Mortgage Rates

Last week’s economic news included readings on home prices from Case-Shiller; readings on construction spending and pending home sales were also released. Weekly data on mortgage rates and jobless claims were also released.

Case-Shiller Posts New Record for Home Price Growth in June

U.S. home prices continued to gain at record levels in June according to S&P Case-Shiller Home Price Indices. The National  Home Price Index rose from May’s seasonally adjusted annual reading of 16.80 percent growth to 18.60 percent year-over-year home price growth in June.

Case-Shiller’s 20-City Home Price Index reported no change in the top three cities for home price growth in June. Phoenix, Arizona, San Diego, California, and Seattle, Washington retained the top three positions in the 20-City Home Price Index. Analysts said that the current pace of home price growth isn’t sustainable. Demand for homes slowed in June as affordability sidelined would-be buyers. Less demand for homes was expected to ease home price growth and provide an additional inventory of available homes.

Pending Home Sales Slow in July as Construction Spending Increases

The National Association of Realtors® reported that pending home sales slowed in July. Pending sales are sales for which purchase offers are received but are not yet closed. Pending sales of previously-owned homes fell by -1.80 percent in July;  analysts expected pending sales to rise by 0.50 percent from June’s reading of -1.90 percent. Pending home sales fell by 8.50 percent year-over-year in July. Pending home sales provide real estate pros a compass for estimating home sales completed in the future.

Homebuilders faced with an ongoing shortage of available homes for sale increased construction spending in July. Lumber and materials prices have stabilized from earlier in 2021 and should help builders complete more homes. Shortages of buildable land and skilled labor continued to impact optimum home-building conditions.

Mortgage Rates Hold Steady as Jobless Claims Fall

Freddie Mac reported no change in rates for 30-year fixed-rate mortgages, which averaged 2.87 percent; rates for 15-year fixed- rate mortgages averaged 2.18 percent and one basis point higher than in the previous week. Rates for 5/1 adjustable rate mortgages averaged one basis point higher at 2.43 percent. Discount points averaged 0.60 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

Jobless claims fell last week as 340,000 first-time claims were filed as compared to the previous week’s reading of 354,000 initial claims filed. Continuing jobless claims were also lower with 2.75 million continuing claims filed as compared to the previous week’s reading of 2.91 million ongoing claims filed.

What’s Ahead

This week’s scheduled economic reports will be limited due to the Labor Day holiday. Readings on job openings and the Federal Reserve’s Beige Book report will be released. Weekly readings on mortgage rates and jobless claims will also be published.

Last week’s economic reports included readings on new and existing home sales; the University of Michigan released its monthly Consumer Sentiment Index, and weekly updates on mortgage rates and jobless claims were also published.

New Home Sales and Median Home Price Rose in July

The Census Bureau reported that new homes sold at a seasonally-adjusted annual pace of 353,000 sales in July; analysts expected a pace of 350,000 new homes sold based on June’s reading of 349,000 sales of new homes. Homebuyers are buying new and existing homes at a faster pace as more homes and wider choices become available to would-be buyers. The number of new homes for sale rose 5.50 percent month-to-month and was 26 percent higher year-over-year. The median price for a new home rose to a new high of $390,500 in July.

The National Association of Realtors®  reported that July sales of previously-owned homes sold at a seasonally-adjusted annual pace of 5.99 million sales; analysts expected 5.87 million sales based on June’s sales pace of 5.83 million sales of previously-owned homes. Real estate pros were pleased with July’s increased sales pace and expected the trend to continue.

Mortgage Rates, Jobless Claims

Freddie Mac reported little change in average mortgage rates last week. Rates for 30-year fixed-rate mortgages averaged one basis point higher at 2.87 percent; the average rate for 15-year fixed-rate mortgages also rose by one basis point to 2.17 percent. Rates for 5/1 adjustable rate mortgages averaged 2.42 percent and were one basis point lower. Discount points were lower across the board and averaged 0.60 percent for fixed-rate mortgages and 0.20 percent for 5/1 adjustable rate mortgages.

New jobless claims rose to 353,000 claims filed as compared to the prior week’s reading of 349,000 first-time claims filed. Analysts expected 350,000 new jobless claims to be filed last week. Continuing jobless claims dipped to 2.86 million claims filed from the prior week’s reading of 2.87 million ongoing jobless claims filed.

The University of Michigan Consumer Sentiment Index for August ticked up to an index reading of 70.3 from July’s reading of 70.2; analysts expected an August reading of  71.0.

What’s Ahead

This week’s economic reporting included readings on Case-Shiller Home Price Indices, construction spending, and Government readings on public and private-sector jobs growth and the national unemployment rate.

Last week’s economic reporting included readings on construction spending, consumer sentiment, labor sector reports on public and private sector jobs, and national unemployment. Weekly readings for mortgage rates and jobless claims were also released.

Residential Sector Drove June Construction Spending

Construction spending rose by 0.10 percent in June according to the Commerce Department. Analysts expected spending to increase by 0.50 percent, but builders spent less on public sector and non-residential projects. Spending for all construction spending rose at a year-over-year pace of $1.55 trillion. Residential construction rose by 1.10 percent in June, but public-sector spending fell by -1.20 percent and nonresidential construction spending fell by 0.70 percent. Year-over-year residential construction spending rose by 28.80 percent in June; nonresidential construction spending was 6.60 percent lower year-over-year.

Demand for homes continued to exceed the supply of available homes. Builders took advantage of lower lumber prices to ramp up construction, but shortages of affordable entry-level homes continued to challenge first-time and moderate-income home buyers. Although the covid pandemic continued to increase demand for homes, some buyers left the market due to high home prices and few options for available homes. Cash buyers and bidding wars in popular metro areas continued to drive up home prices.

Mortgage Rates, Jobless Claims Fall

Freddie Mac reported lower average mortgage rates last week as rates for 30-year fixed-rate mortgages fell by three basis points to 2.77 percent. The average rate for 15-year fixed-rate mortgages was unchanged at 2.10 percent; Rates for 5/1 adjustable rate mortgages averaged 2.40 percent and were five basis points lower. Discount points averaged 0.60 percent for fixed-rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

New jobless claims fell to 385,000 initial claims filed from the previous week’s reading of 399,000 new claims filed. Ongoing jobless claims were also lower with 2.93 million continuing claims filed as compared to 3.30 million ongoing claims filed in the previous week.

Low Unemployment Rate Suggests Continued Economic Recovery

Public and private sector jobs showed mixed results in July. ADP reported 330,000 private-sector jobs added in July as compared to 680,000 private-sector jobs added in June. The Labor Department reported 943,000 public and private-sector jobs added in July as compared to its June reading of 938,000 jobs added. The national unemployment rate fell to 5.40 percent in July as compared to June’s reading of 5.90 percent. Analysts expected an unemployment rate of 5.70 percent in July. 

What’s  Ahead

This week’s scheduled economic readings include reporting on job openings, inflation, and the University of Michigan’s initial consumer sentiment index for August. Weekly readings on mortgage rates and jobless claims will also be published.