of price growth in several metro areas have made buying a home an onerous task for far too many first-time buyers and middle class families.” Mr. Yun called for builders to double their focus on building single family homes.

Housing Starts Hit 9-Year High in February

Reports on housing starts and building permits issued indicate good news for the shortage of available homes.

The Commerce Department reported that housing starts rose from January’s reading of 1.120 million starts to an annual level of 1.178 million starts. Analysts expected a reading of 1.153 million starts. Building permits also increased from January’s reading of 1.120 million permits to 1.167million permits issued. Analysts forecasted a reading of 1.210 million in February.

Mortgage Rates Rise, Fed Holds Interest Rate Steady

The Federal Reserve announced its decision not to raise the target federal funds rate on Wednesday. The current rate is 0.250 to 0.50 percent. Policymakers cited concerns over global economic developments as a reason for their decision. This decision quickly showed an impact on Thursday. Freddie Mac reported average rates rose across the board. The rate for a 30-year fixed rate mortgage rose five basis points to 3.73 percent. 15-year mortgage rates averaged 2.99 percent, which was three basis points higher than the prior week’s reading. The average rate for a 5/1 adjustable rate mortgage rose by one basis point to 2.93 percent. Discount points averaged 0.50, 0.40 and.50 respectively.

Weekly jobless claims rose to 268,000 against expectations of 268,000 new claims and the prior week’s reading of 258,000 new jobless claims.

Consumer sentiment dropped to 90.00 in March against an expected reading of 92.10 and February’s reading of 91.70. Consumer outlook is important to housing markets as the decision whether or not to buy a home is typically based on potential buyers’ evaluations of job stability and affordability of available homes.

What’s Ahead This Week?

This week’s scheduled economic releases include reports on new and existing home sales as well as usual weekly releases on mortgage rates and new jobless claims.

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Fed Policymakers Make Interesting Decision on Interest Rates


2016
03.17

Fed Policymakers Make Interesting Decision on Interest RatesAccording to a press release by the Federal Reserve, the Federal Open Market Committee (FOMC), the current target federal funds rate will hold steady at  0.25 to 0.50 percent. Committee members cited positive developments in the U.S economy including jobs growth, stronger labor markets and gradually increasing inflation. In addition, stronger housing sector and household spending were also noted as positive signs for the economy. Committee members cited risks associated with global economic and financial developments as a concern.

FOMC members are guided in decision making by the Federal Reserve’s dual mandate of maximum employment and price stability. Inflation remains below the committee’s longer-term goal of 2.00 percent; FOMC members attributed slow inflation growth to lower energy prices. The Fed described its current monetary policy stance as “accommodative” and expects it to remain so until inflation reaches 2.00 percent.

Analysts said that the Fed has scaled back its forecast for rate increases from four increases to two increases in 2016, but any actions will depend on FOMC review of current and expected domestic and global factors. Fed Chair Janet Yellen previously cited turbulent market conditions as “significantly” tightening financial conditions due to lower stock prices.

Fed Chair  Janet Yellens Press Conference

Fed Chair Janet Yellen explained policy makers’ decision not to raise the target federal funds rate in a press conference after the FOMC statement. Chair Yellen responded to media representatives’ questions about FOMC’s views on inflation and unemployment, zero or negative interest rates and uncertainty about China’s economy

Ms. Yellen cautioned against over-emphasis of the relationship between unemployment and inflation as employment rates only modestly impacts tracking inflation indicators as they relate to wages and prices. In her remarks about the decision not to raise the target federal funds rate, Chair Yellen cited uncertainty about China’s economy as a factor in the decision not to raise the benchmark federal funds rate.

The U.S. economy is strengthening as Europe and Japanese economies wane. Chair Yellen indicated that although global economic decisions influence U.S. monetary policy, that U.S. decisions are not based solely on global economic and financial developments.

In response to a question about whether the FOMC has considered the effects of zero to negative interest rates used by Japan and other nations, Chair Yellen said that committee members were not actively considering or discussing negative interest rates in view of improving economic conditions. Ms. Yellen said that Japan incorporated negative interest rates but did not realize the desired effect of increasing inflation.

Media analysts said that a rate increase in April’s FOMC meeting seems unlikely, but with world-wide economic conditions changing quickly, such, forecasts can’t be cast in cement.

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What’s Ahead For Mortgage Rates This Week – March 14, 2016


2016
03.14

What's Ahead For Mortgage Rates This Week - March 14, 2016Last week’s economic news included Fannie Mae’s Home Purchase Sentiment Index along with weekly reports on mortgage rates and new jobless claims. The City of Detroit also announced a program to help would-be buyers purchase homes that do not qualify for mortgage loans due to severe damage.

Fannie Mae: Home Buyer Sentiment Index Rises

Fannie Mae’s Home Buyer Sentiment Index (HBSI) gained 1.20 percent for an overall reading of 82.70 percent for February. The index reading is calculated using responses to several questions contained in Fannie Mae’s National Housing Survey. HBSI components include consumer responses to questions about whether it’s a good or bad time to sell or buy a home, consumer expectations concerning whether home prices and mortgage rates will rise, whether respondents expected to keep or lose their jobs, and consumer outlook for their income to significantly increase year-over-year.

The HBSI is designed to assess consumer attitudes about housing markets and their decisions about buying a home.

Mortgage Rates Rise, Weekly Jobless Claims Fall

Freddie Mac reported that average mortgage rates rose across the board last week. The average rate for a 30-year fixed rate mortgage rose four basis points to 3.68 percent; the average rate for a 15-year mortgage rose two basis points to 2.96 percent and the average rate for a 5/1 adjustable rate mortgage was eight basis points higher at 2.92 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

New jobless claims dropped to a five-month low last week with a reading of 259,000 new claims filed as compared to expectations of 275,000 new claims and the prior week’s reading of 277,000 new claims. New claims readings under 300,000 new claims indicate a healthy labor market; new claims readings have held below the 300,000 benchmark for more than a year. The lowest reading of 256,000 new jobless claims occurred in October 2015.

City of Detroit Addresses Problems with Ravaged Homes

The City of Detroit announced a program designed to facilitate the purchase and rehabilitation of vacant and damaged homes that do not meet appraisal requirements for traditional home loans. While many markets have recovered from the Great Recession, housing markets such as Detroit have languished due to the lack of financing options. The program offers mortgages to cover the home purchase and second mortgages up to $75,000 for repairs and renovation. Program administrators say they plan to issue 1000 loans over the next three years. This type of program may help struggling housing markets recover while providing homeownership opportunities to those who could not otherwise afford to buy a home.

What’s Ahead This Week

This week’s scheduled economic events include the National Association of Home Builders/Wells Fargo Housing Market Index, federal reports on housing starts and building permits issued. The Federal Reserve will release its usual post-meeting statement after its Federal Open Market Committee meeting. Fed Chair Janet Yellen will also hold a press conference.

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What’s Ahead For Mortgage Rates This Week – March 7, 2016


2016
03.07

What's Ahead For Mortgage Rates This Week - March 7, 2016Week in Review

Last week’s scheduled economic news included reports on pending home sales, construction spending and several jobs related readings including ADP Payrolls, the government’s Non-Farm Payrolls and the national unemployment rate.

Mortgage Rates, Weekly Unemployment Claims Rise

Mortgage rates rose across the board according to Freddie Mac’s weekly report. The average rate for a 30-year fixed rate mortgage rose two basis points to 3.64 percent; the average rate for a 15-year fixed rate mortgage rose by one basis point to 2.94 percent and the average rate for a 5/1 adjustable rate mortgage rose five basis points to 2.84 percent. Discount points were consistent at 0.50 percent for all three types of home loans.

Weekly jobless claims also rose to 278,000 new claims as compared to expectations of 270,000 new claims and the prior week’s reading of $272,000 new jobless claims. While an increase in new unemployment claims may seem discouraging, new claims for unemployment remain near pre-recession lows.

The four-week rolling average of new jobless claims dropped by 1750 claims to 270,250 and reached its lowest reading in three months. Analysts view the four-week reading as more reliable than week-to-week readings that can be volatile.

Pending Home Sales and Construction Spending

In other news, pending home sales fell by 2.50 percent as compared to December’s reading. Analysts expected an increase in pending sales of 0.50 percent; December’s reading was 0.10 percent higher than for November. Pending home sales represent sales contracts that have not yet closed and are considered an indicator of future closings and mortgage activity.

Home sales have been impacted in recent months by a shortage of available homes; this creates a backlog of would-be buyers who can’t find homes they want to buy and also causes rapidly escalating home prices in desirable areas. Bidding wars and cash sales can sideline buyers who can’t pay cash or are whose offers are outbid.

Analysts say that new home construction is a key component of easing the housing shortage. Construction spending increased by 1.50 percent in January, but month-to-month spending for residential projects was flat in January. Spending for residential projects was 7.60 percent higher year-over-year.

Labor Reports Reflect Stronger Economy

Federal and private sector reports on jobs indicate that job growth continues. The Department of Commerce reported that Non-Farm Payrolls grew by 242,000 jobs in February, which was higher than expectations of 195,000 new jobs and January’s reading of 172,000 new jobs. According to ADP, which tracks private sector payrolls, 214,000 new jobs were created in February as compared to expectations of 185,000 new jobs and January’s reading of 193,000 new jobs.

Improving jobs markets are a positive indicator for housing markets as stable employment is important to home buyers’ ability to qualify for mortgages. The National Unemployment Rate remained stable in February with a reading of 4.90 percent; the expected reading and prior month’s reading were also 4.90 percent.

Whats Ahead

Next week’s scheduled economic reports include the NFIB Small Business Index and February’s Federal Budget along with regularly scheduled weekly reports on mortgage rates and new unemployment claims.