Mortgage Rates

Last week’s scheduled economic news included readings from the National Association of Home Builders on housing market conditions. Reporting on housing starts and building permits was released along with weekly reports on mortgage rates and jobless claims.

NAHB: Home Builder Confidence Grows as Demand for Homes Increases

November’s national reading for home builder confidence in housing market conditions for single-family homes rose three points to an index reading of 83 and the expected reading of 80. Component readings for the national index were mixed. Builder confidence in home sales for the next six months was unchanged at an index reading of 84. Builder confidence in potential buyer traffic in new housing developments rose three points to an index reading of 68. Readings over 50 indicate that a majority of home builders were confident about housing market conditions.

High demand for homes continued, but builders faced ongoing obstacles including shortages of lots and labor. Robert Dietz, the chief economist at the National Association of Home Builders, said: “ Lot availability is at multi-decade lows and the construction industry currently has more than 330,000 open positions.” Mr. Dietz urged policymakers to address these issues to enable builders to better meet the high demand for single-family homes.

Three of four regional readings for builder confidence in housing market conditions rose, while the Northeast’s reading fell to 69 in November from October’s reading of 73. The Midwest reading rose to 75 in November from October’s reading of 72. Homebuilder confidence in the South also rose three points to 87 in November. The Western region posted a two-point gain in builder confidence for an index reading of 87.

Housing starts fell by one million starts in October to 1.52 million starts on a seasonally-adjusted annual basis. Building permits issued in October rose to a pace of 1.65 million permits issued on a seasonally-adjusted annual basis. Housing starts and building permits issued do not always reflect builder confidence readings.

Mortgage Rates Rise as Jobless Claims Fall

Freddie Mac reported higher fixed mortgage rates last week as the average rate for 30-year fixed-rate mortgages rose  12 basis points to 3.10 percent. Rates for 15-year fixed-rate mortgages also rose 12 basis points and averaged 2.39 percent; the average rate for 5/1 adjustable rate mortgages fell four basis points to an average rate of 2.49 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages and 0.60 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.30 percent. 

Initial jobless claims rose to 286,000 new claims filed from the prior week’s reading of 269,000 first-time claims filed. Ongoing jobless claims fell to 2.08 million claims filed from the prior week’s reading of 2.20 continuing jobless claims filed. 

What’s Ahead

This week’s scheduled economic readings include sales of new and previously-owned homes, reporting on inflation and consumer sentiment are also scheduled. Weekly readings on mortgage rates and jobless claims will be released in advance of the Thanksgiving holidays on Thursday and Friday. 

Last week’s scheduled economic reporting included readings on inflation and a preliminary report on consumer sentiment. Weekly reports on mortgage rates and jobless claims were also released.

Inflationary Growth Exceeds Expectations, Creates Consumer Challenges

October’s inflation rate rose to its highest year-over-year pace in 31 years last week with a reading of 6.20 percent growth as compared to September’s year-over-year growth rate of 5.40 percent. Inflation rose by 0.90 percent month-to-month in October as compared to September’s reading of 0.40 percent growth. Consumers paid more for essential goods including food, fuel, and transportation. October’s inflationary growth rate surpassed the Federal Reserve’s inflationary goal of 2.00 percent year-over-year.

Pandemic-related conditions continued to delay supply chains and further limited goods and services available to consumers. Auto prices were higher due to lower production and falling inventories. Slim supplies and high demand caused rising prices in many economic sectors. Rising prices currently outstrip income growth, which renders current inflationary conditions unsustainable for many consumers.

Core inflation, which excludes volatile food and fuel sectors, rose by 0.60 percent in October and exceeded predictions of an 0.40 percent increase based on September’s reading of 0.20 percent month-to-month core inflation.

The Federal Reserve recently described ongoing high inflation as “transitory,” but it appears to be going nowhere anytime soon.

Mortgage Rates Fall; Jobless Claims Mixed

Freddie Mac reported lower average mortgage rates last week as the rate for 30-year fixed-rate mortgages fell by 11 basis points to 2.98 percent. Rates for 15-year fixed-rate mortgages averaged 2.27 percent and were eight basis points lower. Rates for 5/1 adjustable rate mortgages averaged 2.53 percent and one basis point lower. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages, 0.60 percent for 15-year fixed-rate mortgages, and 0.40 percent for 5/1 adjustable rate mortgages.

Last week’s new jobless claims fell to 267,000 initial claims filed as compared to the previous week’s reading of 271,000 first-time claims filed. Continuing jobless claims rose to 2.16 million claims filed as compared to the reading of 2.10 million ongoing claims filed in the prior week.

The University of Michigan released its preliminary reading for November’s Consumer Sentiment Index and reported a November index reading of 66.8, which was lower than the expected reading of 72.0 and October’s index reading of 71.7. Consumer concerns over growing inflation and higher costs caused consumer sentiment about current economic conditions to dip.

What’s Ahead

This week’s scheduled economic reporting includes readings from the National Association of Home Builders’ Housing Market Index, along with readings on housing starts and building permits issued. Weekly readings on mortgage rates and jobless claims will also be released.