Lee Morof's Real Estate Blog

Last week’s economic reporting included readings on housing markets from the National Association of Home Builders, sales of previously-owned homes, and government reports on housing starts and building permits issued. Weekly readings on mortgage rates and jobless claims were also released.

NAHB: Builder Confidence Slips Two Points in March

The National Association of Home Builders reported that home builder confidence in housing market conditions slipped two points to an index reading of 79. Analysts expected a reading of 80 based on February’s reading of 81. Robert Dietz, the NAHB’s chief economist, said: “While low existing inventory and favorable demographics are supporting demand, the impact of elevated inflation and higher interest rates suggest caution for the second half of 2022.”  Builders also expressed ongoing concerns over rising materials costs and labor shortages.

While springtime traditionally opens peak home-buying season, industry analysts cautioned that this year’s homebuying season may fall far short of its usual performance as concerns over the pandemic and rapidly rising inflation persist. Home prices increased significantly in 2021 and affordability issues challenged prospective first-time and moderate-income home buyers. Demand for homes may ease as fewer buyers can afford rising home prices, mortgage rates, and qualify for financing due to tighter mortgage lending standards.

Mortgage Rates Rise After Fed Raises Key Interest Rate for First Time in Four Years

In its customary statement made after the meeting of Federal Reserve policymakers, the Fed announced its first increase in the federal interest rate range in four years. The rate range increased from 0.00-0.25 percent to 0.25-0.50 percent. Fed leaders announced that a strategy of measured interest rate increases is planned to ease rapid inflation.

Freddie Mac reported higher average mortgage rates last week as the rate for 30-year fixed-rate mortgages rose 31 basis points to 4.16 percent. The average rate for 15-year fixed-rate mortgages rose 30 basis points to an average of 3.39 percent. Rates for 5/1 adjustable-rate mortgages averaged3.19 percent and were 22 basis points higher. Discount points averaged 0.80 percent for fixed-rate mortgages and 0.20 percent for 5/1 adjustable-rate mortgages.

Initial jobless claims fell to 214,000 claims filed as compared to the previous week’s reading of 229,000 first-time jobless claims filed. Analysts expected a reading of 220,000 new jobless claims filed. Continuing jobless claims were also lower with 1.42 million ongoing jobless claims filed; 1.49 million continuing claims were filed in the previous week.

The federal government reported a seasonally-adjusted annual pace of 1.77 million housing starts in February; analysts estimated 1.70 million starts as compared to January’s reading of 1.66 million housing starts. Fewer building permits were issued in February with a seasonally-adjusted annual pace of 1.86 million permits issued as compared to January’s year-over-year pace of 1.90 million building permits issued. Analysts expected a seasonally-adjusted annual pace of 1.85 million building permits issued.  

What’s Ahead

This week’s scheduled economic reporting includes readings on new home sales and pending home sales; the University of Michigan will release its final consumer sentiment index for March. Weekly readings on mortgage rates and jobless claims will also be published. 

Last week’s economic reporting included readings on construction spending, written testimony from Fed chair Jerome Powell and data on public and private sector jobs and national unemployment. Weekly readings on mortgage rates and jobless claims were also released.

Fed Chair Hints at Rate Hikes in Written Testimony

Federal Reserve Chairman Jerome Powell indicated that consistent rate hikes of the Fed’s target interest rate range will likely occur throughout this year, but he said that the Fed would proceed carefully. Analysts interpreted Mr. Powell’s remarks to mean that he would limit each rate hike to 0.25 percent but could be higher depending on the pace of inflation.

Inflation rose by 7.50 percent year-over-year in January; this was the highest inflation rate since 1982. Chairman Powell said the Fed wanted to prevent persistent high inflation while promoting sustainable economic expansion and a strong labor market. The war in Ukraine could lead to faster inflation as Russia is the world’s second-largest producer of oil.

Mortgage Rates, Fall, Jobless Claims Mixed

Freddie Mac reported lower average mortgage rates last week as the rate for 30-year fixed-rate mortgages fell by 13 basis points to 3.76 percent. Rates for 15-year fixed-rate mortgages were also 13 basis points lower at 3.01 percent and rates for 5/1 adjustable-rate mortgages averaged 2.91 percent and were seven basis points lower on average. Discount points averaged 0.80 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable-rate mortgages.

Initial jobless claims fell last week with 215,000 new claims filed as compared to 233,000 jobless claims filed in the previous week. 1.48 million continuing jobless claims were filed last week as compared to the prior week’s reading of 1.47 million continuing claims filed.

Jobs Data Shows Mixed Results

Public and private sector jobs data and the national unemployment rate reflected a strong labor market. The government’s Non-Farm Payrolls report tracks public and private-sector job growth and reported 678,000 jobs were added in February as compared to expectations of 440,000 jobs added and January’s reading of 481,000 jobs added.

The ADP jobs report includes only private-sector jobs data; 475,000 jobs were added in February as compared to predictions of 400,000 jobs added and January’s reading of 509,000 private-sector jobs added. The national unemployment rate dropped to 3.80 percent; analysts expected an unemployment rate of 3.90 percent and January’s jobless rate of 4.00 percent.

What’s Ahead

This week’s scheduled economic reporting includes readings on job openings and quits, inflation, and the University of Michigan’s preliminary reading on consumer sentiment. Weekly reports on mortgage rates and jobless claims will also be released.

Last week’s economic reporting included readings on inflation and the University of Michigan’s preliminary February reporting on consumer sentiment. Weekly readings on mortgage rates and jobless claims were also released.

Inflation Rises as Fed Considers Raising Key Rate

The government’s Consumer Price Index for January reported that month-to-month inflation rose by 0.60 percent as compared to an expected increase of 0.40 percent which was based on December’s month-to-month increase of 0.50 percent.  Year-over-year inflation rose to a rate of 7.50 percent, which was the highest inflation rate in 40 years. Core inflation, which excludes volatile food and energy sectors, also rose 0.60 percent in January from December’s reading of 5.50 percent.

Analysts said that the Federal Reserve will likely raise its key federal funds rate range to help slow inflation, but drastic dips in the inflation rate aren’t expected. While the Fed predicted inflation to ease in a statement made last December, inflation has only increased. The Fed’s strategy of raising interest rates would ease high consumer demand and help slow rapidly rising prices for housing, goods, and services.

Mortgage Rates Rise, Jobless Claims and Consumer Sentiment Fall

Freddie Mac reported higher mortgage rates last week as the average rate for 30-year fixed-rate mortgages rose by 14 basis points to 3.69 percent. The average rate for 15-year fixed-rate mortgages rose by 16 basis points to 2.93 percent. Rates for 5/1 adjustable-rate mortgages averaged 2.80 percent and nine basis points higher. Discount points averaged 0.80 percent for fixed-rate mortgages and 0.30 percent for  5/1 adjustable-rate mortgages.

223,000 new jobless claims were filed last week as compared to the prior week’s reading of 239,000 first-time claims filed. No information for continuing jobless claims was released last week.

The University of Michigan reported a preliminary index reading of 61.7 for January’s Consumer Sentiment Index. This was the lowest consumer sentiment reading in ten years and was attributed to consumer concerns over rising inflation.

What’s Ahead

This week’s scheduled economic news includes readings from the National Association of Home Builders on housing market conditions, Commerce Department readings on building permits issued, and housing starts. Data on sales of pre-owned homes will be released along with weekly reporting on mortgage rates and jobless claims.

Last week’s economic reports included readings on construction spending and labor-related reports on jobs and the national unemployment rate. Weekly data on mortgage rates and jobless claims were also published.

Residential Con

Last week’s economic reporting included readings from S&P Case Shiller Home Price Indices and the FHFA on home prices, data on new home sales, and the Federal Reserve’s statement on the federal interest rate range. The University of Michigan released its monthly survey on Consumer Sentiment and weekly readings on mortgage rates and jobless claims were also published.

S&P Case-Shiller Home Price Indices: Home Price Growth Slows in November

Home prices rose at a seasonally-adjusted annual pace of 18.80 percent in November according to S&P Case-Shiller’s National Home Price Index. The 20-City Home Price Index, which is frequently used by real estate pros, reported that Phoenix, Arizona home prices rose by 32.20 percent year-over-year. Tampa, Florida home prices rose by 29 percent, and Miami, Florida home prices rose by 26.60 percent.

The Federal Housing Finance Agency, which tracks data on homes owned and financed by Fannie Mae and Freddie Mac, reported  17.50 percent year-over-year growth in home prices in November as compared to October’s reading of 17.40 percent.

New homes sold at an annual pace of 811,000 sales in December; analysts expected a reading of 757,000 sales. New homes sold at a pace of 725,000 sales year-over-year in November.

Fed Leaves Key Interest Rate Unchanged, Hints at Raising Rates in 2022

The Federal Open Market Committee of the Federal Reserve announced that it did not raise the key federal funds rate range of 0.00 to 0.25 percent, but indicated future rate increases would be used to control inflation. Combined impacts of rapidly rising home prices and mortgage rates presented challenges to first-time and moderate-income home buyers, but the median price of a single-family home fell to $377,700 in December.

Mortgage Rates, Jobless Claims Mixed

Freddie Mac reported little change in mortgage rates last week as the average rate for 30-year fixed-rate mortgages dropped by one basis point to 3.55 percent. The average rate for 15-year fixed-rate mortgages rose by one basis point to 2.80 percent. Rates for 5/1 adjustable rate mortgages averaged 2.70 percent and 10 basis points higher than in the previous week. Discount points averaged 0.70 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 0.20 percent.

Initial jobless claims fell to 260,000 new claims filed as compared to the previous week’s reading of 290,000 first-time claims filed. Continuing jobless claims rose to 1.68 million claims filed from the prior week’s reading of 1.62 million ongoing claims filed 

What’s Ahead

This week’s scheduled economic reporting includes readings on construction spending, job openings and quits, public and private sector jobs growth, and the national unemployment rate. Weekly reports on mortgage rates and jobless claims will also be published.

Last week’s economic reports included readings from the National Association of Home Builders on housing markets, Commerce Department data on building permits issued, and housing starts. The National Association of Realtors® reported on sales of previously-owned homes. Weekly reports on mortgage rates and jobless claims were also released.

National Association of Home Builders: Builder Confidence Falls One Point

Supply chain issues and rising inflation concerned builders surveyed about housing market conditions in January. The National Association of Home Builders reported an index reading of 83 as compared to December’s reading of 84. While any reading over 50 is considered positive, January’s dip in builder confidence was the first decline in four months.

Component readings for the Housing Market Index also showed a slowing trend. Builder confidence in current housing market conditions was unchanged at an index reading of 90; builder confidence in housing market conditions over the next six months fell two points to 83. Builder confidence in buyer traffic in new single-family housing developments also fell by two points to 69.

NAHB Chairman Chuck Fowke said, “NAHB analysis indicates the aggregate cost of residential construction materials has increased almost 19 percent since December 2020.” Softwood lumber prices rose approximately 85 percent in the last three months according to trade publication Random Lengths. Analysts said that tariffs and labor shortages have also added to the cost of residential home building.

Commerce Department readings on building permits issued and housing starts were higher in December/ 1.87 million building permits were issued on a seasonally-adjusted annual basis as compared to November’s reading of 1.72 million building permits issued. Housing starts also increased with 1.70 million starts reported as compared to November’s reading of 1.68 million housing starts. Analysts expected a seasonally-adjusted annual reading of 1.65 million single-family starts.

The National Association of Realtors® reported December’space of 6.18 million previously-owned homes sold on a seasonally-adjusted annual basis. Analysts expected 6.48 million sales, which matched November’s reading.

Mortgage Rates, Jobless Claims Rise

Mortgage rates rose last week as the average rate for 30-year fixed-rate mortgages rose by 11 basis points to 3.56 percent. The average rate for 15-year fixed-rate mortgages was 17 basis points higher at 2.79 percent. Rates for 5/1 adjustable rate mortgages averaged 2.60 percent and 31 basis points higher. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages, 0.60 percent for 15-year  fixed-rate mortgages. Basis points for 5/1 adjustable rate mortgages averaged 0.30 percent. Rising mortgage rates, high demand for homes, and buyer competition continued to present challenges for first-time and moderate-income home buyers. 

286,000 initial jobless claims were filed last week and exceeded expectations of 225,000 new claims filed and the prior week’s reading of 231,000 first-time claims filed. 1.64 million continuing claims were filed as compared to the previous week’s reading of 1.55 million ongoing claims filed. 

What’s Ahead

This week’s scheduled economic reporting includes readings from S&P Case-Shiller Home Price Indices, the Federal Reserve’s Federal Open Market Committee statement, and Fed Chair Jerome Powell’s press conference. Readings on pending home sales, inflation, and consumer sentiment are also expected Weekly readings on mortgage rates and jobless claims will also be released.

Last week’s scheduled economic reporting focused on inflation with monthly and year-over-year readings on overall and core inflation. Federal Reserve Chair Jerome Powell was confirmed for a second term as Federal Reserve chair.  The University of Michigan released its monthly survey on consumer sentiment and weekly readings on mortgage rates and jobless claims were also released.

Inflation Rises in December; Nears Fastest Growth Pace in 40 Years

Year-over-year inflation rose to a pace of seven percent in December and approached its fastest growth rate in 40 years according to the Bureau of Labor Statistics. Analysts expected year-over-year inflationary growth of seven percent as compared to November’s pace of 6.80 percent. Month-to-month inflation slowed to

0.50 percent as compared to November’s month-to-month growth rate of 0.80 percent.

Housing costs, food, and automotive sectors drove inflation in December. Shortages of computer chips used in vehicles slowed production and increased demand for vehicles. New car prices rose by one percent and used-car prices rose by 3.50 percent month-to-month.

Core inflation, which excludes volatile food and fuel sectors, rose by 5.50 percent year-over-year in December and surpassed the expected reading of 5.40 percent that was based on November’s core inflation rate of 4.90 percent. Rents rose by 0.40 percent for the third consecutive month. Food prices rose by 0.50 percent month-to-month and costs for clothing and furniture also rose.

Last week’s economic reporting included readings on construction spending and labor sector readings on jobs and unemployment. Weekly reports on mortgage rates and jobless claims were also released.

Last week’s economic reporting included readings from S&P Case-Shiller Home Price Indices and the National Association of Realtors® released its monthly report on pending home sales. Weekly reports on mortgage rates and jobless claims were also released.

Last week’s scheduled economic reporting included readings on sales of new and previously-owned homes along with weekly data on mortgage rates and jobless claims.

Home Sales Increase in November

Sales of new and previously-owned homes rose in November. The Commerce Department reported sales of new homes rose to 744,000 sales on a seasonally-adjusted annual basis. October sales of new homes were revised to a year-over-year reading of 662,000 new homes sold, which was the lowest reading since the worst stage of the pandemic in April 2020.  Analysts expected a year-over-year reading of 766,000 new homes sold for November. The median price of new homes sold in October reached a record high of $416,900.The number of homes for sale fell by 8.50 percent between October and November and represented a 6.50 month supply of new homes for sale.

Sales of previously-owned homes also rose in November with 6.46 million sales on a seasonally-adjusted annual basis. November’s reading fell short of the expected reading of 6.50 million sales of previously-owned homes but surpassed October’s reading of 6.34 million sales.

Rising numbers of mortgage applications indicated that demand for homes remains high, but mortgage rates are expected to rise in 2022. Given rising home prices, the additional challenge of higher mortgage rates will negatively impact affordability for some prospective home buyers.

Mortgage Rates Fall, Jobless Claims Data Mixed

Freddie Mac reported lower mortgage rates last week as the average rate for 30-year fixed-rate mortgages fell by seven basis points to 3.05 percent. Rates for 15-year fixed-rate mortgages averaged 2.30 percent and were four basis points lower than for the previous week. Rates for 5/1 adjustable rate mortgages averaged 2.37 percent and eight basis points lower. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

Initial jobless claims held steady at 205,000 new claims filed last week. Analysts expected a reading of 206,000 first-time claims filed. Continuing jobless claims fell to 1.86 million ongoing claims from the previous week’s reading of 1.87 million continuing jobless claims filed.

The University of Michigan’s Consumer Sentiment Index rose to an index reading of 70.6 and exceeded the expected reading of 70.4, which matched November’s reading.

What’s Ahead

This week’s scheduled economic reporting includes S&P Case-Shiller Home Price Indices and data on pending home sales. Weekly readings on mortgage rates and jobless claims will also be released.