30
Sep
By support
Market Outlook

Case-Shiller Housing Market Index: Home Prices Rise in July

Case Shiller Housing Market Index Home Prices Rise in JulyU.S. home prices rose by 0.10 percent in July according to the S&P Case-Shiller Housing Market Index. San Francisco, California edged past Denver Colorado with a year-over-year price increase of 10.40 percent as compared to Denver’s reading of 10.30 percent. All year-over-readings for the 20-City Home Price Index posted gains, but Washington, D.C. showed the lowest year-over0-year growth rate at 1.70 percent. Chicago, Illinois and New York City followed closely with year-over-year readings of 1.80 percent and 1.90 percent respectively.

Seasonally-Adjusted Home Prices Fall

Although seasonally-adjusted home prices typically rise during the peak home selling season during spring and summer, July’s reports indicated that seasonally-adjusted home prices fell by 0.20 percent in July. Factors including tough mortgage approval requirements and low inventories of available homes likely contributed to slower growth in home prices as demand for homes fell.

Would-be home buyers may also have sat on the sidelines awaiting the Federal Reserve’s decision regarding raising rates. The Fed has not raised rates yet, but may do so in October. Mortgage rates are expected to rise when the Fed raises its target federal funds rate, which is currently set at 0.00 to 0.25percent.

Western Cities Lead Home Price Growth

Case-Shiller reported that as of July, the West continues to see the highest rates of home price growth. Over the past 12 months, only San Francisco and Denver have shown double-digit growth in home prices. Los Angeles, San Francisco and San Diego, California have shown the strongest increases in home prices since 2000.

Home prices for cities included in the 20-City Index have risen 35.70 percent since home prices hit their post -recession low in 2012, but remain 13 percent below the housing bubble’s peak prices. All cities in the 20-City Index posted price gains year-over-year as of July and 14 cities posted higher price gains than for the comparable period ending in July 2014.

Trend: Modest Home Price Growth Continues

The Federal Housing Finance Agency recently posted a year-over-year gain of 5.80 percent for home prices associated with mortgages owned or backed by Fannie Mae and Freddie Mac. This news further supports the trend of moderate gains in U.S home prices; moderate growth in home prices could encourage more moderate-income and first-time home buyers to buy homes, particularly in advance of the anticipated increasein mortgage rates when the Federal Reserve raises interest rates.

18
Sep
By support
Market Outlook

NAHB: Builder Confidence Hits Highest Rate in 9 Years; Fed Doesn’t Raise Rates

Whats AheNAHB Builder Confidence Hits Highest Rate in 9 Years Fed Doesnt Raise Ratesad For Mortgage Rates This Week September 8 2015The National Association of Home Builders (NAHB) / Wells Fargo Housing Market Index reported that home builder confidence rose by one point to a reading of 62 for September. This was the highest reading since November 2005, when the NAHB reported a reading of 68 for home builder confidence. Any reading above 50 indicates that more builders are confident about housing market conditions than those who are not.

NAHB notes that builder confidence has been growing at a moderate pace since July 2014; this is in line with economic conditions in general. Relatively low mortgage rates and stronger labor markets are helping would-be buyers with their decisions to buy homes now.

FOMC Statement and Fed Chair Press Conference: No Rate Hikes Yet

The minutes of the Federal Open Market Committee of the Federal Reserve revealed that Fed policymakers have decided to wait on raising the target federal funds rate, which is currently set at 0.00 to 0.25 percent. While the FOMC statement indicated that policy makers acknowledge moderate progress in economic growth, a majority did not feel that the economy is ready to withstand a rate hike. When the Fed does raise rates, consumers can expect to see higher mortgage rates as well as increases in lending rates for credit cards and loans.

FOMC members said that housing markets were growing at a steady but moderate pace, but that inflation was lagging below the Fed’s benchmark 2.00 percent level due to transitory effects of lower energy and import prices. The Fed expects that inflation will reach its 2.00 percent goal over the medium term and will not likely raise rates until FOMC members are confident that inflation will rise as expected.

FOMC members continued to assert that any decision to raise rates will be based on close review of domestic and global financial and economic trends and will not be based on meeting the Fed’s dual mandate of achieving maximum employment and an inflation rate of 2.00 percent.

Committee members also said that economic conditions could continue to warrant keeping the target federal funds rate below normal levels for the longer term.

Fed Chair Janet Yellen gave a press conference after the FOMC statement concluded. She addressed questions about the Fed’s decision not to raise rates and said that concerns over global developments contributed to Fed policy makers’ decision not to raise rates. Ms. Yellen explained that a stronger U.S. dollar has caused deflationary pressures and increased competition for U.S. exports. The Fed isn’t overly concerned about global conditions at present, but changing circumstances could change the Fed’s likely intention to raise rates before year end.

08
Sep
By support
Market Outlook

What’s Ahead For Mortgage Rates This Week – September 8, 2015

Whats Ahead For Mortgage Rates This Week September 8 2015Last week’s economic news included reports on construction spending, private and public sector employment data and a report from the Fed indicating that any move to raise interest rates may be delayed. The details:

Construction Spending Meets Expectations, Beige Book Indicates Wage Pressures

Analysts said that construction is gaining strength and could soon be the strongest sector of the economy. Construction spending for July met growth expectations of 0.70 percent as compared to June’s reading of 0.10 percent. The Commerce Department reported that this reading translated to a seasonally adjusted annual rate of $1.98 trillion, which was the highest rate of spending in the construction sector since May 2008.

Residential construction spending was up 10.80 percent year-over-year in July, with both single-family and multifamily construction posting double digit gains.

The Federal Reserve issued its Beige Book report last Wednesday, which indicated that wage pressures in many of the 13 Fed districts could cause rising inflation, which the Fed has cited as a component in any decision to raise the federal funds rate. The Fed has set a benchmark of 2.0 percent inflation as an indication for raising rates, but doesn’t expect to see this reading in the short term.

Higher wages increase consumers’ discretionary spending, which would contribute to more hiring and increasing demand for goods and services.

Mortgage Rates, Weekly Jobless Claims Higher

Freddie Mac reported that average mortgage rates rose across the board last week. The rate for a 30-year fixed rate mortgage rose by five basis points to 3.89 percent; the rate for a 15-year fixed rate mortgage wash higher by three basis points and the rate for a 5/1 adjustable rate mortgage also rose by three basis points to 2.93 percent. Average discount points were unchanged at 0.60 for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

Weekly jobless claims rose to 282,000 new claims against last week’s reading of 270,000 new claims and expectations of 275,000 new jobless claims. While this was the highest reading for new jobless claims in since late June, the reading for new weekly jobless claims has remained below the 300,000 benchmark for the last six months.

The four-week rolling average of new jobless claims rose by 3250 new claims to an average of 275,500 new claims. Analysts said that layoffs are declining and that workers who lose their jobs are finding new employment quickly.

Continuing jobless claims fell by 9000 to a reading of 2.26 million for the week that ended August 22.

ADP Employment Rises, Non-Farm Payrolls, National Unemployment Rate Fall

Private sector payrolls increased by 190,000 jobs in August as compared to July’s reading of 170,000 jobs according to ADP. This supports the trend of stronger hiring seen by economists in recent weeks. The government reported that Non-farm payrolls, which include public and private sector jobs, fell to 173,000 jobs against July’s reading of 245,000 jobs.

The Commerce Department reported that the national unemployment rate dipped to 5.10 percent in August against expected reading of 5.20 percent and July’s reading of 5.30 percent. The declining unemployment rate further supports economic growth and stronger labor markets.

What’s Ahead

This week’s economic reports include job openings, the usual weekly reports on new jobless claims and mortgage rates and a report on consumer sentiment.