09
May
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Mortgage Rates

What’s Ahead For Mortgage Rates This Week – May 9, 2016

Closing Paperwork: How to Read and Understand the Truth-in-Lending Disclosure Statement

Mortgage rates fell across the board last week according to Freddie Mac’s Primary Mortgage Market Survey. Other economic news included reports on construction spending, public and private sector employment and national unemployment.

Construction Spending Grows in March

The Commerce Department reported that the growth rate for construction spending fell in March to 0.30 percent/Analysts expected a reading of 0.70 percent based on February’s upwardly revised growth rate of 1.0 percent. Construction spending was propelled by a 1.50 percent increase in residential construction spending; this is good news for would-be home buyers who’ve been shut out of the market due to high demand and low inventories of available homes.

Housing market analysts have repeatedly said that new home construction is the answer to short supplies of homes and high buyer demand. Year-over-year, construction spending is up 8.0 percent overall; residential construction spending grew by 7.60 percent year-over-year.

Mortgage Rates Dip

Average mortgage rates were lower last week. The rate for a 30-year fixed rate mortgage fell by five basis points to 3.61 percent; the average rate for a 15-year fixed rate mortgage was three basis points lower at 2.86 percent and the average rate for a 5/1 adjustable rate mortgage dropped six basis points to an average of 2.80 percent.

While any drop in mortgage rates is welcomed by home buyers, the high demand for homes continues to drive prices up and has raised concerns about affordability of single-family homes in many communities.

Jobs Growth Slows

The national unemployment rate held steady at 5.0 percent in April, but job growth slowed in public and private sectors. ADP reported private sector jobs increased by 156,000 jobs as compared to 194,000 jobs added in March. According to the Bureau of Labor Statistics, Non-Farm Payrolls increased by 160.000 jobs as compared to expectations of 203,000 jobs added and March’s reading of 208,000 jobs added. Non-Farm payrolls measure public and private sector job growth.

New jobless claims rose by 17,000 to 274,000 new claims, but remained below the benchmark of 300,000 new claims for 61 consecutive weeks. Analysts projected that new claims would grow by 265,000 new claims based on the prior week’s reading of 257,000 new claims. The less volatile four-week rolling average of new jobless claims indicated that 258,000 new claims were filed. The labor force participation rate dropped from 65 percent to 63 percent in March. Retiring baby boomers contributed to some but not all of this workforce decline.

What’s Ahead

This week’s scheduled economic news includes weekly reports on mortgage rates and new jobless claims along with a report on consumer sentiment.

02
May
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Mortgage Rates

What’s Ahead For Mortgage Rates This Week – May 2, 2016

Whats Ahead For Mortgage Rates

Last week’s economic news included Case-Shiller Home Price Indices, along with new and pending home sales readings. The Federal Open Market Committee of the Federal Reserve met analyst’s expectations and did not raise the target federal funds rate, which remains at 0.25 to 0.50 percent. Freddie Mac’s mortgage rates survey and the Labor Department’s weekly jobless claims report were also released.

Case-Shiller: Home Price Growth Slows in February

Average home prices growth slowed in February according to the S&P Case-Shiller Home Price Index. Home prices fell from January’s year-over-year reading of 5.70 percent to 5.40 percent. 13 of 20 cities included in the index showed slower growth in home prices. Portland, Oregon showed the highest year-over-year price gain at 11.90 percent followed by Seattle, Washington at 11.00 percent and Denver, Colorado at 9.70 percent

Washington, DC had the slowest year-over-year growth rate of 1.40 percent; Chicago, Illinois and New York, New York where home prices grew 1.80 percent and 2.10 percent respectively. S&P Index Chairman David Blitzer said that tight inventories of available homes continued to drive home prices. Analysts are concerned with shrinking affordability, which keeps first-time and moderate income buyers from buying homes. Analysts caution that first-time and moderate-income buyers are the “bread and butter” of housing markets. Without their participation, current homeowners cannot sell and move up to larger homes.

New Home Sales Lower after February Reading Revised

New home sales dipped in March to a seasonally-adjusted annual rate of 511,000 after February’s reading was revised upward to 519,000 sales. Regional results for new home sales were mixed. The Northeast posted flat sales in March; The Midwest posted the highest year-over-year growth in home prices at 18.50 percent followed by the South with a year-over-year gain of 5.00 percent. New home sales fell by 23.60 percent in the West, which was likely due to rapidly escalating home prices in high-cost metro areas.

Pending home sales for March grew by 1.40 percent for a second consecutive monthly increase. Analysts viewed March’s reading as positive for a healthy spring season for home sales. Pending home sales forecast future closings and mortgage lending.

Mortgage Rates, New Jobless Claims Rise

Freddie Mac reported higher mortgage rates last week with the average rate for a 30-year fixed rate mortgage seven basis points higher at 3.66 percent. 15-year fixed mortgage rates were four basis points higher at 2.89 percent; the average rate for a 5/1 adjustable rate mortgage was five basis points higher at 2.86 percent. Discount points averaged 0.60, 0.50 and 0.50 percent respectively.

New jobless claims also rose last week with 257,000 new claims filed as compared to expectations of 260,000 new claims and the prior week’s reading of 248,000 new claims filed. Analysts said that fewer layoffs suggest strengthening job market. Last week’s four-week average of new jobless claims was 256,000 new claims, which was the lowest reading since December 1973. Improving labor markets can encourage would-be home buyers to become active buyers.

What’s Ahead

This week’s scheduled economic news includes reports on construction spending, private sector employment, non-farm payrolls and the national unemployment rate. Weekly reports on new jobless claims and mortgage rates will be released as usual.

25
Apr
By support
Mortgage Rates

What’s Ahead For Mortgage Rates This Week – April 25, 2016

What's Ahead In Mortgage News

Last week’s economic releases included Existing Home Sales, Commerce Department Releases on Housing Starts and Building Permits and the National Association of Home Builders/Wells Fargo Housing Market Index. Mortgage rates and new jobless claims were released according to their weekly schedule.

Home Builder Confidence Holds Firm in April

According to April’s National Association of Home Builders/Wells Fargo Housing Market Index, home builder confidence held steady with a reading of 58 for the third consecutive month. Analysts viewed April’s reading as a sign of steady expansion for home building, but builders noted concerns over labor shortages. NAHB Chief Economist Robert Dietz said that builders were “cautiously optimistic” concerning housing market conditions.

The National Association of Realtors® reported a jump in sales of previously owned homes in March. The seasonally-adjusted annual rate of sales rose to 5.33 million and surpassed expectations of 5.30 million sales and February’s reading of 5.07 million sales of pre-owned homes.Mr. Lawrence Yun, chief economist for NAR, said that demand is increasing and noted that the national average home price increased more than twice as fast as average wages.

In other housing-related reports, the Commerce department reported slower growth in housing starts, which reached 1.089 million starts in March. Analysts expected 1.170 million starts based on March’s reading of 1.194 housing starts. Building permits were also lower with 1.086 million building permits issued as compared to 1.177 million building permits issued in March.

National Association of Realtors®: Sales of Pre–Owned Homes Exceed Expectations

March sales of previously owned homes reached a seasonally-adjusted annual rate of 5.33 million sales against predictions of 5.30 million sales and February’s reading of 5.07 million sales. While March sales of pre-owned homes coincide with the approaching peak home selling season, high demand for homes and low supplies of homes for sale could slow sales. Inventories of available homes are currently at a 4.5 month supply; a six month supply of available homes indicates a normal reading for available homes.

Mortgage Rates Mixed, Jobless Claims Lowest Since 1973

Freddie Mac reported mixed results for last week’s average mortgage rates. The rate for a 30-year fixed rate mortgage was one basis point higher at 3.59 percent. The rate for a 15-year fixed rate mortgage was one basis point lower at 2.85 percent while the average rate for 5/1 adjustable rate mortgages fell by three basis points to 2.81 percent. Discount points averaged 0.60 percent for fixed rate mortgages and 0.50 percent for 5/1 adjustable rate mortgages.

Weekly jobless claims dropped to their lowest level since 1973 with a reading of 247,000 new claims filed. Analysts expected a reading of 265,000 new claims filed based on the prior week’s reading of 253,000 new claims filed. Strong labor markets can be an incentive to home buyers to move up to larger homes or transition from renting to owning, but short supplies of available homes and rapidly rising home prices present obstacles. First-time buyers account for approximately 30 percent of home sales; their participation could diminish unless available homes increase and demand for homes eases.

What‘s Ahead

This week’s scheduled economic reports include the S&P Case-Shiller Home Price Indices along with new and pending home sales reports. Weekly reports on mortgage rates and new jobless claims will be released on schedule.