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What's Ahead For Mortgage Rates This Week – November 23, 2015

Whats Ahead For Mortgage Rates This Week November 23 2015

Last week’s economic events included reports the National Association of Home Builders Housing Market Index, Housing Starts and the release of minutes for the most recent meeting of the Fed’s Federal Open Market Committee. The details:

NAHB: Builder Confidence in Housing Markets Dips

The National Association of Home Builders reported that builder confidence dropped to a reading of 62 as compared to October’s revised reading of 65. Any NAHB reading above 50 indicates that more builders are positive about market conditions than not. NAHB’s assessment of housing market conditions is based on readings for three aspects of current and future market conditions. November’s reading of 67 for current housing market conditions was three points lower than October’s reading of 70. Expectations for market conditions for sales of single family homes over the next six months fell by five points in November to a reading of 70. Builders’ sentiment about prospective buyer foot traffic in new single family developments rose by one point to 48.

Home builders started more new homes than at any time since September 2007; analysts cited wage growth and low unemployment figures along with high demand for homes as driving builder confidence in housing markets. Demand for homes continued to exceed homes available for purchase, which is a driving force for builder confidence.

NAHB Regional Builder Confidence Readings 

Regional readings provide a snapshot of regional housing market conditions on a month-to-month bases and on a three month rolling average. The monthly readings for November were lower except for the Western region, which gained one point for a reading of 77. The Northeastern region held steady with a reading of 52; the Midwest’s reading also decreased by one point to 59 and builder confidence in the Southern region fell by five points to 62.

Monthly regional readings for home builder confidence can be volatile due to regional economic conditions; the NAHB provides a three-month rolling average for its four U.S. regions. In November, the Northeast region reported a reading of 50 which was three points higher than October’s reading. The Midwest region was unchanged from October’s reading of 60; the South also reported no change from its October reading of 65. The Western region posted an increase of 69 to 73 over the three months between August and November.

Housing Starts Lowest Since Spring Floods

According to the Commerce Department, housing starts fell by 11 percent to an annualized reading of 1.06 million in October. This was the lowest reading since last spring, when construction was adversely impacted by flooding. September’s reading was adjusted to 1.19 million starts. Meanwhile, building permits issued rose by 4.10 percent to an annual rate of 1.15 million starts in October.

While housing starts fell by 18.60 percent in the South, permits issued rose to their highest level since 2007. The South is the most active region for home construction and accounts for half of all new home construction in the U.S.

Mortgage Rates, New Jobless Claims Lower

Mortgage rates fell across the board last week according to Freddie Mac. The average rate for a 30-year fixed rate mortgage fell by one basis point to 3.97 percent; the average rate for a 15-year fixed rate mortgage fell two basis points to 3.18 percent and the average rate for a 5/1 adjustable rate mortgage was five basis points lower at 3.03 percent. Discount points averaged 0.60 percent for a 30-year fixed rate mortgage and 0.50 percent for 15-year fixed rate mortgages and 5/1 adjustable rate mortgages.

New jobless claims also fell last week to a reading of 271,000 new claims filed as compared to expectations of 270,000 new claims filed and the prior week’s reading of 276,000 new claims filed. Lower jobless claims indicate further strengthening of labor markets, but seasonal hiring may have positively impacted the reading for new jobless claims.

What’s Ahead

Next week’s scheduled economic news releases include several housing reports. Existing Home Sales, the S&P Case-Shiller Housing Market Index, FHFA House Prices and New Home Sales will be posted along with regularly scheduled reports on mortgage rates and new jobless claims. There will be no economic reports released on Thursday or Friday due to the Thanksgiving holiday.

What's Ahead For Mortgage Rates This Week – November 16, 2015

The Fibromyalgia Diet: Healthy Eating Ideas That Could Help You Feel BetterLast week’s scheduled economic news was sparse due to no scheduled releases on Monday and the Veterans Day Holiday on Wednesday. A report on job openings was released on Thursday along with regularly scheduled weekly reports on jobless claims and Freddie Mac’s report on mortgage rates.

Mortgage Rates, Weekly Jobless Claims Rise

Mortgage rates rose last week according to Freddie Mac. The average rate for a 30-year fixed rate mortgage rose to 3.98 percent from last week’s reading of 3.87 percent. The average rate for a 15-year fixed rate mortgage rose to 3.20 percent from the prior week’s reading of 3.09 percent; the average rate for a 5/1 adjustable rate mortgage was also higher at an average of 3.03 percent as compared to the prior week’s average rate of 2.96 percent. Discount points were unchanged for all three types of mortgages at 0.60 percent for fixed rate mortgages and 0.40 for 5/1 adjustable rate mortgages.

New jobless claims rose last week to 276,000 claims filed against the expected reading of 268,000 new claims and the prior week’s reading of 276,000 new jobless claims filed. The Labor department reported 5.53 million job openings on September, which was the second highest reading since the inception of the job openings report in 2000.

The Labor Department also reported that the quits rate held steady at 1.90 percent for the sixth consecutive month. Fed Chair Janet Yellen has said that the Fed considers the quits rate an indicator of economic strength; if workers have enough confidence to quit their jobs for new jobs, this a strong economy. The quits rate has held steady for six months, which could signal to the Fed that the economy is not yet ready for a rise in interest rates that analysts expect to occur in December.

U.S. News recently cautioned that a combination of rising home prices and interest rates could quickly cool housing markets as first-time and moderate income buyers are priced out of the market and other would-be buyers find it difficult to qualify for the mortgages they need to finance home purchases. Recent hikes in mortgage rates are a likely response to the anticipated Fed rate hike in December.

What’s Ahead

Next week’s scheduled economic reports include the National Association of Home Builders Housing Market Index, Housing Starts and minutes from the most recent meeting of the Fed’s Federal Open Market Committee. The minutes may provide additional insight into how Fed policymakers are approaching the decision about raising the target federal funds rate.

What's Ahead For Mortgage Rates This Week – November 09, 2015

Whats Ahead For Mortgage Rates This Week November 09 2015Last week’s economic reports included releases on construction spending and several labor-related reports including ADP payrolls, Non-Farm payrolls, average hourly earnings and weekly jobless claims. Freddie Mac reported that mortgage rates rose as the national unemployment rate decreased to 5.00 percent.

Labor Reports Show Mixed Results

Key readings on employment showed mixed results as ADP payrolls decreased to 182,000 from September’s downwardly revised reading of 190,000 private sector jobs added. U.S. jobs expanded to a reading of 271,000 jobs added in October, which exceeded expectations of 180,000 jobs added and September’s reading of 137,000 jobs added. This was the fastest pace for job growth in 2015 and fueled expectations that the Federal Reserve may raise interest rates in December. In addition, the national unemployment rate dropped to 5.00 percent in October, which was the lowest unemployment rate in seven years.

Weekly jobless claims rose by 276,000 new claims, which exceeded the expected reading of 263,000 new claims and the prior week’s reading of 240,000 new claims.

In testimony before The House Financial Committee, Federal Reserve Chair Janet Yellen said that the central bank’s objective was to regulate financial institutions “in a manner that promotes the stability of the financial system as a whole.” This indicates that the Federal seeks to prevent threats to major financial institutions that could result in a repeat of the great recession in 2008.

Chair Yellen also said that the Federal Reserve Board and the FDIC have written a rule requiring the largest financial institutions to show that any financial failure could be “resolved in an orderly manner through the bankruptcy court.” These comments suggest that the Federal Reserve has ongoing concerns about the stability of the largest financial institutions and the economy; this could cause the Fed to take a wait-and-see attitude on raising interest rates in December. The Fed is expected to address interest rates in its December meeting of the Federal Open Market Committee, which directs monetary policy for the Fed.

Mortgage Rates Rise, Construction Spending Dips

Average mortgage rates rose across the board last week according to Freddie Mac. The average rate for a 30-yar fixed rate mortgage rose by 11 basis points to 3.87 percent; the average rate for a 15-year fixed rate mortgage rose by 11 basis points to 3.09 percent and the average rate for a 5/1 adjustable rate mortgage rose by seven basis points to 2.96 percent. Discount points were unchanged at 0.60, 0.60 and 0.40 percent respectively.

Construction spending slowed in September to a reading of 0.60 percent which met expectations based on August’s reading of an increase of 0.70 percent.Construction spending slows as fall and winter seasons approach, but analysts are monitoring construction activity as low inventories of available homes continue to increase demand for homes and home prices in many areas.

What’s Ahead

Next week’s scheduled releases for economic reports are slim; no reports are scheduled for Monday and Tuesday markets are closed for the Veterans Day holiday. Freddie Mac will release mortgage rates on Thursday and the weekly Jobless Claims report will also be released. Other scheduled reports include retail sales, retail sales except automotive sector and the University of Michigan’s report on consumer sentiment.

What's Ahead For Mortgage Rates This Week – November 2, 2015

Whats Ahead For Mortgage Rates This Week November 2 2015A number of economic reports released last week indicate mixed economic progress. The 20-City Home Price Index released by S&P Case Shiller showed that August home prices rose, but New Home Sales dropped in September. The Federal Open Market Committee of the Federal Reserve indicated that it may reserve the target federal funds range at its next meeting in December.

Case-Shiller Reports Higher Home Prices in August

August’s 20-City Home Price Index issued by S&P Case Shiller showed that average home prices rose in 18 of 20 cities with Denver, Colorado and San Francisco, California posting year-over-year increases of 10.70 percent. Portland, Oregon closely followed with a year-over-year gain of 9.40 percent. Cities lagging in home price gains were Chicago, Illinois and Washington, D.C. with year-over-year gains of 1.90 percent and New York City with a year-over-year gain of 1.80 percent.

Higher home prices were seen by analysts as contributing to a lag in New Home Sales in September. The Commerce Department reported that pending home sales dropped by -2.30 percent as compared to August’s reading of -1.40 percent. Fewer home sales in September were consistent with the winding-down of the peak spring and summer home buying season, but analysts cited higher home prices and concerns about cooling economic trends as factors contributing to slowing home sales.

Federal Reserve Hints at December Rate Hike

Economists and media have been trying to predict when the Federal Reserve will raise its target federal funds range, which is currently set at 0.00 to 0.25 percent. The Federal Open Market Committee of the Fed indicated in its post-meeting statement that rates could be raised in December, when the committee meets for the final time in 2015. While no specifics were given, eyes and ears will be paying close attention for precursors of a December rate hike. When the Fed does raise rates, mortgage rates and other consumer lending rates can be expected to increase as well.

October Consumer Sentiment decreased to a reading of 97.6 as compared to an expected reading of 101.6 and September’s reading of 102.6; this suggests that consumers are increasingly wary of economic conditions as well as potentially higher interest rates.

Mortgage Rates Mixed, Jobless Claims Rise

Freddie Mac reported that the average rate for a 30-year fixed rate mortgage fell by three basis points to 3.76 percent. Discount points were unchanged at an average of 0.60 percent. The average rate for a 15-year fixed rate mortgage was unchanged at 2.98 percent. The average rate for a 5/1 adjustable rate mortgage was also unchanged at 2.89 percent. Average discount points were 0.60 for fixed rate mortgages and 0.40 percent for a 5/1 adjustable rate mortgage.

Jobless claims were slightly higher with a reading of 260,000 new claims filed against expectations of 265,000 new claims and last week’s reading of 259,000 new claims filed.

What’s Ahead

This week’s scheduled economic reports include reports on Construction Spending, ADP Payrolls, the Non-Farm Payrolls report and the National Unemployment report. These reports are will provide information related to general economic conditions and labor trends.

Case-Shiller: August Home Prices Accelerate

Case-Shiller August Home Prices AccelerateAccording to the Case-Shiller 20-City Home Price Index, U.S. home prices increased by 0.40 percent in August, which boosted year-over-year home price growth to 5.10 percent. Denver, Colorado continued to lead in home price gains with a monthly increase of 0.90 percent and a year-over-year gain of 10.70 percent. San Francisco, California also posted a year-over-year gain of 10.70 percent, but posted a month-to-month loss of -0.10 percent. Portland, Oregon posted a year-over-year gain of 9.40 percent with a month-to-month gain of 1.10 percent.

Cities with the slowest growing home prices year-over-year included New York City with a reading of 1.80 percent; Chicago, Illinois and Washington D.C. each posted year-over-year gains of 1.90 percent.

Majority of Cities Show Home Price Gains

Before seasonal adjustments, home prices were higher in 18 of 20 cities; after seasonal adjustments, 11 cities had higher home prices, four were unchanged and five cities had lower home prices. After adjustments for inflation, current home price growth approached rates seen in the housing boom of 2005and 2006, but current home price growth is driven by a slim supply of available homes rather than excessive demand seen during the housing boom.

The Federal Housing Finance Agency reported that home prices for sales of homes related to mortgages owned by Fannie Mae and Freddie Mac rose by 5.50 percent year over year.

New Home Sales Slump in September

Sales of new homes dropped by 11.50 percent in September; this was the lowest level since last November. The drop largely attributed to a steeper than usual drop in home sales in the Northeast, which accounted for 62 percent of slumping home prices. Over the past two years, the Northeast region accounted for 32 percent of declining home sales. Low inventories of available homes and rising home prices contributed to the slump in sales; home builders are working to close the gap between available homes and current demand. September’s supply of available homes increased to a 5.80 month supply from August’s reading of a 4.90 percent

Analysts said that September’s inventory of homes for sale reached its highest level in and a half years and also noted that homes under construction had achieved their highest volume in six and a half years. Although millennials are expected to boost home sales as they begin to start families, some analysts pointed out that the slump in sales coincided with indications that third quarter growth may be weaker than economic growth during the second quarter of 2015.

What's Ahead For Mortgage Rates This Week – October 26, 2015

Whats Ahead For Mortgage Rates This Week October 26 2015Last week’s economic news included the National Association of Home Builders Index, Housing Starts and FHFA’s report on August home sales. The National Association of Realtors® released its monthly report on sales of previously owned homes.

Builder Confidence and Housing Starts Post Gains

The Wells Fargo National Association of Home Builders Housing Market Index for September posted its highest level of builder confidence in 10 years a higher than expected results with a reading of 64 for October. Analysts expected a reading of 62 based on September’s reading of 61.

The NAHB Wells Fargo Housing Market Index reading is based on three builder confidence readings. Builder confidence in current market conditions rose three points to a reading of 70; builder confidence in housing market conditions over the next six months rose seven points to 75 and buyer traffic in new housing developments held steady with a reading of 47. Any reading over 50 indicates that more builders are confident about market conditions than those who are not.

This news was consistent with September housing starts, which were also higher. The U.S. Commerce Department reported September’s housing starts at an annual level of 1.206 million starts against expectations of 1.139 million starts and August’s reading of 1.132 million housing starts.

Sales of Previously Owned Homes Surpass Expectations

September sales of pre-owned homes surpassed expectations according to a report released by the National Association of Realtors®. Sales of previously owned homes reached 5.55 million sales on a seasonally-adjusted annual basis against an expected reading of 5.34 million sales. August’s reading was adjusted downward from 5.31 million sales to 5.30 million sales of previously owned homes.

Lawrence Yun, Chief Economist for the National Association of Realtors®, cited lower mortgage rates, higher demand for homes and low inventories of available homes as driving higher sales. Slight easing of mortgage credit standards was also said to be driving home sales.

FHFA’s Home Price Index for August showed that home prices for properties associated with mortgages owned by Fannie Mae and Freddie Mac increased at a rate of 5.05 percent in August as compared to a growth rate of 5.80 percent year-over-year in August 2014.

Mortgage Rates Mixed, Weekly Jobless Claims Lower

Weekly reports on mortgage rates and jobless claims yielded mixed results. Freddie Mac reported that average rates for fixed rate mortgages dipped with the average rate for a 30-year fixed rate mortgage three basis points lower at 3.79 percent; the average rate for a 15-year fixed rate mortgage fell by five basis points to 2.98 percent. The average rate for a 5/1 adjustable rate mortgage ticked upward by one basis point to 2.89 percent. Average discount points were 0.60 percent for a 30-year fixed rate mortgage, 0.50 percent for a a5-year fixed rate mortgage and were unchanged at 0.40 percent for a 5/1 adjustable rate mortgage.

Weekly jobless claims were lower than expectations with a reading of 259,000 new claims filed against expectations of 265,000 new jobless claims. New claims were higher than the previous week’s reading of 256,000 new claims. Analysts are keeping an eye on jobs reports as stronger job markets are essential to expanding home sales.

What’s Ahead

This week’s scheduled economic news includes Case-Shiller reports on home prices along with reports on new home sales, consumer confidence and consumer sentiment. Core inflation readings will be released Friday after Thursday’s releases of Freddie Mac mortgage rates and weekly jobless claims.

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