23
Nov
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Market Outlook

What’s Ahead For Mortgage Rates This Week – November 23, 2015

Whats Ahead For Mortgage Rates This Week November 23 2015

Last week’s economic events included reports the National Association of Home Builders Housing Market Index, Housing Starts and the release of minutes for the most recent meeting of the Fed’s Federal Open Market Committee. The details:

NAHB: Builder Confidence in Housing Markets Dips

The National Association of Home Builders reported that builder confidence dropped to a reading of 62 as compared to October’s revised reading of 65. Any NAHB reading above 50 indicates that more builders are positive about market conditions than not. NAHB’s assessment of housing market conditions is based on readings for three aspects of current and future market conditions. November’s reading of 67 for current housing market conditions was three points lower than October’s reading of 70. Expectations for market conditions for sales of single family homes over the next six months fell by five points in November to a reading of 70. Builders’ sentiment about prospective buyer foot traffic in new single family developments rose by one point to 48.

Home builders started more new homes than at any time since September 2007; analysts cited wage growth and low unemployment figures along with high demand for homes as driving builder confidence in housing markets. Demand for homes continued to exceed homes available for purchase, which is a driving force for builder confidence.

NAHB Regional Builder Confidence Readings 

Regional readings provide a snapshot of regional housing market conditions on a month-to-month bases and on a three month rolling average. The monthly readings for November were lower except for the Western region, which gained one point for a reading of 77. The Northeastern region held steady with a reading of 52; the Midwest’s reading also decreased by one point to 59 and builder confidence in the Southern region fell by five points to 62.

Monthly regional readings for home builder confidence can be volatile due to regional economic conditions; the NAHB provides a three-month rolling average for its four U.S. regions. In November, the Northeast region reported a reading of 50 which was three points higher than October’s reading. The Midwest region was unchanged from October’s reading of 60; the South also reported no change from its October reading of 65. The Western region posted an increase of 69 to 73 over the three months between August and November.

Housing Starts Lowest Since Spring Floods

According to the Commerce Department, housing starts fell by 11 percent to an annualized reading of 1.06 million in October. This was the lowest reading since last spring, when construction was adversely impacted by flooding. September’s reading was adjusted to 1.19 million starts. Meanwhile, building permits issued rose by 4.10 percent to an annual rate of 1.15 million starts in October.

While housing starts fell by 18.60 percent in the South, permits issued rose to their highest level since 2007. The South is the most active region for home construction and accounts for half of all new home construction in the U.S.

Mortgage Rates, New Jobless Claims Lower

Mortgage rates fell across the board last week according to Freddie Mac. The average rate for a 30-year fixed rate mortgage fell by one basis point to 3.97 percent; the average rate for a 15-year fixed rate mortgage fell two basis points to 3.18 percent and the average rate for a 5/1 adjustable rate mortgage was five basis points lower at 3.03 percent. Discount points averaged 0.60 percent for a 30-year fixed rate mortgage and 0.50 percent for 15-year fixed rate mortgages and 5/1 adjustable rate mortgages.

New jobless claims also fell last week to a reading of 271,000 new claims filed as compared to expectations of 270,000 new claims filed and the prior week’s reading of 276,000 new claims filed. Lower jobless claims indicate further strengthening of labor markets, but seasonal hiring may have positively impacted the reading for new jobless claims.

What’s Ahead

Next week’s scheduled economic news releases include several housing reports. Existing Home Sales, the S&P Case-Shiller Housing Market Index, FHFA House Prices and New Home Sales will be posted along with regularly scheduled reports on mortgage rates and new jobless claims. There will be no economic reports released on Thursday or Friday due to the Thanksgiving holiday.

16
Nov
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Market Outlook

What’s Ahead For Mortgage Rates This Week – November 16, 2015

The Fibromyalgia Diet: Healthy Eating Ideas That Could Help You Feel BetterLast week’s scheduled economic news was sparse due to no scheduled releases on Monday and the Veterans Day Holiday on Wednesday. A report on job openings was released on Thursday along with regularly scheduled weekly reports on jobless claims and Freddie Mac’s report on mortgage rates.

Mortgage Rates, Weekly Jobless Claims Rise

Mortgage rates rose last week according to Freddie Mac. The average rate for a 30-year fixed rate mortgage rose to 3.98 percent from last week’s reading of 3.87 percent. The average rate for a 15-year fixed rate mortgage rose to 3.20 percent from the prior week’s reading of 3.09 percent; the average rate for a 5/1 adjustable rate mortgage was also higher at an average of 3.03 percent as compared to the prior week’s average rate of 2.96 percent. Discount points were unchanged for all three types of mortgages at 0.60 percent for fixed rate mortgages and 0.40 for 5/1 adjustable rate mortgages.

New jobless claims rose last week to 276,000 claims filed against the expected reading of 268,000 new claims and the prior week’s reading of 276,000 new jobless claims filed. The Labor department reported 5.53 million job openings on September, which was the second highest reading since the inception of the job openings report in 2000.

The Labor Department also reported that the quits rate held steady at 1.90 percent for the sixth consecutive month. Fed Chair Janet Yellen has said that the Fed considers the quits rate an indicator of economic strength; if workers have enough confidence to quit their jobs for new jobs, this a strong economy. The quits rate has held steady for six months, which could signal to the Fed that the economy is not yet ready for a rise in interest rates that analysts expect to occur in December.

U.S. News recently cautioned that a combination of rising home prices and interest rates could quickly cool housing markets as first-time and moderate income buyers are priced out of the market and other would-be buyers find it difficult to qualify for the mortgages they need to finance home purchases. Recent hikes in mortgage rates are a likely response to the anticipated Fed rate hike in December.

What’s Ahead

Next week’s scheduled economic reports include the National Association of Home Builders Housing Market Index, Housing Starts and minutes from the most recent meeting of the Fed’s Federal Open Market Committee. The minutes may provide additional insight into how Fed policymakers are approaching the decision about raising the target federal funds rate.

09
Nov
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Market Outlook

What’s Ahead For Mortgage Rates This Week – November 09, 2015

Whats Ahead For Mortgage Rates This Week November 09 2015Last week’s economic reports included releases on construction spending and several labor-related reports including ADP payrolls, Non-Farm payrolls, average hourly earnings and weekly jobless claims. Freddie Mac reported that mortgage rates rose as the national unemployment rate decreased to 5.00 percent.

Labor Reports Show Mixed Results

Key readings on employment showed mixed results as ADP payrolls decreased to 182,000 from September’s downwardly revised reading of 190,000 private sector jobs added. U.S. jobs expanded to a reading of 271,000 jobs added in October, which exceeded expectations of 180,000 jobs added and September’s reading of 137,000 jobs added. This was the fastest pace for job growth in 2015 and fueled expectations that the Federal Reserve may raise interest rates in December. In addition, the national unemployment rate dropped to 5.00 percent in October, which was the lowest unemployment rate in seven years.

Weekly jobless claims rose by 276,000 new claims, which exceeded the expected reading of 263,000 new claims and the prior week’s reading of 240,000 new claims.

In testimony before The House Financial Committee, Federal Reserve Chair Janet Yellen said that the central bank’s objective was to regulate financial institutions “in a manner that promotes the stability of the financial system as a whole.” This indicates that the Federal seeks to prevent threats to major financial institutions that could result in a repeat of the great recession in 2008.

Chair Yellen also said that the Federal Reserve Board and the FDIC have written a rule requiring the largest financial institutions to show that any financial failure could be “resolved in an orderly manner through the bankruptcy court.” These comments suggest that the Federal Reserve has ongoing concerns about the stability of the largest financial institutions and the economy; this could cause the Fed to take a wait-and-see attitude on raising interest rates in December. The Fed is expected to address interest rates in its December meeting of the Federal Open Market Committee, which directs monetary policy for the Fed.

Mortgage Rates Rise, Construction Spending Dips

Average mortgage rates rose across the board last week according to Freddie Mac. The average rate for a 30-yar fixed rate mortgage rose by 11 basis points to 3.87 percent; the average rate for a 15-year fixed rate mortgage rose by 11 basis points to 3.09 percent and the average rate for a 5/1 adjustable rate mortgage rose by seven basis points to 2.96 percent. Discount points were unchanged at 0.60, 0.60 and 0.40 percent respectively.

Construction spending slowed in September to a reading of 0.60 percent which met expectations based on August’s reading of an increase of 0.70 percent.Construction spending slows as fall and winter seasons approach, but analysts are monitoring construction activity as low inventories of available homes continue to increase demand for homes and home prices in many areas.

What’s Ahead

Next week’s scheduled releases for economic reports are slim; no reports are scheduled for Monday and Tuesday markets are closed for the Veterans Day holiday. Freddie Mac will release mortgage rates on Thursday and the weekly Jobless Claims report will also be released. Other scheduled reports include retail sales, retail sales except automotive sector and the University of Michigan’s report on consumer sentiment.