What’s Ahead For Mortgage Rates This Week – May 30, 2017

Sales of new and previously owned homes were lower in April after reaching near-record levels in March. Mortgage rates were lower last week and new jobless claims were little changed.

New Home Sales Fall in April; March Reading Revised

New home sales were lower in April after moving higher in March. The Commerce Department revised March figures for new home sales to 642,000 sales on a seasonally-adjusted annual basis. April sales of new homes fell by 11.40 percent to 569,000 new home sales, which fell shy of 605,000 expected sales in April. Sales of new homes reported by the government are based on small samples and are frequently revised, so a month-to-month readings are subject to change. New home sales were 11 percent higher for the first four months of 2017 than for the same period in 2016.

Home prices are showing signs of cooling; the median price for a new home fell to $309,000 in April as compared to $318,700 in March. Lower prices increase affordability and may encourage more buyers into the market. In March, there was a 4.9 percent supply of available homes as compared to April’s 5.70 months inventory. Real estate pros typically consider a 6- month supply of available homes a good balance between homes available and prospective buyers.

The National Association of Realtors® reported fewer sales of pre-owned homes in April than for March. 5.57 million pre-owned homes were sold in April as compared to an expected reading of 5.60 million sales. Projected sales were based on 5.70 million sales of previously owned homes in March. Low inventories of homes for sale has stifled demand as would-be buyers wait for a larger choice of homes.

Mortgage Rates Lower

Freddie Mac reported lower mortgage rates across the board for the three types of mortgages reported. The average rate for a 30-year fixed rate dropped seven basis points to 3.95 percent; the rate for a 15-year fixed rate mortgage was eight basis points lower at 3.19 percent and the average rate for a 5/1 adjustable rate mortgage fell six basis points to 3.07 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

New jobless claims rose from the prior week’s reading of 233,000 new claims to 234,000 new claims filed last week.

Whats Ahead

This week’s scheduled economic news includes readings on inflation, core inflation, Case-Shiller Home Price Indices, and construction spending. Pending home sale and multiple labor-related reports will be released along with weekly readings on mortgage rates and new jobless claims.

What’s Ahead For Mortgage Rates This Week – May 22, 2017

Last week’s economic reports included readings from the National Association of Home Builders, Commerce Department readings on housing starts and building permits and weekly reports on mortgage rates and new jobless claims.

NAHB Housing Market Index Rises, Exceeds Expectations

Builder Sentiment rose two points in May, which exceeded expectations of no change to April’s reading of 68. Builders and analysts said that short inventories of available homes continue to drive demand for new homes. While index readings jumped immediately after the Presidential election in November, builder enthusiasm settled when tariffs on lumber were increased.

Two of three components used in calculating the NAHB Housing Market Index reading. Builder confidence in current housing market conditions gained two points to a reading of 76; Confidence in market conditions over the next six months gained four points to 79. The reading for buyer traffic in new home developments fell one point to 51. Any reading over 50 is considered positive in NAHB HMI reports.

Housing Starts, Building Permits Lower in April

Despite rising home builder confidence in current and future housing markets, housing starts and building permits issued were lower in April than for March. According to the Commerce Department, 1.172 million homes were started in April as compared to 1.203 million housing starts reported in March; April’s housing starts were 0.070 percent higher year over year. Analysts had expected a reading of 1,259 million starts, which are calculated on a seasonally-adjusted annual basis.

Builders started single-family homes at a seasonally- adjusted annual pace of 835,000 homes in April, which indicated that builders may be gaining confidence in building homes for sale as compared to rental units. Building permits were issued at a pace of 1,229 million on a seasonally-adjusted annual basis; this was lower than the March reading of 1.260 million permits issued.

 The apparent lag between strong builder sentiment and housing starts and permits could be due to ongoing concerns over increasing materials prices and shortages of buildable lots and labor needed to ramp up home construction.

Mortgage Rates, Weekly Jobless Claims Fall

Mortgage rates fell last week. Freddie Mac reported that the average rate for a 30-year fixed rate mortgage averaged three basis points lower at 4.02 percent. Rates for a 15-year fixed rate mortgage averaged 3.27 percent, a drop of two basis points over the prior week. Mortgage rates for a 5/1 adjustable rate mortgage averaged 3.13 percent, which was one basis point lower than the prior week. Discount points were unchanged at an average of 0.50 percent for all three mortgage types reported.

New jobless claims were lower than expected last week, with 232,000 new claims filed as compared to 240,000 new claims expected and 236,000 claims reported the prior week. Low readings for new unemployment claims suggest strong jobs markets, but can be volatile and subject to adjustment.

Whats Ahead

This week’s scheduled economic reports include readings on new and existing home sales and consumer sentiment. Mortgage rates and new jobless claims will also be released.

NAHB: Home Builder Confidence Rises in May

The National Association of Homebuilders reported a two-point increase in builder confidence in May. The NAHB Housing Market Index reading increased from 68 in April to 70, which was the second-highest reading since the economic recovery started. May’s reading exceeded analyst expectations of a flat reading for May. Builder confidence rose as demand for homes continued to rise; this factor overrode builder obstacles including higher prices for lots and ongoing labor shortages. A new tariff on lumber was also expected to dampen builder confidence.

Component Readings Suggest Strong Builder Confidence in Current and Future Housing Markets

The monthly Housing Market Index is comprised of three components. Builder confidence in current housing market conditions rose two points to 76; the reading for builder confidence in market conditions for the next six months rose four points to 79. Builder confidence in buyer traffic in new homes dropped one point to 51, but overall, builder confidence in market conditions is strong as any NAHB Housing Market Index reading over 50 is considered positive.

Fewer Mortgage Applications: Home Buyers Dont Share Builder Optimism

According to the Mortgage Bankers Association, mortgage applications dropped 4.30 percent year-over-year in April, and were 20 percent lower than in March. While the Mortgage Bankers Association doesn’t report seasonal adjustments, fewer applications for purchase mortgages on new homes illustrated ongoing affordability challenges faced by first-time and moderate income home buyers.

High demand for available homes puts mortgage-dependent home buyers at a disadvantage when cash offers are in play. Rapid escalation of home prices creates difficulty for first-time and moderate income buyers as down payment and mortgage qualification requirements sideline buyers.

Increasing home builder sentiment has not corresponded to the number of new homes being built, which industry analysts consider the main solution to high demand for homes driven by short inventories of homes. First-time buyers are important to housing markets as they enable “move-up” buyers to sell their homes and buy new or larger homes.

What’s Ahead For Mortgage Rates This Week – May 15, 2017

Last week’s economic reports included readings on inflation and core inflation, retail sales and consumer sentiment. Weekly reports on new jobless claims and mortgage rates were also released.

Inflation, Retail Sales Higher in April

April inflation grew by 0.20 percent as expected. Core inflation, which excludes volatile food and energy sectors, increased by 0.10 percent. Analysts expected a reading of 0.20 percent. The Federal Reserve monitors inflation readings as part of its research for monetary policy decisions. The Fed set a benchmark of 2.00 percent annual inflation as an indicator of solid economic recovery. Growing inflation could prompt the Fed to raise interest rates in June.

Retail sales grew in April from 0.10 percent in March to 0.40 percent, but fell short of an expected 0.50 percent increase. Retail sales not including the automotive sector rose by 0.30 percent in April, which was the same growth rate posted in March. Analysts expected a reading of 0.50 percent. Growing retail sales indicates that consumers are more confident about economic conditions.

Mortgage Rates Rise, Weekly Jobless Claims Fall

Freddie Mac reported higher mortgage rates last week. The average rate for a 30-year fixed rate mortgage was three basis points higher at 4.05 percent. 15-year fixed rate mortgages had an average rate of 3.29 percent and was two basis points higher than the prior week. The average rate for 5/1 adjustable rate mortgages rose one basis point to 3.14 percent. Discount points averaged 0.50 percent for all three types of mortgages reported.

New jobless claims fell to 236,000 last week as compared to an expected reading of 245,000 new claims and the prior week’s reading of 238,000 new claims. Jobless claims remained below the 300,000 benchmark for the 114th consecutive week; last week’s reading was the lowest in more than 28 months.

Consumer sentiment ended the week on a positive note with a May index reading of 97.7 as compared to an expected reading of 97.20 and April’s reading of 97.0.

Whats Ahead

Economic readings scheduled for this week includes reports on the National Association of Home Builders Housing Market Index, Commerce department readings on housing starts and building permits issued. Weekly readings on mortgage rates and new jobless claims will also be released.

What’s Ahead For Mortgage Rates This Week – May 8, 2017

Last week’s economic news included readings on construction spending, the post-meeting statement by the Fed’s Open Market Committee and labor-related reports including ADP payrolls, Non-farm payrolls and the national unemployment rate. Weekly readings on new jobless claims and mortgage rates were also released.

Fed Rate Unchanged, Mortgage Rates Hold Steady

Federal Reserve policymakers did not change the target federal funds rate, which ranges from 0.75 to 1.00 percent. In its usual post-meeting statement, FOMC said that a weak first quarter was “transitory” and expected economic growth to continue going forward. Less consumer spending contributed to a sluggish first quarter, but analysts said that a rate hike was very likely at the FOMC meeting in June. The FOMC included its usual caveat concerning monetary policy in its statement; FOMC policies are not pre-determined, but are based on members’ ongoing review of news and economic developments.

Freddie Mac reported minor changes in its weekly survey of mortgage rates. 30-year fixed rate mortgage rates were one basis point lower at 4.02 percent. The average rate for a 15-year fixed rate mortgage was unchanged at 3.27 percent; the average rate for a 5/1 adjustable rate mortgage rose one basis point to 3.13 percent. Discount points averaged 0.50 percent for all three mortgage types.

Construction, Labor Reports Reflect Economic Growth

Construction spending fell in March after an unusually high reading in February. The original growth rate for February construction spending was 0.80 percent, but was adjusted to 1.80 percent. A spurt of unseasonably warm weather was cited as pushing construction activity to unusual levels in February. Construction spending fell by -0.20 percent as compared to an expected reading of 0.50 percent, which was based on the original reading for February.

ADP Payrolls reported lower growth for private sector jobs in April with a reading of 177,000 new jobs as compared to 255,000 new jobs gained in March. The Federal Non-farm payrolls report, which covers public and private sector jobs, posted a gain of 211,000 jobs in April after reporting only 79,000 jobs added in March. The disparity in month to month readings indicates ongoing volatility in jobs growth, but the national unemployment rate dropped to 440 percent in April from 4.50 percent in March. Low unemployment rates can indicate economic growth with job seekers gaining employment.

What’s Ahead For Mortgage Rates This Week – May 1, 2017

Last week’s economic news included readings on Case-Shiller Home Prices Indices, new and pending home sales. Weekly readings on new jobless claims and average mortgage rates were also released. Case-Shiller reported that home prices rose by 0.20 percent from January to February with a year-over- year growth rate of 5.80 percent.

Western cities continued to post the fastest growth rates for home prices with Seattle, Washington topping annual home price growth rates at 12.20 percent; Portland, Oregon followed with a year-over-year home price growth rate of 9.70 percent. Dallas, Texas posted the third fastest growth rate for home prices with year-over-year growth in home prices at 8.80 percent. Dallas replaced Denver, Colorado for third place in the 20-City Home Price Index. 15 of 20 cities tracked in the Case-Shiller 20-City Home Price Index posted higher year-over-year gains in February than for January 2017.

New Home Sales Rise as Pending Home Sales Dip

New home sales rose to 621,000 sales in March; analysts expected a reading of 580,000 new homes sold on a seasonally adjusted annual basis based on January’s reading of 587,000 new home sales. Sales of new homes are important due to months of high demand for homes coupled with low inventories of homes for sale. Sales of new homes can indicate future readings on builder confidence and housing starts, but there are no definite connections between new home sales, builder confidence in housing market conditions and housing starts.

Pending home sales dipped in March with a month-to-month reading of -0.80 percent as compared to February’s seasonally adjusted annual reading of 5.50 percent. Pending sales are home sales for which sales contracts are signed but have not been closed. Pending home sales are an indicator of future completed sales and can be impacted by factors including fluctuating mortgage rates and regulatory influences on mortgage lending and mortgage approval requirements.

Mortgage Rates, New Jobless Claims Rise

Freddie Mac reported higher mortgage rates last week. The average rate for a 30-year fixed rate mortgage was six basis points higher at 4.03 percent. The average rate for a 15-year fixed rate mortgage was four basis points higher at 3.27 percent. Mortgage rates for a 5/1 adjustable rate mortgage averaged 3.12 percent which was two basis points higher than for the previous week. Discount points averaged 0.50 percent for a 30-year fixed rate mortgage and averaged 0.40 percent for 15-year fixed rate mortgages and 5/1 adjustable rate mortgages

New jobless claims rose to 257,000 last week as compared to expectations of 245,000 new claims filed and the prior week’s reading of 243,000. Analysts said that the spike appeared to be localized in New York State and would likely resolve soon.

Whats Ahead

This week’s economic readings include ADP and Non-Farm Payrolls, national unemployment rate and readings on inflation. The Federal Open Market Committee of the Fed will issue its customary post-meeting announcement on Wednesday; this announcement is expected to reveal the Fed’s next move on interest rates. Weekly readings on new jobless claims and mortgage rates will also be released.

What’s Ahead For Mortgage Rates This Week – April 24, 2017

Last week’s economic reports included NAHB Housing Market Index, Commerce Department readings on housing starts and building permits issued. The National Association of Realtors® released data on existing home sales; Freddie Mac released average mortgage rates and new jobless claims were also released.

Builder Sentiment Dips in April, but Remains Strong

The National Association of Home Builders reported that home builder sentiment dipped three points in April to an index reading of 78. Any reading over 50 indicates that more builders are positive about housing market conditions than not. Builders continued to cite concerns including shortages of labor and buildable lots and increasing materials costs.

Builder confidence in housing market conditions do not always reflect building activity. March housing starts were lower at 1.215 million starts on a year-over-year basis. February’s reading was 1.303 million starts; the expected reading for April was 1.238 million starts. Readings for housing starts include single family homes of one to four units and multifamily complexes with five or more units. Single-family housing starts were 6.20 percent lower than in February at a seasonally-adjusted annual rate of 821,000 starts.

While housing starts were lower in March, more building permits were issued in March than in February. 1,260 million permits were issued in March on a seasonally-adjusted annual basis as compared to February’s reading of 1.216 million building permits issued.

Mortgage Rates Fall, Existing Home Sales Up

Mortgage rates fell below three percent according to Freddie Mac. The average rate for a 30-year fixed rate mortgage dropped from 4.08 percent to 3.97 percent; the average rate for a 15-year fixed rate mortgage fell by nine basis point from 3.34 percent to 3.23 percent. The average rate for a 5/1 adjustable rate mortgage was eight basis points lower at 3.10 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for a 5/1 adjustable rate mortgage. Lower mortgage rates are good news for home buyers challenged by rapidly rising home prices based on high demand and low supplies of homes for sale.

Home buyers persisted in March despite higher home prices. Sales of pre-owned homes hit a 10 year high in March as 5.71 million pre-owned homes were sold on a seasonally-adjusted annual basis. As compared to February’s reading of 5.48 million pre-owned homes sold, analysts expected a reading of 5.65 million sales of pre-owned homes in March.

New Jobless Claims Rise

First-time jobless claims were higher last week with a reading of 244,000 new claims as compared to the prior week’s reading of 234,000 new jobless claims. Week-to-week readings for new jobless claims tend to be volatile, but last week’s reading remained well below the benchmark of 300,000 new claims filed.

Whats Ahead

This week’s economic news includes readings on new and pending home sales, Case-Shiller Home Price Index reports, along with weekly reports on average mortgage rates and new jobless claims.

NAHB: Builder Sentiment Dips in April

According to the National Association of Home Builders Housing Market Index for April, Builder Confidence dropped three points to an index reading of 68 in April. While any reading over 50 indicates positive builder confidence, home builders said that they continue to face obstacles including higher costs for materials and elevated costs associated with regulatory issues. Builders have repeatedly cited concerns including a lack of buildable lots and labor shortages in past months.

Home Builder Component Readings Fall But Remain in Positive Territory

Component readings of the Housing Market Index include builder confidence in current market conditions for newly built homes, which dropped three points to 73. Builder confidence in market conditions over the next six months fell three points to 75. Home builder confidence in buyer traffic volume for new housing developments dropped one point to an April reading of 52.

Regional Readings for Builder Sentiment Vary

Regional readings for April were included in the three-month rolling average in four U.S. regions. Builder confidence in the Northeastern region fell by two points to 46; The Midwestern region added one point for a builder confidence reading of 68, while the Southern region’s reading was unchanged at 68. The Western region added one point for a three-month reading of 77.

Housing industry groups and analysts watch the NAHB Housing Market Index for indications of future volume in housing starts, but builder confidence and housing starts are not always closely connected. The Commerce Department will release readings for March housing starts and building permits issued on Tuesday.

What’s Ahead For Mortgage Rates This Week – April 17, 2017

Last week’s economic releases included readings on inflation, core inflation, new jobless claims, and mortgage rates. Consumer sentiment for April was also released.

Inflation Rate Dips in April

Consumer Price Index readings for April indicated that inflation decreased from 0.10 percent growth in March to a negative reading of -0.30 percent reading in April. The Core Consumer Price Index, which does not include volatile food and energy readings, also dipped in April to -0.10 percent from the March reading of +0.20 percent. While negative readings for month=to-month inflation suggests sluggish economic conditions, month-to-month readings can be volatile

 It’s possible that sluggish inflation readings could cause the Fed to postpone further interest rate increases. Lenders typically raise consumer interest rates when the Fed raises its target federal funds rate.

Mortgage Rates, New Jobless Claims

Freddie Mac reported lower average mortgage rates last week. Rates for a 30-year fixed rate mortgage averaged 4.08 percent a reading two basis points lower than for the previous week. The average rate for a 15-year fixed rate mortgage was two basis points lower at 3.34 percent; rates for a 5/1 adjustable rate mortgage dropped by one basis point to an average of 3.18 percent Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages. Last week’s mortgage rates were the lowest seen so far in 2017.

Fewer new jobless claims were filed last week with 234,000 new claims filed as compared expectations of 245,000 new claims filed and the previous week’s reading of 235, new claims filed.

Consumer sentiment rose in April to an index reading of 98.0. Analysts expected a reading of 96.0 based on the March reading of 96.9. The University of Michigan said that most consumers are upbeat about current economic conditions.

Whats Ahead

This week’s scheduled economic news includes the NAHB Housing Market Index, Existing Home Sales, Commerce Department readings on housing starts and building permits issued. Weekly readings for average mortgage rates and new jobless claims will also be released.

What’s Ahead For Mortgage Rates This Week – April 10, 2017

Last week’s economic data included releases on construction spending and labor-related reports including ADP Payrolls, Non-Farm Payrolls, national unemployment. Weekly readings on mortgage rates and new jobless claims were also released.

Construction Spending Increases in February

February construction spending grew by 0.80 percent from January’s reading of -0.50 percent. Analysts expected a reading of + 1.00 percent. Housing industry pros and analysts continue monitoring construction spending for indications of future construction projects. Construction spending was boosted by unseasonably warm weather in regions typically subject to cold winter climates.

 U.S. homes are in high demand despite rapidly rising home prices due to short supplies of available homes; industry leaders contend that building more homes is the only remedy for the imbalance between would-be home buyers and low inventories of homes for sale. Home builders repeatedly cite shortages of buildable lots and skilled labor as obstacles to building more homes.

Job Growth Dips as New Jobless Claims and Unemployment Rate Falls

ADP reported that 263,000 private-sector jobs were created in March as compared to revised readings of 245,000 jobs created in February and expectations of 170,000 jobs created in March Private-sector employers were encouraged by potential reductions in taxes, regulations, infrastructure and improvements.  

Non-farm payrolls dropped significantly in March; the Commerce Department reported only 98,000 new public and private sector jobs added in March as compared to expectations of 185,000 jobs added and 219,000 public and private-sector jobs added in February.

Economists said that rapid growth of jobs seen in the last few years was not sustainable and cited severe reductions in retail jobs as contributing to the drop in the Non-farm payrolls reading for March. The steep drop in job creation could cause the Federal Reserve to hold off on raising the federal funds rate in June, but this is far from certain depending on economic readings for April and May.

National unemployment fell to 4.50 percent in March against expectations of 4.70 percent and February’s reading of 4.70 percent

New jobless claims fell to 234,000 claims as compared to expectations of 251,000 new claims and the prior week’s reading of 259,000 claims. Lower initial jobless claims despite the steep drop in job growth suggests that workers are leaving the workforce and are ineligible to file new claims or that the drop in jobs growth was a “correction” and future jobs growth reports may not show such sharp adjustments.

Mortgage Rates Mixed

Rates for fixed-rate mortgages were lower last week. Freddie Mac reported that average rates for fixed rate mortgages fell; the average rate for a 30-year mortgage was four basis points lower at 4.20 percent. The average rate for a 15-year fixed rate mortgaged dropped three basis points to 3.36 percent. The average rate for a 5/1 adjustable rate mortgage ticked up by one basis point to an average of 3.19 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for a 5/1 adjustable rate mortgage.

Whats Ahead

This week’s scheduled economic reports include readings on inflation, core inflation and consumer sentiment. Weekly reports on new jobless claims and mortgage rates will also be released.