South Orange County Blog from Bob Phillips

Altos: Critics wrong about housing, it’s going to soar in 2015!

An interesting new article from Jacob Gaffney, of HousingWire.com, dated July 29, 2014:

HotAirBalloonWith so many fists beating on the housing-is-facing-ruin door, Altos Research is set to release data that claims all that pounding is in vain.

Clients will begin receiving a report Wednesday afternoon, but HousingWire was able to get a sneak peek, and the results say that housing recovery critics are wrong about housing. According to Altos, it’s going to soar in 2015.

“While we see signs of demand easing, we are significantly more bullish on housing than many of the recent headlines seem to suggest,” said Altos CEO Michael Simonsen. “Based on our models, we’re forecasting another year of home price appreciation, with a 7% home price increase for the year of 2015.”

Single-digit appreciation is a remarkable prediction. Many other experts anticipate depreciation in   the nation’s housing market, so the Altos call is relatively noteworthy.

What’s driving the negative stand most of the market holds? The media is partially to blame, the report states.

Bearish Headlines, Bullish Reality

In the section titled, “Bearish Headlines, Bullish Reality,” the researchers state their case this way:

“In our view, these attitudes reflect a myopic view of actual market conditions and conflate concerns over the mortgage industry, the otherwise-constrained new construction market, and more broadly, the long-term financial stability of the U.S. consumer with specific current housing market supply and demand dynamics. While these are valid long-run concerns, the variables impacting home prices have proven to be driven by low available supply and growing household formation.”

So what is the main driver for the Altos view that prices will rise 7%? Altos expects inventory to climb another 10%.

“As inventory and transactions rise along with pricing, participants in the housing market stand to benefit broadly,” they write. Furthermore, the number of days on market remains low compared to before the housing bust, indicating a seller’s market.

In a seller’s market, sellers can list homes at a higher value, hoping a buyer takes the bait. If not, they can also bring down the price closer to market value, while appearing to offer a sales compromise to the buyer.

Altos estimates that approximately 35% of properties will take such a price cut. Altos sees this as an indicator of strong competition, despite weaker demand overall.

The nation’s housing market, they note, continues to require a more nuanced view of its future.

“Home prices across the U.S. are poised for a fifth consecutive year of recovery. The market is still faced with low inventory and demand, buoyed by an expanding economy, which, among other factors, remains healthy,” the report concludes. “Both supply and demand conditions are moving from extreme bullish conditions to healthy condition.”

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FOMC Statement: Asset Purchases to end in October, Labor Market Stronger

Fed-Reserve-FOMC-StatementThe Federal Reserve’s Federal Open Market Committee (FOMC) released its customary statement at the conclusion of its meeting on Wednesday. FOMC members oversee the Fed’s monetary policy. In recent months, investors and economists have speculated on whether or not the Fed would continue tapering its asset purchases under its latest quantitative     easing (QE) program, and whether the Fed would raise its target federal funds rate of 0.00 to 0.250 percent.

According to its statement, FOMC members plan to continue tapering monthly asset purchases of Treasury securities and mortgage-backed securities until asset purchases under the QE program conclude in October. FOMC statements have repeatedly indicated that members do not foresee raising the target federal funds rate for a “considerable period” after the QE asset purchases cease. Wednesday’s FOMC statement reasserted this position, and said that the committee may keep   the current target federal funds rate at its current level for “some time” after employment levels and inflation reach    normal levels.

Committee member and Philadelphia Federal Reserve Bank President and CEO Charles I. Plosser objected to use of the term “considerable period” as being “…time dependent and not reflecting economic progress made toward the committee’s goals.”

The committee’s comments about asset purchases and the target federal funds rate included the usual reminder that asset purchases and determination of the target federal funds rate are not on a predetermined course and are subject to adjustment should economic conditions merit changes in FOMC monetary policy.

FOMC Concerned with Housing Markets, Unemployment

The committee’s statement said that while FOMC members noted improvements in labor markets, but the unemployment rate remains elevated. The FOMC statement noted that “a range of labor market indicators suggest that there remains significant underutilization of labor resources.”

In spite of encouraging labor market reports, FOMC members remain concerned about overall labor market conditions, and are not relying on the national unemployment rate alone as an accurate measure of labor market health.

Home prices continue to rise, but at a slower pace in many areas. On a positive note, the statement indicated that FOMC members found that the likelihood of inflation running consistently below the committee’s target rate of 2.00 percent was “diminished somewhat.”

While Wednesday’s FOMC statement reflected signs of an ongoing economic recovery, it’s evident that FOMC members plant to keep a close eye on factors that impact their expectations for the economy.

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Consumer Confidence Soars in June

An article by Tory Barringer, of DSNews.com, July 29th, 2014

2OnEscalatorPicU.S. consumer confidence jumped up more than four points from June to July, signaling a brighter economic outlook among Americans.

The Conference Board’s Consumer Confidence Index reached 90.9 in the group’s July survey, up from 86.4 in June. As   of July, the index stands at its highest level since before the Great Recession.

Lynn Franco, director of economic indicators at the Conference Board, said the surge was fueled by strong job growth and a brighter short-term outlook for the labor market and personal incomes.

“Recent improvements in consumer confidence, in particular expectations, suggest the recent strengthening in growth   is likely to continue into the second half of the year,” Franco added.

The index component measuring consumers’ feelings about their present situation increased two points to 88.3, the Conference Board reported, while the index gauging future expectations jumped more than six points to 92.7.

Looking at recent economic developments, 15.9 percent of consumers surveyed said jobs are plentiful at the moment, though nearly double that percentage maintained that work is still hard to find.

Looking ahead, however, Americans were more positive, with a greater share expecting more jobs in the months to come and a smaller number expecting labor to fall—an improvement Federal Reserve leaders might take note of as they sit down this week to decide their next move in monetary policy, says Paul Ashworth, chief U.S. economist for Capital Economics.

“The net difference between those two balances shrank to -14.8 in July, from -16.1. That decline strongly suggests that the amount of slack in the labour market really is diminishing quite rapidly, which many Fed officials still aren’t willing to admit,” Ashworth said in a note to clients.

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S P Case-Shiller Home Price Index: May Home Prices Rise

S&P Case-Shiller Home Price Index: May Home Prices RiseMay home prices rose in all 20 cities tracked by the S&P Case-Shiller 20 City Home Price Index. This was the second consecutive month in which all cities posted gains.

On average, national home prices rose by 1.10 percent in May as compared to April’s reading. Year-over-year, home prices rose, but at a slower rate of 9.39 percent in May as compared to 10.80 percent year-over-year for April.

Nevada, Florida and California Cities Post Highest Gains

Cities posting the highest year-over-year price gains in May included Las Vegas, Nevada at 16.90 percent, San Francisco, California at 15.40 percent, Miami, Florida at 13.20 percent. San Diego and Los Angeles, California reported home price growth rates at 12.40 and 12.29 percent respectively.

According to the 20-City Index, home prices are 18 percent below their peak reached in mid-2006, but are 27 percent higher as compared to March 2012 lows.

Pending Home Sales Decline in June

More evidence of sluggish home sales was reported for June. The National Association of REALTORS® reported that pending home sales dropped by 1.10 percent in June. This was a surprise as compared to May’s month-to-month gain of 6.00 percent for pending sales.

Several factors were cited as contributing to slower home sales; higher home prices, stagnant wage growth, higher mortgage rates and stringent loan requirements were seen as obstacles for home buyers. Pending home sales are an indicator of future closings and mortgage activity. Approximately 80 percent of purchase contracts signed sales completed within 60 days.

FHFA House Price Index: Home Price Growth Slips in May

FHFA, the agency that oversees Fannie Mae and Freddie Mac, reported that home prices grew by 0.40 percent in May to a seasonally-adjusted year-over-year rate of 5.50 percent as compared to April’s year-over-year reading of 5.90 percent. FHFA’s House Price Index is based on sales of homes connected with Fannie Mae and Freddie Mac mortgages.

On a positive note, the reading for the Consumer Confidence Index jumped from 85.20 in June to 90.90 in July. Expanding consumer confidence suggests that more families may decide to transition from renting to owning their homes, and that homeowners may feel confident enough to move up to larger homes.

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Sellers, Beware: Five Reasons You Might Not Get Top Dollar when You Sell Your Home (And How to Avoid Them)

Sellers, Beware: Five Reasons You Might Not Get Top Dollar when You Sell Your Home (And How to Avoid Them)For most people, their home is their largest asset, so they want to maximize that asset by getting top dollar when they sell. Here are a few reasons you might not get top dollar when you sell – and how to avoid them!

Selling At The Wrong Time

From early spring to late summer is home-buying season for most people, especially those with children. Putting your house on the market during this period is when you are likely to get top dollar for it. Early fall is also a good time to list your home. Winter – especially December – is the worst time to list. If you list your home outside of prime selling season, you are likely to get less for it than you could have otherwise.

Not Staging Your Home Properly

Many people think of staging as simply rearranging the furniture or changing curtains, but there is so much more to it, and not doing it properly can mean less money for your home. To stage your home properly, you must declutter, putting knick-knacks and family pictures away. You also want to make sure your home is as clean as possible and that you correct any defects such as holes in the wall or cracked window panes. Another thing you should do as part of your staging routine is to paint your walls in neutral colors and update cabinet hardware and light fixtures that are out of date. These little changes can make a big difference.

Not Paying Attention To Curb Appeal

You can spend all the time and money necessary to spruce up the inside of your home, but if your lawn is a patch of dirt and your gutters are falling down, all that work and money can go for naught. To get top dollar for your home, you need to improve your curb appeal. This includes seeding or sodding bare spots in your lawn, trimming trees and shrubbery and fixing up home-related items such as broken concrete and sagging gutters.

Not Getting The Price Right

You might think that to get the highest price out of your house, you have to price it high. However, that’s not necessarily always the case. If you price your house too high, it can make other similar houses that are priced lower look like better deals. You should make sure to pay close attention to what comparable homes are selling for in the area and price your home accordingly.

Not Working With A Real Estate Agent

Many people think they can save a bundle selling their home by not working with a real estate agent. While you might save on the real estate commission, that is probably not the case, since your potential buyer is wanting to save that same commission.  So, at best you’re likely only saving HALF the commission.  Also, if you’re thinking that the commission is going to be 6%, you’re probably wrong there, as well.  Many agents, like me, are willing to offer a substantial discount to a seller – frequently, as low as 1% to 2% on the seller’s side, ( Depending on the price range.) while offering 2.5% to the buyer’s side of the transaction.  You can quickly lose more than that 3.5% to 4.5% – that the buyer expects at least 2.5% of – by making mistakes in pricing and marketing.

A real estate agent will have access to resources you don’t, such as information on buyers looking in your neighborhood. An agent will market your home, make sure it is priced accordingly and set up showings. It is worth your time and money to call an agent experienced in selling homes in your neighborhood who can give you a free market evaluation.

In South Orange County, that agent is Bob Phillips, with over 38 years of local, professional real estate service.  Why not give me a call or text today, at             949-887-5305, or shoot me an email to BobPhillipsRE@gmail.com.  I’d love to talk with you about your real estate plans.

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What’s Ahead For Mortgage Rates This Week – July 28, 2014

Home cooling costsLast week’s economic news brought several housing-related reports, which indicated varying results in terms of gauging the economic recovery. FHFA reported slower growth of home prices associated with Fannie Mae and Freddie Mac mortgages, but sales of existing homes as reported by the National Association of REALTORS® surpassed expectations and May’s reading. Sales of new homes slumped to their lowest level in three months. Weekly jobless claims were lower than expected and also lower than for the prior week.

FHFA Home Prices Grow at Slower Rate, Existing Home Sales Higher than Expected

The Federal Housing Finance Agency (FHFA) reported that the average sale price of homes associated with mortgages owned or backed by Fannie Mae and Freddie Mac grew by.40 percent in May with year-over year growth of 5.90 percent. While national home price readings continue to rise, they are doing so at a slower pace since 2013’s rapid appreciation of average home prices.

Sales of previously owned homes reached their highest level in eight months in June. Existing home sales surpassed expectations and May’s reading in June, with sales of pre-owned homes at a seasonally adjusted annual rate of 5.04 million units. Analysts forecasted sales of existing homes at 5.00 million against May’s reading of 4.91 million existing homes sold.

New Home Sales Fall Short in June

New home sales did not achieve the expected volume for June. The reading of 406,000 new homes sold was less than the expected reading of 475,000 new homes sold. Projections were based on the original May reading of 504,000 new homes sold, but this was downwardly revised to 442,000 new homes sold in May. Builders were said to be cautious about over-extending themselves are focused on new home construction in high-demand areas where home prices are higher. Homes are less affordable in such areas, which impacts lower sales volume.

Freddie Mac: Mortgage Rates Steady for 30-year FRM

The average rate for a 30-year fixed rate mortgage was unchanged at 4.13 percent with average discount points also unchanged at 0.60 percent according to Freddie Mac’s weekly survey of mortgage rates. The average rate for a 15-year fixed rate mortgage rose by three basis points to 3.26 percent with discount points higher at 0.60 percent. The average rate for a 5/1 adjustable rate mortgage was two basis points higher at 2.99 percent with discount points ten basis points higher at 0.50 percent.

Weekly Jobless Claims Lowest since 2006

A major consideration for home buyers is stable employment. Recent reports suggest that the labor market is expanding; the Weekly Jobless Claims report continued this trend with a lower than expected reading of 284,000 new jobless claims filed against expectations of 310,000 new claims and the prior week’s reading of 303,000 new jobless claims. Analysts found the declining number of new jobless claims consistent with lower unemployment rates, but cautioned that sustained weekly jobless claims readings lower than 300,000 are more consistent with a national unemployment rate of 5.00 percent or less.

What’s Ahead

This week’s scheduled economic news will add further insight to housing market trends with the release of Pending Home Sales for June and the Case-Shiller Home Price Index report for May. The Bureau of Labor Statistics will also release July’s Non-Farm Payrolls report and National Unemployment report. The Federal Reserve is set to release its customary statement in the aftermath of the Federal Open Market Committee (FOMC) meeting that concludes on Wednesday.

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Can One Missed Mortgage Payment Affect Your Credit Rating? Yes! Here’s What to Do if You Miss One

Can One Missed Mortgage Payment Affect Your Credit Rating? Yes! Here's What to Do if You Miss OneMost people don’t know whether or not a single missed mortgage payment can have serious consequences for their credit score.

The good news is that there are things that can be done to mitigate the damage and help anyone who has missed a payment repair their credit. What are some options to help homeowners get back in the good graces of their creditors?

Own Up To The Mistake

The best thing to do is to admit that the payment was missed and immediately make amends for it. For the most part, mortgage lenders are sympathetic to the fact that people miss payments for reasons that may be beyond their control.

By calling the lender as soon as it appears that a payment may be late or not forthcoming at all, it is easier to make arrangements to roll that payment back into the mortgage or take other steps to decrease the odds of a negative remark being made on a credit report.

Don’t Let A Single Missed Payment Turn Into Multiple Missed Payments

While a single missed payment can hurt a credit score, it is important to not compound the mistake by missing more payments. In some cases, someone may decide to make up for the late payment before making any further payments.

However, that only makes the mistake worse because a borrower will be considered late on all subsequent payments. It is better to make the most current payment on time and make the late payment the secondary priority.

Hire A Third-Party If Necessary To Negotiate A Loan Modification

It is important to not let emotion get in the way of negotiating a modification to a mortgage. When a borrower hires a credit counselor or a bankruptcy attorney to talk his or her creditors, the negotiations can stay professional and on topic.

In most cases, a lender will be willing to make modifications for those who need them because it is better to get the money from the borrower willingly instead of having to go through a foreclosure proceeding.

While a missed mortgage payment can be bad news for a credit score, it is possible to make amends for the missed payment while minimizing long-term damage to a borrower’s credit score. By owning the mistake, staying current on all future payments and working with a third-party, it may be possible for a lender to forget that the missed payment ever happened.

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National Association of REALTORS: Existing Home Sales Exceed Projections

sold-homeIn Tuesday’s post I focused on our local – Orange County, California – housing market. Today I have news about   the National housing market. It looks better than most pundits anticipated. It’s not great, but it’s not bad, either.

According to the National Association of REALTORS®, existing home sales surpassed both May sales and expectations for June. Sales of previously owned homes increased by 2.60 percent in June and reached a seasonally adjusted annual level of 5.04 million sales. June’s reading was the third consecutive monthly increase  in sales of existing homes and was the highest reading for existing home sales in eight months. Existing home   sales remain 2.30 percent below the June 2013 reading of 5.16 million sales of existing homes.

Analysts projected sales of 5 million existing homes for June against May’s initial reading of 4.89 million sales of previously owned homes; the May reading was later revised to 4.91 million sales. Lawrence Yun, chief economist for the National Association of REALTORS® said that market conditions are becoming “more balanced,” and    noted that inventories of existing homes are at their highest level in over a year and that price gains have slowed to much more welcoming levels in many parts of the country.

Housing Market Headwinds Declining

After a particularly harsh winter and lagging labor reports, analysts forecasted lower annual sales of existing homes for 2014 than for 2013. Labor markets are stronger according to recent labor market reports and a declining national unemployment rate. Steady work is an important factor for families considering a home purchase; as labor markets improve, more would-be homeowners are expected to become active buyers.

Housing markets are not without challenges. In recent unrelated reports, the Federal Reserve has noted higher than anticipated inflation may cause the Fed to raise its target Federal Funds rate in the next several months. Gas and food prices, important components of consumers’ household budgets continue to rise and could slow save toward a home for some families. Steve Brown, president of the National Association of REALTORS®, said that first-time and moderate income buyers continue to deal with affordability due to increased FHA costs and tight mortgage credit. Relief may be in sight as a slower pace of home price growth suggests that more buyers may be able to afford homes.

FHFA House Price Index Reports Gain in May Home Sales

FHFA released its May index of home sales connected with mortgages owned or backed by Fannie Mae and Freddie Mac. The index posted a month-to-month gain of 0.40 percent in May and a year-over-year gain of 5.90 percent year-over-year. FHFA said that increased sales were driven by a 9/60 percent increase in sales in the Pacific region and that average home prices remain 6.50 percent below April 2007.

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The Latest Orange County Housing Report

Below is the latest Orange County Housing Report from my friend, Steven Thomas.

Window of OpportunityOrange County Housing Report:  The Window of Opportunity is Closing

Summer is flying by and so is the second best time of the year to sell a house 

Window of Opportunity: The second best time of the year to sell will come to an end as soon as the kids go back to school and housing transitions into the Autumn Market.

This year, the transition from the Summer Market to the Autumn Market is a bit more significant because the expected market time is moving away from a seller’s market to one that is balanced, favoring neither the seller   nor the buyer. It is also important to note that the best time of the year to sell is already behind us, the Spring Market. Summer is mistakenly viewed as the best, but the higher sales numbers are actually a reflection of  pending sales that were negotiated during the spring, but did not close until the summer. As a result of a lot of publicity that is circulated about closed sales, many are duped into thinking that right now is the best time to sell; unfortunately, they are wrong.

Back to school means that fewer buyers are yearning to make an immediate move. Buyers with children factor the displacement of their children and the strain on their family in moving during a school year. As a result, many buyers simply opt to wait until the following spring to start the process of isolating their next home.

As housing transitions into the Autumn Market, the window of opportunity in taking advantage of the summer will come to an end. That does not mean that sellers will not be successful; however, it is going to take a bit more patience and accurately pricing will be fundamental in luring a willing and able buyer. Sellers will absolutely NOT get away with overpricing a home. Ironically, most sellers initially list their homes outside of the realm of reality and arbitrarily price based upon what they want rather than what buyers are willing to pay. Today’s buyers are looking to pay very close to a home’s Fair Market Value, a value based upon the most recent comparable sales activity.

Appreciation has already slowed to a crawl, but it is going to slow further, from 1% to 0%, a flat line. Pricing a home in hopes that the market will appreciate enough to come up to an overpriced level is a fruitless strategy only resulting in a decision to make: reduce the asking price or throw in the towel.

The proverbial “window of opportunity” is closing further because the Orange County housing market is marching its way towards a balanced market, leaving behind the seller’s market of the past 2½ years. This may not occur in all price ranges or cities, but, at the very least, will slow across the board, affecting every community and every price across the county. This will require patience and accurate pricing to succeed. Today’s seller’s market means sellers can call the shots, but does NOT mean that they will get away with arbitrarily overpricing their homes. That will be true for any remaining seller’s markets for the rest of the year. The higher price ranges, above $750,000, will be much slower. This range accounts for 43% of the active listing inventory and 29% of total demand. As is always true, there are fewer buyers, as a percentage, in the upper ranges compared to the lower ranges. It is purely an affordability issue. Thus, it makes sense that this range has many more challenges in selling.

The higher the price, the more challenging it becomes to sell. In many cases throughout the year, the ultra-luxury ranges, homes priced above $2 million, slip into a lethargic market with expected market times ballooning to above one or even two years. This market does not respond with quick price reductions; instead, they must patiently wait for either the market to evolve on its own or carefully analyze any changes that need to be addressed. It also marches to the beat of its own drum and does not change as radically as the rest of the housing market.

Currently, Newport Coast, Laguna Beach, Corona del Mar, Coto De Caza, Ladera Ranch, and all homes above $1.5 million, are experiencing a balanced market with an expected market time of at least five months. Expect the number of cities and price ranges in this select group to increase during the Autumn and Holiday Markets. It is incumbent upon sellers to know their specific market and price range as it continues to evolve.

The lower ranges are slowing too. For homes priced below $750,000, the expected market time is at 2.5 months compared to 1.5 months one year ago. This range will not be an exception, as it too will slow during the Autumn and Holidays, just not as profound as the upper ranges. It will still require a very careful approach and accurate pricing. There are simply fewer buyers in the market, so not every seller will be successful. Properly pricing homes NOW is the best strategy and approach.

The bottom line, the window of opportunity in taking advantage of the second best time of the year, the Summer Market, as well as a more favorable expected market time, is coming to a close. Benefit from proper pricing now before a different, more patient strategy will be required.

o.c.housing.chart.7.20.14

Active Inventory: The active inventory increased by 4% in the past two weeks.

The active listing inventory added an additional 276 homes in the past two weeks and now totals 7,811. Thus far in 2014 the inventory has grown without pause, adding an additional 3,093, a 65% increase, and is poised to continue to increase through the end August. Keep in mind, in order for the active inventory to grow, more home need to be placed on the market than are coming off as pending sales. Last year at this time there were 5,340 homes on the market, 2,486 fewer than today.

o.c.inventory.7.20.14

DemandDemand increased by 1% in the past two weeks.

Demand, the number of new pending sales over the past month, increased by 24 and now totals 2,501. After an initial small dip in demand in July, it will slightly rise in August. Last year at this time demand was at 2,663, 162 additional pending sales compared to today. 

Distressed Breakdown: The distressed inventory increased by 6% in the past two weeks.

The distressed inventory, foreclosures and short sales combined, increased by 17 homes and now totals 281. In 2014, the distressed inventory has not changed much, starting the year at 271. The long term trend is for it to remain at a very low level. Last month, they represented only 5% of all closed sales.

In the past two weeks, the number of active foreclosures increased by 7 homes and now totals 76. 1% of the active inventory is a foreclosure. The expected market time for foreclosures is 69 days. The short sale inventory increased by 10 homes in the past two weeks and now totals 205. The expected market time is 46 days and remains one of the hottest segments of the Orange County market. Short sales represent 2.6% of the total active inventory.

Steven Thomas, Quantitative Economics and Decision Sciences

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What’s Ahead For Mortgage Rates This Week – July 21, 2014

Mythbusters: 5 Reasons Why Diet Sodas Might Not Be as Healthy as You ThinkLast week’s economic news offered a variety of indications that the economic recovery continues, but some readings missed their expected levels. The Philadelphia and New York branches of the Federal Reserve Bank reported higher than anticipated manufacturing for their respective regions and new jobless claims were lower than expected.

Fed Chair’s Senate Testimony Hints at Coming Interest Rate Hike

Federal Reserve Chair Janet Yellen testified that the Fed might have to raise interest rates sooner than expected if the economy continues to outperform the Fed’s projections. Ms. Yellen said that the central bank presently estimates that the first rate increases will take place approximately one year from now.

The Federal Open Market Committee (FOMC) of the Fed has repeatedly stated that members will continue to review data and economic conditions changing monetary policy. Ms. Yellen said in last week’s remarks that this holds true whether economic conditions improve or decline.

In other Fed-related news, the Philadelphia Fed released its manufacturing index for July with higher than expected results. The Philly Fed’s reading for July was 23.90 as compared to expectations of 16.50 and June’s reading of 17.80.

The New York Fed reported a similar trend for July with a reading of 25.60 as compared to an estimated reading of 17.50 and June’s reading of 19.30. This is good news after the Northeast’s economy was slammed by severe weather last winter. Weather conditions stalled area housing and labor markets.

Weekly jobless claims were lower at 303,000 than expectations of 310,000 new jobless claims and the prior week’s reading of 305,000 new jobless claims.

Home Builders Post Positive Confidence Reading for July

The National Association of Home Builders posted its highest builder confidence reading in six months for July with a reading of 53 against the expected reading of 50 and June’s reading of 49. Numbers above 50 indicate that more builders surveyed have a positive outlook than not.

Housing Starts for June were reported lower than expected at an annual level of 893,000 against an expected reading of 1.02 million and May’s reading of 985,000 housing starts.

Mortgage Rates Lower

According to Freddie Mac’s weekly survey, average mortgage rates were slightly lower last week. The average rate for a 30-year fixed rate mortgage fell by two basis points to 4.13 percent. Discount points were 0.60 as compared to the prior week’s reading of 0.70 percent. The average rate for a 15-year fixed rate mortgage was 3.23 percent as compared to the previous reading of 3.24 percent.

Discount points for a 15-year mortgage averaged 0.50 percent against the prior week’s reading of 0.50 percent. The average rate for a 5/1 adjustable rate mortgage dropped by two basis points to 2.87 percent with discount points unchanged at 0.40 percent.

The University of Michigan’s Consumer Sentiment Index for July fell just short of expectations at 81.3. Analysts expected a reading of 83.0, based on June’s reading of 82.50. Analysts said that although labor markets are improving, consumers continue to face rising costs for gasoline and food, which likely explained the dip in confidence for July.

What’s Ahead

This week’s economic news releases include Existing Home sales from the National Association of REALTORS®, New Home Sales from the Department of Commerce and the FHFA House Price Index. The Chicago Fed is set to release its National Activity Index. Freddie Mac mortgage rates and New Jobless Claims will be released Thursday as usual.

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