South Orange County Blog from Bob Phillips

What’s Ahead For Mortgage Rates This Week – September 14, 2015

Whats Ahead For Mortgage Rates This Week September 14 2015A short week after the Labor Day Holiday provided a slack schedule for economic news. Bloomberg reported that residential investment for the second quarter of 2015 represented 3.34 percent of the Gross Domestic Product. Compared to the long-term average reading of 4.56 percent, analysts said that the Q2 15 reading suggested pent-up demand in the housing market that could help propel the economy through any setbacks that could occur when the Fed raises rates.

Pent-Up Housing Demand a Plus when Fed Raises Rates

Job openings rose in July to 5.75 million as compared to June’s reading of 5.32 million. This is a positive indicator for the economy and for the housing sector, as consumer confidence in terms of buying a home typically relies on stable employment and a strong labor sector.

While economic indicators are looking good for housing construction, analysts note that a shortage of construction workers could affect construction of new residential units. Analysts said that children born during the 1980’s will lead the next wave of first-time home buyers, with millennials following. This trend could last for the next 10 to 15 years and is expected to bolster housing markets.

More lenient mortgage lending requirements and rising confidence among home builders were also cited as positive indicators for housing.

Mortgage Rates Mixed

Freddie Mac reported that average fixed mortgage rates rose by one basis point to 3.90 percent for 30-year fixed rate mortgages and 3.10 percent for 15-year mortgages. The average rate for a 5/1 adjustable rate mortgage fell by two basis points to 2.91 percent. Average discount points for a 30-year fixed rate mortgage were unchanged at 0.60 percent and rose to 0.70 percent for 15-year fixed rate mortgages and to 0.50 percent for 5/1 adjustable rate mortgages.

Job Openings Rise as Weekly Jobless Claims Fall

July job openings rose to 5.75 million from June’s reading of 5.32 million; this was the highest number of available jobs since records have been kept. Analysts said that the high number of job openings clearly indicate that the labor force is not able to supply the workers needed by employers. Jobs available range from professional to service related work; this suggests a universal trend rather than hiring challenges within specific job areas.

Hiring activity fell in July to 4.98 million from June’s reading of 5.18 million. July separations also fell, which suggests that employers are having problems finding skilled workers and are holding on to experienced workers.

Weekly jobless claims fell to 275,000 from the prior week’s reading of 281,000 new jobless claims.

What’s Ahead

Next week’s scheduled economic reports include Retail Sales, Consumer Price Index and Core CSI along with the NAHB Wells Fargo Housing Market Index, Commerce Department reports on housing starts and building permits. The Fed’s Federal Open Market Committee will issue its customary statement on Wednesday, followed by highly-anticipated press conference by Fed Chair Janet Yellen.

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What’s Ahead For Mortgage Rates This Week – August 10, 2015

Whats Ahead For Mortgage Rates This Week August 10 2015This week’s scheduled economic news includes reports on construction spending, a survey of senior loan officers, and reports on labor markets including ADP private sector jobs, the federal government’s reports on non-farm payrolls, core inflation and the national unemployment rate.

Construction Spending Slows, Loan Officers Survey Suggests Growing Confidence

Construction spending fell in June after the May reading was revised upward to 1.89 percent from the original reading of 0.90 percent. Spending for residential construction rose by 0.40 percent, while non-residential construction spending remained flat. The seasonally-adjusted annual outlay for construction was $1.06 billion in June.

Analysts continue to note a trend toward construction of smaller residential units including condominiums and apartments, with an emphasis on rental properties. This supports reports that would-be homebuyers are taking a wait-and-see stance to see how factors including rising home prices, fluctuating mortgage rates and labor market conditions perform.

According to a survey of senior loan officers conducted by the Federal Reserve, mortgage lenders reported that mortgage applications increased during the second quarter and indicating that financial constraints on consumers may be easing. According to the survey of 71 domestic banks and 23 foreign-owned banks, 44 percent of respondents reported moderate increases in loan applications, while only 5 percent of survey participants reported fewer loan applications.

Some banks surveyed reported easing mortgage approval standards, but fewer lenders eased standards than in the first quarter. Further supporting growing confidence among lenders, the Fed survey also reported that large banks were easing consumer credit standards for auto loans and credit cards.

Mortgage Rates Fall, Jobless Claims Rise

Freddie Mac reported that average mortgage rates fell across the board last week with the average rate for a 30-year fixed rate mortgage lower by seven basis points to 3.91 percent; the average rate for a 15-year fixed rate mortgage fell by four basis points to 3.13 percent, and the average rate for a 5/1 adjustable rate mortgage was unchanged at 2.95 percent. Discount points for all loan types were unchanged at 0.60 percent for 30 and 15-year fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

Weekly jobless claims rose from the prior week’s reading of 268,000 new claims to 270,000 new claims, which matched analysts’ expectations. In other labor-related news, the government reported a national unemployment rate of 5.30 percent in July; this was unchanged from June’s reading.

The ADP employment report for July showed fewer jobs were available in the private sector. June’s reading showed that private sector jobs grew by 229,000 jobs; July’s reading fell to 185,000 private sector jobs. According to July’s Non-farm Payrolls report, 215,000 new jobs were added in July as compared to expectations of 220,000 jobs added and June’s reading of 231,000 new jobs added.

The Federal Reserve’s Federal Open Market Committee (FOMC) is closely monitoring job growth and inflation rates as it contemplates raising the target federal funds rate. Core inflation grew by 0.10 percent in June; which was consistent with May’s reading and expectations. The FOMC recently cited the committee’s concerns about labor markets and lagging inflation. The Fed has set an annual growth rate of 1.65 percent for inflation for the medium term; this benchmark is part of what the Fed will consider in any decision to raise rates.

What’s Ahead

This week’s scheduled economic reports include reports on retail sales and consumer sentiment in addition to usual weekly reports on mortgage rates and new jobless claims.

 

 

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Last Week’s Economic News in Review

Existing home sales outpaced expectations to hit an eight-year high, while new home sales were at a seven-month low. Meanwhile, lay-offs shrank to their smallest rate in more than 40 years.

Existing Home Sales

Sales of existing single-family homes, townhomes, condominiums and co-ops, increased 3.2 percent to an annual rate of 5.49 million in June, according to last week’s report from the National Association of Realtors. This was not only well ahead of the market expectation for a 5.4 million-unit pace, but marked the highest level in more than eight years.

“Buyers have come back in force, leading to the strongest past two months in sales since early 2007,“ NAR Chief Economist Lawrence Yun said. “This wave of demand is being fueled by a year-plus of steady job growth and an improving economy that’s giving more households the financial wherewithal and incentive to buy.“

Looking at price, the median existing-home price for all housing types in June rose to $236,400, which is 6.5 percent higher than June 2014’s and surpassed July 2006’s peak median sales price of $230,400. Looking at inventory, the supply of existing homes at the end of June grew 0.9 percent to 2.3 million units available for sale. This put the inventory of existing homes available for sale at five months.

“Limited inventory amidst strong demand continues to push home prices higher, leading to declining affordability for prospective buyers,“ Yun noted. “Local officials in recent years have rightly authorized permits for new apartment construction, but more needs to be done for condominiums and single-family homes.“

New Home Sales

While existing home sales skyrocketed, sales of new, single-family homes fell to an annual rate of 482,000 in June, according to last week’s report from the Census Bureau and the Department of Housing and Urban Development. This was 6.8 percent below May’s revised rate of 517,000, and marked a seven-month low.

However, compared on an annual basis, June’s sales pace was 18.1 percent higher than June 2014’s estimate of 408,000. If anything, the experts advised against reading too much into new home sales, when other real estate activity — such as existing homes sales — was performing so much better.

“We should not get too worried about the signal from the new home sales data at this point,“ JPMorgan Economist Daniel Silver told the Reuters news service.

In terms of prices, the median sales price of new homes sold in June was $281,800, and the average sales price was $328,700. Looking at inventory, the estimated number of new homes for sale at the end of June was 215,000, which represented a 5.4-month supply at June’s sales rate.

Initial Jobless Claims

First-time claims for unemployment insurance benefits filed by recently unemployed individuals plummeted to a 40-year low. Initial jobless claims filed during the week ending July 18, dropped to 255,000, a tumble of 26,000 claims from the previous week’s total of 281,000, the Employment and Training Administration reported last week.

The news marked the lowest point for lay-offs since November 24, 1973’s total of 233,000 claims. The big driver for the substantial drop was likely lay-offs due to restructuring in the car industry, but there was no denying that lay-offs were in retreat.

“This week’s claims reading may have been exaggerated on the low side but there is certainly no sign of the labor market losing momentum,“ High Frequency Economics’ Jim O’Sullivan told the Wall Street Journal. “The message: Employment growth remains more than strong enough to keep the unemployment rate declining.“

The four-week moving average — considered a more stable measure of lay-off activity — fell to 278,500, a decrease of 4,000 from the previous week’s unrevised average of 282,500. This was still well below the 300,000-claim mark that indicates a healthy job market.

This week we can expect:

  • Monday — Durable goods orders for June from the Census Bureau.
  • Tuesday — Consumer confidence for July from The Conference Board.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; advanced second quarter GDP estimate from the Bureau of Economic Analysis.
  • Friday — Consumer sentiment for July from the University of Michigan and Thompson-Reuters Survey of Consumers.

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What’s Ahead For Mortgage Rates This Week – July 20, 2015

Whats Ahead For Mortgage Rates This Week July 13 2015Last week’s economic news included an encouraging report from the National Association of Home Builders, whose housing market index held steady with a reading of 60 in July. This was the 13th consecutive month for readings over 50, which indicate that more builders are confident about housing markets than those who are not. July’s reading was noteworthy as it was the highest since November 2005 prior to the recession.

Housing Starts, Building Permits Increase

The Commerce Department provided further evidence of stronger housing markets with reports on housing starts and building permits issued in June. Housing starts rose from May’s reading of 1.07 million to 1.17 million, which surpassed the expected reading of 1.11 million housing starts.

May’s reading for housing starts was revised from 1.04 million to 1.07 million an annual basis.

Construction of apartments and other multifamily housing complexes attained their highest level since 1987, which supports reported trends that millennials who prefer to live in larger cities are renting rather than buying homes. Housing starts gained nearly 10 percent between May and June. Would-be home buyers are also renting due to tighter mortgage approval standards; others may be “sitting on the fence” as they wait for further indications of stronger labor markets and improvements in overall economic conditions.

Building permits issued in June supported trends in housing starts, with permits for multi-family housing units higher by 16. 10 percent and was the highest reading for multi-family building permits since 1990. Analysts said that the increase in multifamily building permits was in caused by the pending expiration of a tax credit for builders in New York State that was set to expire June 30.

Permits for single family homes rose only 0.90 percent in June, to an annual pace of 689,000 but this was still the highest reading for single family housing permits since 2008.

Mortgage Rates Rise, Jobless Claims Fall

Freddie Mac reported that average mortgage rates rose last week. The rate for a 30-year fixed rate mortgage averaged 4.09 percent and was higher by five basis points. The average rate for a 15-year mortgage was also five basis points higher at 3.25 percent. The average rate for a 5/1 adjustable rate mortgage was up by three basis points to 2.96 percent. Discount points were 0.60 percent for 15 and 30 year mortgages and 0.50 percent for 6/1 adjustable rate mortgages.

New jobless claims fell to 281,000 last week against the prior week’s reading of 296,000 new claims and an expected reading of 285,000 new jobless claims. Analysts said that the current reading indicates that last week’s spike in new unemployment claims was a false alarm. Seasonal anomalies and re-tooling at some auto plants were cited as causes for the prior week’s high reading. New jobless claims have remained under the benchmark reading of 300,000 since February for the longest consecutive period in 15 years.

Last week’s reports ended with the University of Michigan’s Consumer Sentiment Index, which fell from June’s reading of 96.1 to 93.3; analysts expected a reading of 95.0.

What’s Ahead

Scheduled economic reports for next week include new and existing home sales, and FHFA home prices along with weekly reports on mortgage rates and new jobless claims.

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What’s Ahead For Mortgage Rates This Week – June 8, 2015

Whats-Ahead-Mortgage-Rates-5Last week’s economic news included reports on construction spending, Freddie Mac’s mortgage rates survey and several employment related reports. The details:

Construction Spending Jumps

The Commerce Department reported that construction spending reached its fastest annual pace since November 2008. Most  of the momentum was caused by construction of apartments, commercial projects and roads, and construction of single  family homes. Builders spent 2.20 percent more in April than they did in March, which equated to an annual outlay of $1.01 trillion for all types of construction spending. Analysts said that increased spending in construction indicated that the    housing sector could see improvement as construction provides more jobs.

Mortgage Rates Mixed

Freddie Mac’s weekly survey of mortgage rates reported that average mortgage rates were mixed last week. Average rates were reported as follows: 30-year fixed rates were unchanged at 3.87 percent with discount points also unchanged at 0.60 percent. The average rate for a 15-year fixed rate mortgage fell from 3.11 percent to 3.08 percent with discount points unchanged at an average of 0.50 percent. The average rate for a 5/1 adjustable rate mortgage rose by six basis points to 2.96 percent with discount points unchanged at 0.50 percent.

Employment Reports Suggest Stronger Labor Market

Several labor-related reports released last week suggest that job markets are gaining strength as they continue to improve. ADP, a private-sector payrolls company, reported 201,000 new jobs in May against April’s reading of 165,000 new jobs. The Labor Department released its Nonfarm Payrolls report for May and reported 280,000 new jobs against expectations of 210,000 new jobs and April’s reading of 221,000 new jobs.

Average hourly wages rose by 0.30 percent and surpassed expectations of a 0.20 percent increase and April’s reading of 0.10 percent. Although incremental, this suggests that labor markets are strengthening to a point where employers are comfortable with increasing wages.

Weekly Jobless claims were reported at 276,000 new claims filed as compared to expectations of 278,000 new claims and the prior week’s reading of 284,000 new jobless claims filed. The national unemployment rate for May ticked up to 5.50 percent from the prior month’s reading of 5.40 percent, but this reading remains below the Federal Reserve’s original benchmark of 6.50 percent for potentially raising the target federal funds rate. The Fed has not moved to change the rate, but analysts expect that this could occur by Fall if economic conditions hold steady.

What’s Ahead

Next week’s scheduled economic reports include job openings, retail sales, consumer sentiment along with the usual weekly reports on mortgage rates and weekly jobless claims.

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What’s Ahead For Mortgage Rates This Week – April 13, 2015

Whats Ahead For Mortgage Rates This Week April 13 2015Last week’s economic news included the minutes from the most recent FOMC meeting, which indicated that the Fed’s monetary policymakers are eyeing a potential increase in the target federal funds rate, but don’t expect to do so immediately.

Members of the Federal Open Market Committee expressed concerns about lagging housing markets and noted that inflation has not yet achieved the Fed’s two percent goal. When the Fed decides to raise its target federal funds rate, which now stands at 0.00 to 0.25 percent, Interest rates and mortgage rates can be expected to rise as well.

Mortgage Rates Lower, Jobless Claims Rise

Freddie Mac reported that mortgage fell last week. The average rate for a 30-year fixed rate mortgage fell by four basis points to 3.66 percent; the average rate for a 15-year mortgage dropped by six basis points to 2.93 percent. The average rate for a 5/1 adjustable rate mortgage was nine basis points lower at 2.83 percent. Discount points were unchanged across the board at 0.60 percent for fixed rate mortgages and 0.50 percent for 5/1 adjustable rate mortgages.

New jobless claims rose to 281,000 against projections of 285,000 new claims and the prior week’s reading of 267,000 new claims. Analysts said that the Easter holiday week affected weekly jobless claims, and that the varied dates of the Easter holiday and spring break weeks for schools can impact weekly readings for new unemployment claims.

The four-week rolling average of jobless claims fell to its lowest reading since June 2000. The four-week rolling average is considered a more dependable source for identifying labor force trends, as it lacks the volatility associated with holidays and one-time events that can cause great variation in weekly readings for new jobless claims.

What’s Ahead

Next week’s scheduled economic reports include retail sales, retail sales not including the automotive sector, the Federal Reserve’s Beige Book report, which includes anecdotal reports of economic conditions reported to the Fed, and Housing Starts. The usual reports for weekly jobless claims and Freddie Mac’s mortgage rates survey will be released Thursday.

On Friday, the University of Michigan will release its Consumer Sentiment report, which provides indications of how American consumers view current economic conditions. While general in scope, consumer sentiment can suggest how consumers view buying homes.

A lack of positive sentiment about the economy in general and jobs in particular suggests that fewer Americans may be ready to buy homes. Increasing positive sentiment indicates less concern about economic conditions and could point to more Americans entering the housing market as the peak home- buying season gets underway.

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What’s Ahead For Mortgage Rates This Week – February 2, 2015

Whats Ahead For Mortgage Rates This Week Feburary 2 2015Last week’s economic reports included Case-Shiller 10 and 20-City Home Price Index reports for November along with new and pending home sales for December. Freddie Mac reported on average mortgage rates and new jobless claims dipped unexpectedly. The details:

Case-Shiller: Home Price Growth Slower in November

Case-Shiller’s 20-City Home Price Index for November indicated that home prices continue to slow across the nation. Seasonally-adjusted annual home price growth slowed to 4.30 percent from October’s reading of 4.50 percent. Slowing momentum in year-over-year home price growth placed downward pressure on month-to-month readings. Several cities, including Atlanta, Georgia, Boston Massachusetts and Cleveland Ohio reported lower home prices in November as compared to October. Chicago, Illinois surprised analysts with a -1.10 percent drop in home price growth for November. Although mortgage rates have fallen in recent weeks, analysts cited tough mortgage approval standards, lower demand for homes and growing inventories of available homes as factors contributing to sluggish housing markets.

New and Pending Home Sales: Mixed Readings

New home sales jumped to a seasonally-adjusted annual reading of 481,000 sales in December against expectations of 455,000 sales and November’s revised reading of 431,000 new homes sold. The original reading for November was 438,000 new homes sold. New home sales were 8.80 percent higher in December year-over-year. The median price of new homes was $298,100 in December, which was an increase of 8.20 percent year-over-year.

Pending home sales reflected sluggish market conditions in December with pending sales lower by -3.70 percent as compared to November’s reading of +0.60 percent. This lull will likely impact completed sales as pending sales generally forecast completed sales within the next 60 days. The National Association of Realtors® said that home prices rose in some areas as supplies dwindled. Fewer homeowners list homes for sale during the fall and winter months than during spring and summer. Analysts also said that home sales trends rely on the willingness of homeowners to list their homes and move up. Although the economy continues to grow, homeowners can impact supplies of available homes if they wait to move up to larger homes.

Mortgage Rates Rise, New Jobless Claims Fall

Freddie Mac reported that average mortgage rates rose last week. The average rate for a 30-year fixed rate mortgage was three basis points higher at 3.66 percent; the average rate for 15-year mortgages rose by five basis points to 2.98 percent, and the average rate for a 5/1 adjustable rate mortgage was 2.86 percent. Discount points fell to 0.60 percent for 30-year mortgages and 0.50 percent for 15-year mortgages. Discount points were unchanged at0.40 percent for 5/1 adjustable rate mortgages.

New jobless claims fell to 265,000; this was lower than the expected reading of 296,000 new jobless claims and the prior week’s reading of 308,000 new jobless claims. Analysts said that the short work week likely contributed to the drop in weekly jobless claims, which was the largest drop in new jobless claims since November 2012. As labor markets improve, more consumers can afford to buy homes. January’s Consumer Confidence Index rose more than expected in January with a reading of 102.9 against expectations of 96.90 and December’s reading of 93.10.

What’s Ahead

This week’s scheduled reports include Construction Spending, Personal Income, Core Inflation, and several employment reports including ADP Payrolls, Non-Farm Payrolls and the national unemployment rate. Freddie Mac’s mortgage rates report and new unemployment claims will be released on Thursday as usual.

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What’s Ahead For Mortgage Rates This Week – January 5, 2015

Whats-Ahead-Template-252Case-Shiller reported that home prices hit their lowest pace in two years. According to the Case-Shiller 20-City Home Price Index for October, home prices fell in 10 cities, rose in eight cities and were unchanged in two cities.

In other news, pending home sales increased and weekly jobless claims rose. The details:

Case-Shiller: Home Price Growth Lowest in Two Years

According to its 20-City Home Price Index, Case-Shiller said that home prices dropped by 0.10 percent to a reading of 4.50 percent year-over-year as compared to September’s reading of 4.80 percent year-over-year. Analysts expected home price growth to drop to 4.70 percent in October.

David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said that 2014 could finish on a strong note with price growth accelerating in 2015. Home price growth hasn’t hit double digits since April, but there is encouraging news on the horizon.

More than half of states’ average home prices are set to surpass housing bubble peaks in 2015. Through October, home prices were approximately 15 percent below a 2006 peak. Higher inventories of available homes and lower mortgage rates are seen as stabilizing influences on housing markets, and could also encourage more buyers into the market.

Pending Home Sales Up, Mortgage Rates Mixed

The National Association of Realtors® reported that November pending home sales rose to a reading of 0.80 percent from October’s reading of -1.10 percent. The seasonally-adjusted index reading for November was 104.8.

Lawrence Yun, NAR’s chief economist noted that steady economic growth and hiring contributed to home buyer confidence. Regional readings for pending home sales were +1.40 percent in the Northeast, +1.30 percent in the South and +0.40 percent in the South. Pending home sales declined by -0.40 percent in the Midwest.

Fixed mortgage rates rose last week. Freddie Mac reported that average rates for 30-year and 15-year mortgages rose to 3.87 percent and 3.15 percent respectively; the average rate for a 5/1 adjustable rate mortgage was unchanged at 3.01 percent.

Discount points for all types of mortgages were unchanged at 0.60 percent for fixed rate mortgages and 0.50 percent for 5/1 adjustable rate mortgages.

Jobless Claims Up

Weekly jobless claims rose to 298,000 new claims against expectations of 290,000 new claims and 281,000 new claims filed the previous week. This was the highest reading since Thanksgiving.

Analysts said that seasonal hiring fluctuations and the volatility of week-to-week claims cause weekly reports to be less reliable than the four-week rolling average of jobless claims, which fell by 250 claims to a reading of 290,750.

Continuing claims fell by 53,000 to a reading of 2.35 million in the week ending December 20. This reading was close to a 14 year low.

Overall, analysts viewed stronger labor markets and economic growth as positive signs for 2015.

What’s Ahead

Next week will resume a full schedule of economic events including construction spending, ADP employment, Non-Farm Payrolls and the national unemployment rate. The Federal Reserve will release the minutes from the most recent meeting of the Federal Open Market Committee (FOMC).

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What’s Ahead For Mortgage Rates This Week – December 29, 2014

What's Ahead For Mortgage Rates This Week December 29 2014Last week’s economic news included several housing related reports. Housing markets continue to cool as November reports on existing and new home sales fell below expectations. New Jobless claims were lower than expected by 10,000 claims. The details:

Existing and New Home Sales Down, FHFA House Price Index Up

The National Association of Realtors® reported that November sales of existing homes fell to 4.93 million sales against expectations of 5.18 million sales. October’s reading was revised from 5.25 million sales to 5.26 million. This was seen as an anomaly that may have occurred during uncertainty caused by volatile stock markets. Federal Reserve Chair Janet Yellen slow housing markets to tight lending standards in a recent statement.

FHFA reported that October home prices connected with Fannie Mae and Freddie Mac mortgages increased incrementally year-over-year. October house prices increased to 4.50 percent year-over-year as compared to September’s year-over-year house price increase of 4.40 percent.

November sales of new homes fell short of expectations according to the Commerce Department. 438,000 new homes were sold as compared to expectations of 450 new home sales and September’s reading of 445,000 new homes sold. This was the slowest rate of growth in four months.

New home sales declined in three of four regions. Readings for November were -12.00 percent in the Northeast, -6.40 percent in the Southeast, -6.30 percent in the Midwest. Sales of new homes rose by 14.80 percent in the West. Analysts typically caution against reading too much into volatile month-to-month figures, but they are concerned about longer-term sales trends too. Sales of new homes were 1.60 percent lower year-over-year.

The median sale price of new homes was $280,900 in November, which was 1.40 percent higher year-over-year.

Mortgage Rates Up, New Jobless Claims Down

Mortgage rates rose across the board according to Freddie Mac’s weekly survey of average mortgage rates. The average rate for a 30-year fixed rate mortgage increased three basis points to 3.83 percent. The average rate for a 15-year mortgage rose one basis point to 3.10 percent. The average rate for a 5/1 adjustable rate mortgage was six basis points higher at 3.01 percent. Discount points were 0.60 for 30 and 15-year fixed rate mortgages and 0.50 percent for 5/1 adjustable rate mortgages.

280,000 new jobless claims were filed last week, a seven-week low. Analysts expected 290,000 new claims based on the prior week’s reading of 289,000 new claims. The four-week rolling average of new jobless claims also showed improvement with 8500 fewer claims at 290,250 new jobless claims filed. Stronger labor markets are considered good news for housing markets as more consumers can afford to buy homes.

No economic reports were scheduled Thursday or Friday due to the Christmas holiday.

What’s Ahead

This week brings Case-Shiller Home Price reports, Pending Home Sales and Construction Spending. Freddie Mac mortgage rates and Weekly Jobless Claims will be released on Wednesday due to the New Year’s Day holiday on Thursday.

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What’s Ahead For Mortgage Rates This Week – December 22, 2014

What's Ahead For Mortgage Rates This Week December 22 2014

Last week’s scheduled economic events were few but informative. Housing related reports included the National Association of Home Builders/Wells Fargo Housing Market Index for December, which stayed close to a nine-year high reading of 59 in September. December’s reading was 57 and fell two points shy of the expected reading of 59. November’s reading was 58. Readings above 50 indicate that more builders are positive about market conditions than those who are not.

Housing Starts for November were lower according to the Department of Commerce’s report released Tuesday. The reading for November was 1.028 million starts on a seasonally adjusted annual basis. Analysts expected a reading of 1.035 million housing starts based on October’s level of 1.045 million starts.

Fed Confident, but Watchful of Economic Conditions

The Fed’s Federal Open Market Committee (FOMC) released its statement at the conclusion of its final meeting in 2015. Fed Chair Janet Yellen also gave a press conference that primarily supported information contained in the statement. The Fed did not foresee rising the target federal funds rate until mid to late 2015, and said that no changes were likely to be made at the first two FOMC meetings of the year. The target federal funds rate remains steady at 0.00 to 0.250 percent. FOMC members noted improvement in labor markets, but said that housing continued to recover at a slow rate. The Fed repeated its customary statement that FOMC members would monitor ongoing economic conditions and developments as part of any decision to change monetary policy. Chair Janet Yellen affirmed the committee’s position in her press conference.

Mortgage Rates, Jobless Claims Fall

Mortgage rates fell according to Freddie Mac. The average rate for a 30-year fixed rate mortgage was 3.80 percent as compared to the prior week’s reading of 3.93 percent. The average rate for a 15-year fixed rate mortgage was 3.09 percent, which was 11 basis points below the prior week’s reading. 5/1 adjustable rate mortgages had an average rate of 2.95 percent; this was three basis points lower than the previous week. Discount points remained steady at 0.50 percent with the exception of average points charged for a 15-year mortgage, which increased to 0.60 percent.

Weekly jobless claims fell to 289,000 against expectations of 295,000 new jobless claims; expectations were based on the prior week’s reading of 295,000 new claims. Analysts cautioned that weekly jobless claims readings can be particularly volatile during the holiday and early winter season.

What’s Ahead

Economic news scheduled for next week includes the National Association of Realtors® report on November sales of existing homes and November sales of new homes, which is issued by the Department of Commerce. Consumer sentiment, consumer spending and core inflation reports will also be issued next week. No economic reports will be issued Thursday or Friday due to the Christmas holiday.

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