Feb 23, 2015 | Market Outlook
Last week’s housing related reports included the National Association of Home Builders (NAHB) Housing Market Index for February, The Commerce Department’s report on Housing Starts for January and Freddie Mac’s weekly report on average mortgage rates. The Federal Reserve released the minutes of January’s FOMC meeting, which indicated that FOMC members are in no hurry to raise the target federal funds rate. The details:
Home Builder Confidence, Housing Starts Impacted by Winter Weather
The NAHB Housing Market Index for February fell from January’s reading of 57 to 55. Analysts expected a reading of 59. This was the lowest reading since October, but February’s reading remains above the benchmark of 50. Readings exceeding 50 indicate that more home builders are confident about housing market conditions than not.
According to the NAHB, harsh weather contributed to lower builder confidence in February. NAHB Chief Economist David Crowe said that low mortgage rates, increasing affordability and improving job markets are helping home buyers.
The NAHB Housing Market Index is calculated based on three components. Builder confidence dropped by one point to a reading of 61 for current housing market conditions. Not surprisingly, the winter weather caused buyer foot traffic to drop five points to a reading of 39. A gauge of housing market conditions in the next six months was unchanged.
Regional readings showed declines in three of four regions: The Northeast saw a one-point drop to 46; the Midwest and South dropped by two points to readings of 54 and 57. The Western region gained two points for a reading of 68.
The U.S. Commerce Department reported that January’s Housing Starts dropped from 1.09 million in December to 1.07 million in January; the reading for January matched analysts’ expectations.
Weekly jobless claims provided some good news; they dropped from the prior week’s reading of 304,000 new claims to 283,000 new claims. The expected reading was 290,000 new jobless claims.
Mortgage Rates Rise, Points Unchanged
Freddie Mac reported that average mortgage rates rose last week. The rate for a 30-year fixed rate mortgage rose by seven basis points to 3.76 percent; the average rate for a 15-year fixed rate mortgage increased by six basis points to 3.05 percent and the average rate for a 5/1 adjustable rate mortgage was unchanged at 2.97 percent. Discount points were unchanged at 0.6 percent for fixed rate mortgages and 0.50 percent for 5/1 adjustable rate mortgages.
What’s Ahead
Next week’s scheduled economic news includes several reports related to housing. New and existing home sales reports will be released along with the Case-Shiller Composite Housing Market reports. FHFA will release its House Price Index Report and Fed Chair Janet Yellen is set to testify before Congress. Reports on Consumer Sentiment and Consumer Confidence are also scheduled along with weekly reports on jobless claims and mortgage rates.
Feb 20, 2015 | Around The Home
Many buyers anticipate the day they drive to their new home. Then it happens: the movers pull up. It’s time to move everything in. This can be a daunting task, but following a few steps will break down the work and careful planning will maximize space in the years ahead.
Clear Your Space
Go through each room to make sure the seller removed all belongings. Contact the real estate agent if the seller did not do this. Check the condition of all surfaces to determine how much preparation may be required.
Place Boxes In Correct Rooms
Boxes should be marked by room and either carry a label detailing what’s inside or be matched to a list showing what’s inside. Put each box in the correct room.
Place Boxes In Order Of Need
In each room, place boxes that will not be immediately needed against the far wall. Place boxes needed sooner in front of or on top of those boxes.
Eliminate Excess Items
If this wasn’t done while packing, buyers should stop any unwanted belongings from being taken into the house.
Create A Strategy
Unpacking does not have to be done in one day. Create a strategy for unpacking in three steps: immediate, secondary, and long-term needs.
Immediate Unpacking
Unpack what you need in the next couple of days. This will include bedding, toiletries, basic cooking equipment, and a few changes of clothing.
Secondary Unpacking
In the first week, unpack secondary items. Each day, unpack these items for one or two rooms. In the bedroom, for example, unpack your clothing and accessories. In the kitchen, unpack the rest of what you use for everyday cooking and eating. Do the same for other rooms.
Long-term Unpacking
By the end of the first month, decide what you are going to do with items you don’t use every day. Use extra closets, cupboards, basement or storage rooms, outdoor sheds, and the like. Remember where you put things so you can find them later.
Organize as You Go
Put items away in an organized fashion. Don’t just haphazardly unpack and toss things. It’s better to unpack more slowly and take time to put things away thoughtfully.
Call your real estate agent for moving-in tips and lists to track belongings. Take your time with unpacking and you will create a home where you can find things easily, maintain livable spaces, and enjoy a spacious environment.
Feb 19, 2015 | Market Outlook
Minutes of the Federal Open Market Committee (FOMC) meeting held January 27 and 28 were released on Wednesday. According to the minute’s transcript, it appears that Fed policymakers are in no hurry to raise the target federal funds rate. Members said that raising rates too soon could swamp the strengthening economy and expressed concerns that changing the committee’s current “patient” stance on rising rates could cause more harm than good to current economic conditions.
FOMC members discussed the Fed’s use of the word “patient” in its guidance, and said that dropping the word could incorrectly suggest that the Fed is planning to act sooner than later on raising the Fed’s target interest rates, and could result in “undesirably tight” financial conditions. While a majority of members agreed on protecting current economic conditions by raising rates too soon, member viewpoints varied on which conditions would support the first rate hike.
Target Inflation Rate of Two Percent “Most Consistent” with Fed’s Statutory Mandate
According to the Federal Reserve’s statutory mandate supplied by Congress, the Fed seeks to provide maximum employment, price stability and moderate long-term interest rates. The Fed established a target inflation rate of 2.00percent as a benchmark for economic health, but inflation has remained consistently below the target rate according to the annualized index reading for personal consumption expenditures.
FOMC members did not set a target rate for annual unemployment; FOMC members cited unpredictable “non-monetary factors that affect the structure and dynamics of the labor market” as reasons why it’s impossible establish an accurate target percentage rate for national unemployment. The minutes caution that these factors are sufficiently unpredictable that they may cause the Fed to revise or reverse its policies concerning national unemployment readings.
Committee members noted that short-term fluctuations in the federal funds rate could be expected. The minutes indicated that in general, day-to-day fluctuations outside of the Fed’s target range were not surprising as historical data indicated that such changes had “few if any implications for overall financial conditions or the aggregate economy.”
FOMC members agreed that the economy had expanded at a solid pace, but noted that inflation had fallen due to rapid decreases in fuel prices.
Fed/FOMC Chair Janet Yellen did not hold a post-meeting press conference at the conclusion of January’s FOMC meeting; she is scheduled to hold a press conference at the conclusion of the next FOMC meeting on March 18, 2015.
Feb 18, 2015 | Home Mortgage Tips
If you are self-employed, either as a freelancer or as the owner of your own business, your income can fluctuate greatly from year to year. That can make it difficult to get approved for a mortgage, although there are some things you can do to improve your chances. Here are three tips for securing a mortgage if you are self-employed.
Make Sure Your Credit Score Is In Good Shape
While your ability to pay back a mortgage is the most important factor in approval, your credit score is a close second, and that goes for every borrower, not just those who are self-employed. If you have a credit score in the high range — something above 750 or 760 — it will help you get approved for a mortgage. To boost your score, make sure you pay all bills on time, pay down your debt levels and don’t make any new big purchases or apply for new credit soon before you apply for a mortgage.
Have a Large Down Payment
The more money a bank lends you to buy a house, the more risk it is taking in that the money won’t be paid back. If you are self-employed and considered a higher risk to begin with, one way you can alleviate some of that risk is to be able to put down a large amount of money. Putting down 20 percent is standard for a conventional loan, and you should be willing to contribute at least that much. Putting down at least 20 percent also will save you money in the long run, because you won’t have to pay for mortgage insurance and you will pay less in finance charges over the life of the loan.
Have Significant Assets
One way to put a lender at ease about your ability to pay for a mortgage is to have significant reserves in the form of assets. If you have large amounts of money in regular savings, brokerage and retirement accounts, it offers a reserve for you to tap should your income take a dive. Other forms of property, such as personal and business property that’s paid off and has value, also help.
Feb 17, 2015 | Market Outlook
Last week’s economic news included an index of labor market conditions provided by the Federal Reserve, a report on small business sentiment, and a report from the Labor Department on job openings. Weekly jobless claims, Freddie Mac’s mortgage rates report and a report on Consumer Sentiment rounded out the week. The details:
Labor Market Conditions, Small Business Index Reports Fall
According to the January reading for a labor index report released by the Federal Reserve, labor market conditions declined from December’s reading of 7.3 to January’s reading of 4.9. This index is based on 19 economic indicators and January’s reading was the lowest since September. The National Foundation for Independent Business (NFIB) reported that its index of small business sentiment fell to 97.9 in January as compared to December’s reading of 100.4. Analysts said that this report reflected less optimism about business conditions and sales growth rather than concerns over spending and hiring plans.
In other labor–related news, the Labor Department reported that job openings rose to 5.03 million in December; this was 3.70 percent higher than November’s reading and represented a year-over-year increase in job openings of 28.50 percent. In contrast, all hiring for 2014 increased by 12.50 percent, which suggested that employers may be having trouble finding employees with needed job skills.
Jobless Claims Rise, but Four Week Average Shows Drop in New Claims
According to the Labor Department’s weekly Jobless Claims report, 304,000 new unemployment claims were filed, which once again positioned new jobless claims over the key benchmark of 300,000 new jobless claims filed. Analysts expected a reading of 296,000 new jobless claims based on the prior week’s reading of 279,000 new claims. To put this in perspective, new jobless claims have fallen by 3250 claims over the past four weeks to a reading of 289,750 new claims. Economists say that the four-week average is a more accurate measure of developing trends, as week-to-week readings can be volatile.
Mortgage Rates Rise
Last week’s only scheduled mortgage-related news was Freddie Mac’s weekly survey of average U.S. mortgage rates. Rates were higher with the average rate for a 30 year fixed rate mortgage higher by 10 basis points at 3.60 percent. The average rate for a 15-year fixed rate mortgage rose by eight basis points to 2.99 percent. The average rate for a 5/1 adjustable rate mortgage jumped to 2.97 percent from the previous week’s average of 2.82 percent. Average discount points were 0.60 percent for 30 and 15-year fixed rate mortgages and averaged 0.50percent for a 5/1 adjustable rate mortgage.
February’s Consumer Sentiment Index dipped as fears of rising inflation caused consumer sentiment to dip from January’s reading of 98.1 and expectations of February’s reading at 98.5; unfortunately, February’s actual reading fell short at 93.6. February’s reading was a three-month low after January’s reading hit an 11-year high. Fears of growing inflation were noted as an influence on the drop in consumer sentiment; fuel prices are rising, which will contribute to rising inflation.
What’s Ahead
No economic reports were scheduled Monday due to the President’s Day holiday. The National Association of Home Builders (NAHB) releases its housing market index report on Tuesday, Housing Starts will be released Wednesday along with the minutes of the most recent FOMC meeting. Weekly jobless claims, Freddie Mac’s mortgage rates survey and Leading Economic Indicators round out this week’s scheduled reports.
