Lee Morof's Real Estate Blog

Last week’s economic reports were limited due to the Christmas holiday. New home sales data was released along with a weekly reading on mortgage rates.

Census Bureau: New Home Sales Hit Highest Level Since 1999

Mortgage rates below 4.00 percent propelled the highest number of new homes sold since 1999. 719,000 new homes were sold on a seasonally-adjusted annual basis in November.

Analysts expected November sales of new homes to reach 740,000 sales based on October’s original reading of 733,000 sales, but this reading was later revised to 710,000 sales.

New home sales reported are based on a narrow range of data and subject to major revisions. Slim inventories of previously-owned homes for sale also boosted new home sales.

The national median sale price for new homes was $330,800 in November and there was a 5.40 month supply of new homes available, which fell below the peak of a seven-month supply of available new homes reported in December 2018.

The Northeast region reported a 52.40 percent increase in new home sales; Sales of new homes in the South decreased by 4.10 percent and were unchanged in the Midwest. New home sales in the West rose by 7.50 percent.

Mortgage Rates Little Changed

Freddie Mac reported incremental changes in average mortgage rates; 30-year fixed-rate mortgage rates averaged 3.74 percent and were one basis point higher than for the prior week. Rates for 15-year fixed-rate mortgages averaged 3.19 percent and were unchanged.

The average rate for 5/1 adjustable rate mortgages was eight basis points higher at 3.45 percent. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

Freddie Mac cautioned that the ongoing shortage of affordable homes is causing home prices to rise throughout the U.S; in recent years significant home price gains primarily occurred in coastal regions. Analysts said that as fewer affordable homes become available, housing markets and the general economy could be negatively affected.

Weekly reporting on first-time jobless claims was not released last week.

What’s Ahead

This week’s scheduled economic reports include readings from Case-Shiller on home prices, pending home sales, construction spending and weekly reports on mortgage rates and new jobless claims.

Last week’s economic reports included readings on inflation and retail sales; the Federal Reserve released its post-meeting statement from its Federal Open Market Committee. Weekly readings on mortgage rates and new jobless claims were also released.

Inflation, Retail Sales Rate Dip in November

The Commerce Department’s Consumer Price Index dipped in November to a growth rate of 0.20 percent as compared to October’s growth rate of 0.40 percent. Analysts expected inflation to slow to 0.20 percent growth.

Year-over-year inflation rose to 2.10 percent, which was its highest reading in a year. Analysts said rising rents, energy and healthcare costs caused the higher consumer inflation reading. November’s Core Consumer Price Index was unchanged at 0.20 percent growth. The Core CPI reading excludes volatile food and energy sectors.

Retails sales growth slowed to 0.20 percent in November as compared to October’s growth rate of 0.40 percent and expected growth of 0.50 percent. Retail sales exclusive of autos were also lower in November with a reading of 0.10 percent growth.

Analysts expected a reading of 0.40 percent growth; October’s reading for Retail Sales Excluding Autos showed 0.30 percent growth. Lower retail sales at the start of the winter holiday shopping season could signify cooling consumer confidence in the economy.

Fed Holds Steady on Key Interest Rate Range

The Federal Open Market Committee of the Federal Reserve announced no change to the target federal funds rate range at its meeting on Wednesday. The target range for the federal funds rate remained at 1.50 to 1.75 percent.

The Committee’s post-meeting statement suggested that FOMC members did not plan to change the federal funds rate in 2020 if economic conditions remain stable, but said that monetary policy decisions were flexible and could change as global and domestic economic conditions require.

Mortgage Rates, New Jobless Claims Rise

Freddie Mac reported higher average rates for fixed-rate mortgages last week. The average rate for a 30-year fixed-rate mortgage was five basis points higher at 3.73 percent; rates for 15-year fixed-rate mortgages averaged five basis points higher at 3.19  percent.

The average rate for a 5/1 adjustable-rate mortgage was three basis points lower at 3.36 percent. Discount points rose across the board last week and averaged 0.70 percent for fixed-rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

New jobless claims jumped to 252,000 last week, which surpassed expectations of 220,000 new claims and the prior week’s reading of 203,000 first-time claims filed.

What’s Ahead

This week’s scheduled economic releases include the National Association of Home Builders’Housing Market Index and Commerce Department readings on housing starts and building permits issued. The National Association of Realtors® will release data on sales of pre-owned homes and weekly readings on mortgage rates and new jobless claims will also be released.

Last week’s economic reports included readings on construction spending and multiple labor sector reports including private and public sector jobs and the national unemployment rate. Weekly reports on average mortgage rates and first-time jobless claims were also released.

Construction Spending Falls 0.80 Percent in October

Commerce Department reports on construction spending said that spending fell by 0.80 percent to a seasonally-adjusted annual rate of $1.29 million. Analysts expected construction spending to increase by 0.40 percent based on September’s original reading of 0.50 percent growth, which was later revised to -0.30 percent.

Less construction of multifamily homes and apartments caused a decrease in October construction spending. Private construction spending fell by -1.00 percent in October; residential construction fell 0.90 percent as multi-family construction spending fell 1.60 percent after a 2.10 percent dip in September. Construction spending on single-family homes increased by 1.60 percent.

Low mortgage rates, a strong job market, and rising wages contributed to a strong demand for homes. Short inventories of available homes continued to pressure home builders to build more homes; construction of homes jumped 3.80 percent in October.

Mortgage Rates, Mixed, New Jobless Claims Fall

Freddie Mac reported no change in the average rate of 3.68 percent for 30-year fixed-rate mortgages; rates for 15-year fixed-rate mortgages averaged 3.14 percent and were one basis point lower than for the prior week.

Rates for 5/1 adjustable-rate mortgages fell four basis points on average to 3.39 percent. Discount points averaged 0.50 percent for 30-year fixed-rate mortgages and 0.40 percent for 15-year fixed-rate mortgages and 5/1 adjustable-rate mortgages.

First-time jobless claims fell from the prior week’s reading of 213,000 claims to 203,000 claims filed last week. ADP reported 67,000 private-sector jobs added in November.

The federal government’s Non-Farm Payrolls report offset the dismal reading for private-sector job growth. 266,000 public and private sector jobs were added in November and surpassed expectations of 180,000 public and private sector jobs added.

Approximately 55,000 were accounted for as auto workers returned after a strike. 156,0000 public and private sector jobs were added in October. The national unemployment rate dropped to 3.50 percent in November and matched the reading for unemployment posted at the end of 1969.

What’s Ahead

This week’s scheduled economic reports include readings on inflation, retail sales and the post-meeting statement from the Federal Reserve’s Federal Open Market Committee. Fed Chair Jerome Powell is scheduled to give a press conference after the FOMC statement. Weekly readings on mortgage rates and new jobless claims will also be released.

Last week’s economic news included readings from Case-Shiller Home Price Indices, readings on new and pending home sales and weekly readings on mortgage rates and new jobless claims. The holiday break on Thursday and Friday curtailed some economic reports.

Case-Shiller Reports Uptick in September Home Prices

Home prices rose 0.10 percent to a year-over-year growth rate of 3.20 percent in September. Rates of home price growth showed a new geographic trend with smaller cities showing higher home price growth than the coastal cities that dominated rapid home price growth in recent years. Homebuyers seeking affordable options turned inland and southward where home prices are less expensive.

Home prices in Phoenix, Arizona rose 6.00 percent year-over-year in September and claimed the top spot for home price growth in Case-Shiller’s 20-City Home Price Index. Charlotte, North Carolina held second place in home price growth with a reading of 4.60 percent year-over-year.

Tampa, Florida rounded out the top three cities with home price growth of 4.50 percent year-over-year. September’s readings indicate slowing home price growth as compared to double-digit growth rates that dominated Case-Shiller Home Price Indices in the past.

Analysts said that while low mortgage rates are helpful to home buyers, strict mortgage requirements and home price growth rates continued to outstrip inflation and wage growth.

New and Pending Home Sales Dip in October

The Commerce Department reported 733,000 sales of new homes in October; this was lower than 738,000 new homes sold in September but exceeded analysts’ forecasts for 705,000 sales. Fewer homes are sold in the fall as peak home-buying season winds down and winter holidays approach; September’s reading for new homes sold was upwardly revised from the original reading of 701,000 new homes sold.

The National Association of Realtors® reported fewer pending home sales in October with a negative reading of -1.70 percent as compared to September’s reading of +1.50 percent. Factors contributing to fewer purchase contracts signed included shortages of available homes and higher mortgage rates in October.

Pending sales are home sales for which purchase offers have been made and the sale is awaiting completion. Pending home sales are a gauge of future mortgage loan volume and completed home sales.

Mortgage Rates, New Jobless Claims

Freddie Mac reported mixed movement on average mortgage rates last week. Rates for 30-year fixed-rate mortgages averaged 3.68 percent and were two basis points higher. The average rate for 15-year fixed-rate mortgages was unchanged at 3.15 percent. The average rate for 5/1 adjustable rate mortgages rose four basis points to 3.43 percent.

New jobless claims fell sharply last week from 228,0000 claims filed the prior week to 213,000 first-time claims filed last week. The dip in new jobless claims brought last week’s reading near to a post-recession low.

What’s Ahead

This week’s scheduled economic news includes readings on construction spending, public and private-sector jobs and the national unemployment rate. The monthly reading on consumer sentiment will be released along with weekly reports on mortgage rates and first-time jobless claims.

Last week’s scheduled economic news included the Federal Reserve’s survey of loan officers and the University of Michigan’s report on consumer sentiment. Weekly readings on mortgage rates and new jobless claims were also released.

Fed Survey of Loan Officers Finds Banks Tightened Lending Standards

The Federal Reserve’s survey of financial institutions found that lenders tightened standards for credit card and other consumer loan approval. Lending officials said that concerns over the economy drove decisions to tighten standards for new credit cards, auto loans, and personal loans.

Lenders also tightened lending requirements for new borrowers in January and March. January’s revision to lending requirements was the strictest since 2009.

Lending officials surveyed said that less tolerance for risk and concerns over new borrowers’ ability to repay loans drove decisions to tighten loan approval requirements. Growing concerns over student loan debt may have influenced lenders’ reluctance to extend credit to new borrowers.

Survey respondents said that they did not tighten requirements for residential real estate loans, but did increase restrictions on commercial real estate loans. Survey participants included 76 domestic banks and 22 foreign banks and agents of federal banks.

Mortgage Rates, New Jobless Claims Fall

Freddie Mac reported lower average mortgage rates last week after the prior week’s spike. Rates for 30-year fixed-rate mortgages fell nine basis points and averaged 3.69 percent. Rates for 15-year fixed-rate mortgages fell six basis points to an average of 3.13 percent.

The average rate for 5/1 adjustable rate mortgages fell four basis points to 3.39 percent. Discount points averaged 0.50 percent for 30-year fixed-rate mortgages and 0.40 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.30 percent.

Initial jobless claims fell to a one-month low of 211,000 new claims filed; analysts said that last week’s reading approached a 50-year low and proved the staying power of the strongest job market in decades. In other news, the University of Michigan’s Consumer Sentiment Index rose to 95.70 in November as compared to October’s index reading of 95.50. Analysts expected consumer sentiment to fall to 95.00.

What’s Ahead

This week’s economic releases include reports on inflation and retail sales. Weekly readings on mortgage rates and initial jobless claims will also be released.

Last week’s economic reports included readings from Case-Shiller on home prices, pending home sales data and the post-meeting statement announcement from the Fed’s Federal Open Market Committee were released.

Labor sector reports on jobs and the national unemployment rate were also released. Weekly readings on mortgage rates and initial jobless claims were also published.

Case-Shiller: Home Price Growth Slows in August

Home price growth slowed by 0.20 percent in August for the first time since August 2018. Home price growth rates typically decrease in August as peak home-buying season passes. The Case-Shiller 20-City Home Price Index showed a geographical shift away from the West and Southwest in August as two of the three cities with the highest home price growth rates were in the Southeast.

Home prices in Phoenix, Arizona held the top spot in the 20-City Home Price Index with a seasonally-adjusted annual growth rate of 6.30 percent. Home prices in Charlotte, North Carolina and in Atlanta, Georgia rose 4.50 and 4.00 percent.

Pending home sales rose 1.50 percent in September according to the National Association of Realtors®. Pending home sales gauge future closed sales and mortgage loan volume.

Fed Lowers Key Interest Rate Range

The Federal Reserve announced its third consecutive cut to its benchmark interest rate range but indicated that future rate cuts may be on hold. Fed policymakers cut the federal funds rate range one-quarter percent to 1.50 to 1.75 percent from 1.75 percent to 2.00 percent.

Federal Open Market Committee members said global economic developments and muted inflationary pressure were considerations in the decision to lower the Fed’s key interest rate range.

Mortgage Rates, New Jobless Claims Rise

Freddie Mac reported higher mortgage rates last week; rates for a 30-year fixed-rate mortgage rose eight basis points and averaged 3.78 percent. Rates for 15-year fixed-rate mortgages rose one basis point and averaged 3.19 percent.

Rates for 5/1 adjustable-rate mortgages rose three basis points to 3.43 percent. Discount points averaged 0.50 percent for 30-year fixed-rate mortgages and 0.60 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable-rate mortgages averaged 0.40 percent.

First-time jobless claims rose by 5000 claims to 218,000 new claims filed. The national unemployment rate rose to 3.60 percent in October as compared to September’s reading of 3.50 percent. ADP reported 125,000 private-sector jobs added in October as compared to 93,000 jobs added in September. 128,000 public and private sector jobs were added in October according to the government’s Non-Farm Payrolls report.

What’s Ahead

This week’s scheduled economic news includes readings on job openings and consumer sentiment. Weekly reports on mortgage rates and new jobless claims will also be released.

Last week’s economic reports included readings from the National Association of Home Builders on builder confidence in housing market conditions, Commerce Department readings on housing starts and building permits issued. Weekly readings on mortgage rates and first-time jobless claims were also reported.

Builder Confidence in Housing Markets Rises

The NAHB Housing Market Index rose in October from September’s index reading of 68 to 71.Home builders were confident in market conditions due to strong demand for homes caused by low mortgage rates and slower growth in home prices.

Obstacles including tariffs on building materials did not deter builder confidence; any reading above 50 on the Housing Market Index indicates that most builders are confident about housing market conditions.

Robert Dietz, Chief Economist for NAHB, said: “The second half of 2019 has seen steady gains in single-family construction, and this is mirrored by a gradual uptick in builder sentiment over the past few months.” Mr. Dietz cited “ongoing supply side constraints and concerns about a slowing economy” as factors expected to negatively impact builder sentiment in coming months.

The Commerce Department reported a  seasonally-adjusted annual pace  of 1.26 million housing starts in September. Analysts expected a pace of 1.32  million starts; August’s reading for housing starts was 1.39 million starts.

Fewer building permits were issued in September with 1.39 million permits issued as compared to August’s reading of 1.43 million permits issued; analysts expected 1.38 million building permits to be issued.

Mortgage Rates, New Jobless Claims Rise

Freddie Mac reported higher rates for fixed rate mortgages last week. The average rate for 30-year fixed rate mortgages rose 12 basis points to 3.69 percent; the average rate for 15-year fixed rate mortgages rose 10 basis points to 3.15 percent.

The average rate for 5/1 adjustable rate mortgages was unchanged at 3.15 percent. Discount points averaged 0.60 percent for 30-year fixed rate mortgages and 0.50 percent for 15-year fixed rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.40 percent.

Initial jobless claims also rose last week. 214,000 new claims were filed as compared to expectations of 215,000 claims filed and the prior week’s reading of 210,000 first-time jobless claims filed. Analysts noted that new jobless claims remained near a 50-year low.

What’s Ahead

This week’s scheduled economic news includes readings on sales of new and previously-owned homes along with a report on consumer sentiment. Weekly readings on mortgage rates and initial jobless claims will also be released.

The mortgage interest rate represents the cost of borrowing money to purchase a property. Mortgage interest rates are not fixed; that is, they fluctuate from one period of time to the next.

Many different factors play into what your mortgage interest rate will finally turn out to be. Some of these factors have to deal with the economy and government decisions. Other factors have to do with your personal financial situation.

Finally, mortgage interest rates can differ between lending institutions, which is why you may get different mortgage interest rate quotes from different places.

Economic Factors That Cause Mortgage Interest Rates To Fluctuate

Mortgage interest rates are somewhat connected to the stock market. When the stock market indexes go up, mortgage rates tend to rise as well. The Consumer Price Index is a measure of inflation rates. When inflation rises, you can expect to see mortgage interest rates go up, too. Other economic factors that affect mortgage interest rates include Data from the Gross Domestic Product, Consumer Confidence, and Home Sales reports.

Government Decisions That Lead To Mortgage Interest Rate Changes

The federal government keeps close tabs on the economy. Government officials are always making adjustments in order to keep the economy strong. Periodically, the government will raise or lower key interest rates in order to adjust bank lending economics. When the government raises or lowers the Federal Funds interest rate, it is always announced in the media.

Personal Financials And Your Mortgage Interest Rate

Finally, your personal financial situation influences what kind of mortgage interest rate your lender offers. A higher credit score will generally get you a lower mortgage interest rate. This is another reason why it’s always a good idea to review and improve your credit score before applying for a mortgage.

When you are ready to apply for a mortgage, meet with a trusted home mortgage professional. Because mortgage interest rates fluctuate often, you could find that the interest rate gets higher in the short time in which you’re still shopping for your home. Once you do find an attractive program for your personal situation, be sure that you are ready to take the necessary steps to lock in that rate.

If you are interested in buying a new home or listing your current property, be sure to contact your trusted real estate professional.

Last week’s economic news included readings on construction spending, and labor reports on public and private sector jobs and the national unemployment rate. Weekly reports on new jobless claims and mortgage rates were also released.

Construction Spending Ticks Up in August

Commerce Department reporting on construction spending showed 0.10 percent growth in August as compared to a revised flat reading for July. Construction spending hit a seasonally-adjusted annual rate of  $1.29 trillion for August.  Analysts expected 0.40 percent growth, which was based on the original July reading of 0.10 percent growth.

Residential construction spending rose 0.90 percent in August ; public construction spending rose 0.40 percent for the month. Factors impacting residential construction spending include rising costs of building materials, winter weather conditions and mortgage rates

Mortgage Rates Little Changed; New Jobless Claims Rise

Freddie Mac reported mixed activity with mortgage rates last week. Rates for 30-year fixed rate mortgages rose one basis points to an average of 3.65 percent. Rates for 15-year fixed rate mortgages averaged 3.14 percent and were two basis points lower.

The average rate for 5/1 adjustable rate mortgages was unchanged at 3.38 percent. Discount points averaged 0.60 percent for 30-year fixed rate mortgages and 0.50 percent for 15-year fixed rate mortgages. Discount points for 5/1 adjustable rate mortgages  averaged 0.40 percent.

First-time jobless claims rose to 219,000 claims filed and surpassed expectations of 218,000 new claims. 215,000 first-time claims were filed the prior week.

Jobs Growth Slows; National Unemployment Rate Drops

September jobs reports showed fewer jobs available for public and private sector employers. The federal government’s Non-Farm Payrolls report showed 136,000 jobs added as compared to an expected reading of 150,000 jobs added and the previous month’s reading of 168,000 public and private sector jobs added.

ADP reported 135,000 private-sector jobs added in September as compared to 157,000 jobs added in August. The national unemployment rt rate dropped to 3.50 percent in September.

What’s Ahead

This week’s scheduled economic news includes readings on job openings, minutes of the most recent FOMC meeting, and reports on inflation and consumer sentiment. Weekly reports on mortgage rates and new jobless claims will also be released.

Last week’s economic reports included readings from Case-Shiller on home prices along with data on new and pending home sales. Weekly readings on mortgage rates and initial jobless claims were also released.

Case-Shiller: Home Price Gains Slow to Lowest Pace in 7 Years

Case-Shiller Home Price Indices reported slower home price growth in July with 3.20 percent growth year-over-year. There was no change in July’s reading for the 20-City Home Price Index as compared to June after seasonal adjustments.

The top-three cities in Case-Shiller’s 20-City Home Price Index were Phoenix, Arizona with 5.80 percent home price growth year-over-year. Las Vegas, Nevada reported 4.70 percent growth and Charlotte, North Carolina home prices rose by 4.60 percent.

West coast cities that dominated home price growth in recent years have given way to more affordable markets. Seattle, Washington reported a negative reading of -0.60 percent year-over-year. Low mortgage rates have compelled buyers to enter the market; this could drive up demand again and boost home prices at a higher pace than they are rising now.

New and Pending Home Sales Increase in August

New home sales rose to 713,000 year-over-year in August as compared to July’s reading of 686.000 sales and expectations of 660,000 new homes sold in August. Pending sales rose 1.60 percent in August after posting a negative reading of -2.50 percent  in July.

Pending sales are transactions with signed purchase contracts, but that have not closed. Home sales typically taper off in fall after the peak selling season in spring and summer; rising sales during fall suggest stronger housing markets.

Mortgage Rates Fall, New Jobless Claims Rise

Freddie Mac reported lower mortgage rates last week; rates for 30-year fixed rate mortgages averaged 3.64 percent and were nine basis points lower than in the prior week. The average rate for 15-year fixed rate mortgages was five basis points lower at 3.16 percent and rates for 5/1 adjustable rate mortgages fell 11 basis points to an average of 3.38 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

First-time jobless claims rose to 213,000 claims filed from 210,000 new claims filed the prior week. Analysts said the GM auto worker strike caused the increase in new claims.

What’s Ahead

This week’s scheduled economic news includes readings on construction spending and labor sector reports on public and private sector jobs and the national unemployment rate. Weekly readings on mortgage rates and new jobless claims will also be released.