05
Jun
By First Rate Financial Group
Market Outlook

What’s Ahead For Mortgage Rates This Week – June 5, 2023

What's Ahead For Mortgage Rates This Week - June 5, 2023Last week’s economic reporting included readings from S&P Case-Shiller Home Price Indices on home prices, reports on U.S. jobs growth, and the national unemployment rate. Weekly readings on mortgage rates and jobless claims were also released.

S&P Case-Shiller: Limited Supply of Available Homes Boosts Prices in March

Limited supplies of homes for sale drove home prices up in March. Home prices rose by 0.40 percent month-to-month as compared to 0.70 percent year-over-year. Cities with the highest rates of home price growth were Miami, Florida, where home prices rose 7.70 percent year-over-year, Tampa, Florida with a year-over-year pace of  4.80 percent home price growth, and Charlotte, North Carolina, where home prices rose by 4.70 percent year-over-year.

High mortgage rates impacted both home buyers and sellers as average mortgage rates approached 7 percent. Higher mortgage rates create higher monthly payments and also affect buyers’ ability to qualify for mortgage loans. Homeowners who refinanced to lower mortgage rates during the pandemic stayed in their homes rather than buying new homes or refinancing their current homes at higher interest rates.

The Commerce Department reported that construction spending rose by 7.2 percent year-over-year .and 1.2 percent month-to-month in April. Private residential construction rose by 0.50 percent in April, but single-family home construction fell by -0.8 percent.

Mortgage Rates and Jobless Claims Rise

Freddie Mac reported higher average mortgage rates last week as the rate for 30-year fixed-rate mortgages rose by 22 basis points to 6.79 percent. Rates for 15-year fixed-rate mortgages rose by 21 basis points to an average rate of 6.18 percent.

232,000 new jobless claims were filed last week; analysts expected 235,000 initial claims to be filed as compared to the prior week’s reading of 230,000 initial jobless claims filed. The national unemployment rate rose to 3.7 percent in May. Analysts expected a national unemployment rate of  3.5 percent in May.

In related news, U.S. employment rose as 339,000 jobs were added in May; analysts expected a reading of 190,000 jobs added.  294,000 jobs were added in April.

What’s Ahead

This week’s scheduled economic reporting includes weekly readings on mortgage rates and jobless claims.

 

02
Jun
By First Rate Financial Group
Financial Reports

S&P Case-Shiller Home Price Indices Show Mixed Readings in March

S&P Case-Shiller Home Price Indices Show Mixed Readings in MarchMarch readings for the S&P Case-Shiller National Home Price Index showed that month-to-month home prices rose by 0.40 percent in March. The 20-City Home Price Index, which is considered a benchmark indicator by U.S. real estate professionals, rose by 0.50 percent month-to-month in March but posted a negative reading of -1.10 percent year-over-year. Analysts said that the slim supply of homes for sale drove up prices as demand for homes exceeded available inventory.

Homeowners took a “wait and see” position as mortgage rates rose and concerns over the economy persisted. Those who refinanced their mortgages to low rates during the pandemic weren’t looking to buy new homes or refinance at current mortgage rates near seven percent. Prospective homebuyers faced affordability challenges and concerns over buying at the top of their local real estate markets.

Southeast leads the  U.S. in home price growth

U.S. home price growth dominated the S&P Case-Shillere 20-City Home Price Index in March; the top three cities reporting the highest year-over-year home price appreciation rates were Miami, Florida with 7.7 percent growth. Tampa, Florida reported 4.8 percent home price growth and Charlotte, North Carolina held third place with 4.7 percent year-over-year home price growth.

The Western region continued to lag as year-over-year home prices fell by -1.10 percent from March 2022 to March 2023 as compared with 0.40 percent year-over-year growth in February. Data included in S&P Case-Shiller readings are seasonally adjusted. All 20 cities reported home price gains on a month-to-month basis, which indicates that housing prices continue to recover from the lows that occurred during the pandemic. Home prices will indicate further developments in the economic recovery based on how home prices and sales perform during the typically busy summer home-buying season. 

FHFA reports 3.6 percent year-over-year home price growth in March

The Federal Housing Finance Agency, which oversees government-sponsored mortgage enterprises Fannie Mae and Freddie Mac, reported 3.6 percent seasonally-adjusted year-over-year growth in home prices for U.S.  properties owned and sold by the two government-sponsored organizations. FHFA reported regional home price growth rates for the nine U.S. Census divisions; month-to-month results ranged from -10 percent in the Pacific division to 1.20 percent growth in the Mountain division. 

15
May
By First Rate Financial Group
Financial Reports

What’s Ahead For Mortgage Rates This Week – May 15, 2023

What's Ahead For Mortgage Rates This Week - May 15, 2023Last week’s scheduled economic reporting included readings on inflation, consumer sentiment, and weekly readings on mortgage rates and jobless claims.

Inflation Rate Rises in April, Slower Pace Expected in Coming Months

The  U.S. Labor Department reported the month-to-month pace of inflation rose by 0.40 percent in April and matched analysts’ expectations. April’s reading surpassed the March reading of 0.10 percent month-to-month inflationary growth. Inflation rose by 4.90 percent year-over-year in April. Analysts expect inflationary growth to continue, but at a slower pace through 2023.

Core inflation, which excludes volatile food and fuel sectors, rose at a month-to-month pace of 0.40 percent in April, which matched expectations and the March reading. Year-over-year core inflation rose by 4.90 percent in April as compared to the expected reading of 5.00 percent and the March reading of 5.00 percent.

Mortgage Rates Fall as Jobless Claims Rise

Freddie Mac reported lower average mortgage rates last week as rates for 30-year fixed-rate mortgages fell by four basis points to 6.35 percent. Rates for 15-year fixed-rate mortgages averaged one basis point lower at 5.75 percent. First-time jobless claims rose with 264,000 claims filed as compared to the expected reading of 245,000 claims and the prior week’s reading of 242,000 initial jobless claims filed.

As inflation slows, rapidly rising rental rates and home prices are also expected to increase at a slower pace. As homeownership becomes more affordable, fewer families will rely on rental homes. Less demand for rentals should help with easing very high rental rates seen in many metro areas. In general, more affordable housing choices could help ease housing challenges in areas with few affordable housing options.

The preliminary consumer sentiment survey for May reflects less consumer enthusiasm for current economic conditions. The initial index reading for May is 57.7, which fell short of the expected reading of 63.0 and April’s index reading of 63.5. May’s reading was the lowest since November 2022.

What’s Ahead

This week’s scheduled economic reporting includes readings on sales of previously-owned homes, housing market conditions, housing starts, and building permits issued. Weekly readings on mortgage rates and jobless claims will also be released.