Lee Morof's Real Estate Blog

Last week’s economic releases included reports on inflation, core inflation and minutes from the Federal Open Market Committee Meeting held June 18 and 19. Weekly readings on mortgage rates and first-time jobless claims were also released.

Inflation Rate Rises, but Grows at Lowest Pace in Four Months

June’s Consumer Price Index reported the lowest rate of inflation in four months with a year-over-year rate of 1.60 percent growth as compared to May’s year-over-year inflation rate of 1.80 percent. Fuel prices were lower, which helped balance rising costs of rent, clothing and autos. Analysts said that falling inflation rates would be a primary reason why the Fed is likely to cut its key interest rate range later this month.

Core inflation, which excludes volatile food and energy sectors, rose 0.30 percent in June and surpassed expectations of 0.20 percent growth and May’s 0.10 percent growth rate.

Federal Reserve policymakers base their decisions  on the Fed’s dual mandate of maintaining maximum employment and economic growth, which is benchmarked at 2.00 percent annual inflation. FOMC members repeatedly state their commitment to reviewing domestic and global economic news and willingness to adjust Fed policy according to changing economic conditions and current events.

Mortgage Rates, New Jobless Claims

Freddie Mac  reported little change in average mortgage rates last week; Rates for 30-year fixed rate mortgages were unchanged at 3.75 percent; rates for 15-year fixed rate mortgages rose four basis points on average to 3.22 percent. The average rate for 5/1 adjustable mortgages rose one basis point to 3.40 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

Initial jobless claims fell by 13,000 claims to 209,000 claims filed and was lower than the expected reading of 221,000 new claims filed.  The July 4 holiday likely impacted the number of initial claims filed.

What‘s Next

This week’s scheduled economic news includes the National Association of Home Builders Housing Market Index, Commerce Department readings on housing starts and building permits issued and a report on consumer sentiment. Weekly readings on mortgage rates and new jobless claims will also be released.

Last week’s scheduled economic news included readings on construction spending and reports on public and private sector  jobs. Monthly readings for public and private sector jobs and the national unemployment rate were released along with weekly reports on mortgage rates and initial jobless claims.

Construction Spending Dips in May

May construction spending fell to a seasonally-adjusted annual rate of 0.80 percent growth at a pace of $1.3 trillion as compared to April’s reading, which was adjusted to 0.40 percent growth after reports of a flat reading. Year-over-year construction spending  was 2.30 percent lower in May.  

High materials costs and shortages of workers continued to dampen builder sentiment as shortages of available homes added to buyer concerns. Slower home price growth and shortages of affordable homes also impacted housing markets, but low mortgage rates encouraged qualified home buyers to lock in low rates.

Recent news reports suggest that economic growth may be slowing along with home price growth, but public and private-sector jobs grew in June after low readings in May. The Commerce Department’s Non-Farm Payrolls report showed 224,000 public and private sector jobs added in June; ADP reported 102,000 private-sector jobs added in June after May’s lean reading of 41,000 jobs added. The national unemployment rate ticked up to 3.70percent in June as compared to May’s reading of 3.60 percent.

Mortgage Rates Rise, New Jobless Claims Fall

Average mortgage rates rose last week according to Freddie Mac. Rates for a 30-year fixed rate mortgage averaged  two basis points higher at 3.78 percent. 15-year fixed mortgage rates averaged two basis points higher at 3.18 percent. The average rate for 5/1 adjustable rate mortgages rose six basis points to 3.45 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 fell to 221,000 new claims filed last week as compared to the prior week’s reading of 229,000  initial jobless claims.

What‘s Ahead

This week’s economic reports include testimony by Jerome Powell, chairman of the Federal Reserve and release of minutes of the Fed’s Federal Open Market Committee meeting held in June. Reports on inflation and weekly readings on mortgage rates and first-time jobless claims will also be released.

Last week’s economic reports included readings on home prices, sales of pre-owned homes and pending home sales. Weekly readings on mortgage rates and first-time jobless claims were also released.

Case-Shiller Home Price Index: Home Price Growth Slips in April

Case-Shiller reported slower home price growth in April; home prices were 0.20 percent lower at 3.50 percent. Increasing inventories of homes for sale provided buyers with more choices and eased demand, which increased in recent years due to severe shortages of available homes.

Cities on the west coast previously dominated home price growth, but the top three cities with highest home prices reported in April were sunbelt cities located east of high-priced west coast cities. Las Vegas, Nevada reported the highest rate of home price growth with 7.20 percent year-over-year.

Phoenix, Arizona followed with 6.00 percent growth and Tampa, Florida home prices grew by 5.60 percent year-over-year in April. Home values in all three cities were hard hit during the recession and are recovering, but not at the double digit rates seen in prior years.

New Home Sales Fall in May

Sales of newly-built homes fell to a five-month low in May according to the Commerce Department. New homes sold at a seasonally-adjusted annual rate of 626,000 homes as compared to April’s rate of 679,000 new homes sold. May’s reading was 3.70 percent lower than April’s revised reading.

There was a 6.40 month supply of new homes available at May’s sales pace. Real estate pros consider a six-month supply of available homes as average. Sales of new homes were 4.00 percent higher than for the same period in 2018. The median price of new homes sold in May was $308,000 and was 2.70 percent lower than a year ago.

Pending home sales rose in May from April’s negative reading of -1.50 percent to a positive reading of 1.10 percent. This reading lines up with the increase in homes for sale.

Mortgage Rates, New Jobless Claims

Freddie Mac reported lower mortgage rates last week with the average rate for a 30-year fixed rate mortgage 11 basis points lower than for the prior week. Average rates for 15-year fixed rate mortgages and 5/1 adjustable rate mortgages fell nine basis points to 3.16 percent and 3.39 percent respectively.

Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages. Mortgage applications rose 5 percent from the prior week due to the dip in home loan rates.

Initial jobless claims rose last week to 227,000 new claims filed as compared to 216,000 new claims expected and 217,000 first-time claims filed the prior week. Analysts sad that new jobless claims remain low and that last week’s rise in claims did not reflect weakening in labor markets.

The University of Michigan Consumer Sentiment Index dropped to an index reading of 98.20 in June from May’s reading of 100. Consumer sentiment dropped due to concerns over recent tariffs and resulting increases in consumer prices

What‘s Ahead

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

Last week’s economic reports included monthly readings on housing market conditions, housing starts and building permits issued. Sales of pre-owned homes were released; the Federal Reserve announced its decision not to raise its key interest rate range. Weekly reports on mortgage rates and new jobless claims were also released.

NAHB: Home Builder Confidence Slips in June

The National Association of Home Builders Housing Market Index for June showed builder confidence was two points lower at an index reading of 64. Builders surveyed said ongoing concerns such as lot and labor shortages impacted their outlook, but builders were also concerned over the impact of trade wars and tariffs on the cost of building materials.

Housing starts dipped to 1.27 million starts on a seasonally-adjusted annual basis in May. April’s reading was 1.28 million starts and surpassed the expected reading of 1.23 million starts. Although housing starts were higher, they were 3 percent lower year to date than for the same period in 2018 and were 4.79 percent lower year-over-year.  Building permits issued held steady in May at 1.29 million permits issued; analysts expected a reading of 1.30 million permits issued.

Sales of pre-owned homes were higher in May with 5.34 million sales; 5.28 million sales were expected based on April’s reading of 5.21 million sales. The National Association of Realtors® said that sales of pre-owned homes were 2.50 percent higher than for April, but were 1.10 percent lower year-over-year.

Warmer weather and peak home-buying season contributed to the increase in sales. Lower mortgage rates likely compelled would-be buyers to enter the market. The Federal Reserve did not raise its target interest rate range, which stands at 2.25-2.50 percent. Lenders typically raise rates charged to consumers when the Fed raises its key rate range.

Mortgage Rates Little Changed, New Jobless Claims Fall

Freddie Mac reported little change in mortgage rates last week. 30-year fixed rate mortgages averaged 3.84 percent and rose two basis points week-to-week. Interest rates for 15-year fixed rate mortgages averaged 3.25 percent and fell one basis point on average.

The average rate for 5/1 fixed-rate mortgages was three basis points lower at 3.48 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 to 216,000 claims from the prior week’s reading of 222,000 new claims filed and expectations of 220,000 initial jobless claims filed.

What‘s Ahead

This week’s scheduled economic reports include readings from Case-Shiller Indices, readings on sales of new homes, pending home sales and the consumer sentiment index. Weekly readings on mortgage rates and first-time jobless claims are also scheduled.

Last week’s economic reports included readings on inflation, retail sales and consumer sentiment. Weekly readings on mortgage rates and first-time jobless claims were also released.

Consumer Price Index Lower in May as Retail Sales Hold Steady

Last month’s Consumer Price Index, which is a widely-used gauge of inflation, dropped to 0.10 percent in May and matched expectations. April posted month-to-month growth of 0.30 percent. Core inflation, which excludes volatile food and fuel sectors, rose 0.10 percent in May and fell short of expectations of 0.20 percent growth.

April’s Core Consumer Price Index grew by 0.10 percent. Analysts reported a likely slowdown in economic expansion last week. Consumers, vendors and financial analysts said trade wars and global economic uncertainty were factors in concerns over economic conditions.

Retail sales rose from April’s reading of 0.30 percent to 0.50 percent in May; retail sales without automotive sales held steady with 0.50 percent growth. April retail sales also had 0.50 percent growth.

Mortgage Rates Stay Near Two Year Low

Freddie Mac reported average mortgage rates were little changed last week. 30-year mortgage rates averaged 3.52 percent and were unchanged from the prior week. 15-year fixed mortgage rates averaged 3.26 percent and were two basis points lower.

5/1 adjustable rate mortgages dropped one basis point to 3.51 percent on average. Discount points averaged 0.60 percent for 30-year fixed rate mortgages, 0.50 percent for 15-year fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

First-time jobless claims rose to 222,000 claims filed last week, which exceeded expectations of 218,000 new claims based on the prior week’s reading of 219,000 initial jobless claims. Analysts said that labor markets remained solid, but layoffs in California and Pennsylvania caused new jobless claims to rise last week.

The University of Michigan reported lower consumer sentiment in June with an index reading of 97.90 as compared to May’s reading of 100.00; 40 percent of consumers surveyed cited concerns over pending tariffs against Mexico for falling confidence in economic conditions.

The tariffs against Mexico were sidelined, which may boost consumer confidence readings in July. When tariffs were set against imports from China, only 21 percent of survey participants identified tariffs as cause for concern.

What‘s Ahead

This week’s scheduled economic releases include reports from the National Association of Home Builders on housing markets conditions, the Federal Reserve’s FOMC meeting statement and a press conference from Fed Chair Jerome Powell. Data on sales of pre-owned homes will be released along with weekly readings on mortgage rates and new jobless claims.

Last week’s economic releases included readings on construction spending, public and private sector jobs and national unemployment. Weekly reports on mortgage rates and first-time unemployment claims were also released.

Construction Spending Little Changed in April

Census Bureau readings for April showed a minor dip in construction spending as compared to revised figures for March. $1,295.5 billion was spent on a seasonally-adjusted annual basis and missed the expected reading of $1,314.7 billion.

March construction spending was revised to $1,299.2 billion. Falling mortgage rates were good news for home buyers, but concerns over global economic disputes and higher materials prices concerned home builders.

Mortgage Rates Fall as Initial Jobless Claims Hold Steady

Freddie Mac reported lower average mortgage rates across the board. 30-year fixed mortgage rates dropped 17 basis points to 3.82 percent; the average rate for 15-year fixed rate mortgages fell 18 basis points to 3.28 percent and the average rate for 5/1 adjustable rate mortgages fell eight basis points to 3.22 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

Initial jobless claims were unchanged with 218,000 first-time claims filed.  Monthly labor reports issued for May showed sharply lower jobs growth for public and private sector jobs.

Public and Private Sector Jobs Growth Dips in May

In a potential warning of slowing economic growth, public and private sector job creation fell far short of expected readings in May. The Labor Department’s Non-Farm Payrolls report showed 75,000 new jobs in May as compared to expectations of 180,000 new jobs and April’s reading of 224,000 public and private sector jobs created.

ADP’s report for private sector jobs growth was equally dismal for May; 27,000 jobs were created as compared to April’s revised reading of 271,000 private sector jobs created. Mark Zandi, who developed ADP jobs reporting, said “The economy is weakening; growth is slowing and slowing sharply.” The national unemployment rate was unchanged at 3.60 percent, which matched expectations. Analysts said that signs of slower economic growth could lead the Federal Reserve to implement monetary easing. 

What‘s Ahead

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

Last week’s economic news included readings on sales of new and pre-owned homes; weekly readings on mortgage rates and first-time jobless claims were also released.

Sales of New and Pre-Owned Homes Lower in April

Sales of brand-new homes fell nearly seven percent in April according to Commerce Department reports. Analysts noted that March sales of new homes were revised upward, which contributed to the difference between March and April readings. 673,000 new homes were sold in April on a seasonally adjusted annual basis. Analysts expected a reading of 670,000 sale of new homes; this reading was based on the initial March reading which was later revised upward to 723,000 sales.

Factors impacting new home sales include affordability, strict mortgage qualification requirements and new homes being built for higher-end markets. The average sale price for new homes was eight percent higher year-over-year at $342,20.

Year-to-date sales of new homes were 6.70 percent higher in April than for the same period in 2018. Inventories of homes for sale was reported at 5.9 months. Real estate pros typically consider a six-month supply of available homes as an indicator of average market conditions.

Sales of previously-owned homes were lower in April. 5.19 million existing homes were sold on a seasonally adjusted annual basis; this reading fell short of expectations of 5.35 million sales and the sales rate of 5.21 million sales of pre-owned homes reported in March. Sales were lower for pre-owned homes for the second consecutive month in April.

Sales of pre-owned homes were 0.40 percent lower month-to-month and were 4.40 percent lower year-over-year. First-time and moderate income home buyers are attracted to lower asking prices for previously-owned homes; declining sales suggest that prices of pre-owned homes have risen beyond affordability for buyers with moderate incomes and less-than perfect credit ratings.

Mortgage Rates, New Jobless Claims Fall

Freddie Mac reported lower average mortgage rates for fixed-rate mortgages last week. The average rate for a 30-year fixed rate mortgage was one basis point lower at 4.06 percent. Rates for 15-year fixed rate mortgages averaged two basis points lower at 3.51 percent. 

Rates for 5/1 adjustable rate mortgages were two basis points higher and averaged 3.68 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.

Initial jobless claims fell to 211,000 new claims filed as compared to the prior week’s reading of 0f 212,000 claims filed. Analysts expected a higher reading of 217,000 new jobless claims filed.

What‘s Ahead

This week’s scheduled economic reporting includes readings from Case-Shiller on home prices; pending home sales will also be released along with weekly readings on mortgage rates and new jobless claims.

Last week’s economic reports included readings from the National Association of Home Builders on housing market conditions, housing starts and building permits issued. Consumer sentiment was reported along with weekly readings on mortgage rates and new jobless claims.

NAHB: Builder Confidence Rises in May, Housing Starts Increase in April

The National Association of Home Builders Housing Market Index posted its highest reading in seven months in May as headwinds facing home construction waned. Lower mortgage rates were a positive sign. May’s reading rose three points to 66; component readings also rose.

The index of builder confidence in current housing market conditions rose three points to an index reading of 72; the reading for builder confidence in housing market conditions in the next six months rose one point to 72 and the confidence reading for buyer traffic in new housing developments rose two points to 49. The reading for buyer traffic seldom exceeds 50. A reading of 50 or above indicates positive builder sentiment.

Commerce Department reports for April showed higher readings for housing starts and building permits issued. 1.235 million housing starts were reported at a seasonally-adjusted annual pace. Analysts expected 1.209 million starts based on March reading of 1.16 million starts. Housing starts were six percent higher as compared to March, but remained lower year-over-year. Building permits reported in April rose from 1.288 million permits issued on a seasonally-adjusted annual basis in March to 1.296 million permits in April. 

Mortgage Rates, Mixed New Jobless Claims Fall

Freddie Mac reported lower fixed mortgage rates were lower last week, but the average rate for 5/1 adjustable mortgages rose. Rates for 30-year fixed rate mortgages averaged 4.07 percent and were three basis points lower. Rates for a 15-year fixed rate mortgage averaged 3.53 percent and were four basis points lower.

The average rate for 5/1 adjustable rate mortgages rose three basis points to 3.66 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 were lower last week with 212,000 claims filed as compared to expectations of 217,000 new claims filed and the prior week’s reading of 228,000 initial claims filed. Analysts said that the drop in first-time claims was a sign of economic strength and job markets.

Consumer sentiment hit a 15-year high according to the University of Michigan’s Consumer Sentiment

Index. reported an index reading of 102.40 in May; analysts expected a reading of 97.10 based on April’s reading of 97.20. Low unemployment fueled consumer sentiment, but analysts emphasized that consumers were surveyed before higher tariffs on China were announced; the costs of tariffs will be passed on to consumers, which is expected to dampen consumer sentiment.

What‘s Ahead

This week’s scheduled economic news includes readings on sales of new and pre-owned homes and minutes of the Fed’s FOMC Committee meeting. Weekly readings on mortgage rates and new jobless claims will also be released.

Last week’s economic reporting included readings on sales of new and pre-owned homes; weekly reports on mortgage rates and new jobless claims were also released along with a report on consumer sentiment.

Sales of New Homes Hit 16-Month High

The Commerce Department reported that deep discounts offered by home builders boosted sales of new single-family homes to 692,000 sales on a seasonally-adjusted annual basis.

March sales exceeded February’s reading by 4.50 percent and exceeded the expected sales pace of 656,000 sales. The average price of new single family homes fell to $302,700 in March; this was 9.70 percent lower year-over-year.

Real estate pros reported higher inventory of new homes for sale with a six-month supply of homes for sale in March. A six-month supply of available homes indicates that housing markets were evenly balanced between homes for sale and prospective buyers.

Previously-owned homes sold at a seasonally-adjusted annual pace of 5.21 million sales in March. The National Association of Realtors® said that sales of pre-owned homes were 5.90 percent lower than the sales pace of 5.48 million pre owned homes posted for February and that March sales missed expectations of 5.35 million sales.

Sales were likely impacted by higher average sales price for pre-owned homes; the average selling price for pre-owned homes was $259,400, which was 3.80 percent higher year-over-year. Higher home prices challenge first-time and moderate income home buyers; this could explain the slower sales pace for pre-owned homes in March.

Mortgage Rates and New Jobless Claims Rise

Freddie Mac reported higher average mortgage rates last week. Rates for 30-year fixed rate mortgages averaged 4.20 percent and were three basis points higher than for the prior week. Rates for 15-year fixed rate mortgages averaged two basis points higher at 3.64 percent; Rates for 5/1 adjustable rate mortgages fell one basis point and averaged 3.77 percent. Discount points for fixed rate mortgages averaged 0.50 percent and 0.40 percent for 5/1 adjustable rate mortgages.

First-time jobless claims jumped to 230,000 new claims filed as compared to the prior week’s reading of 193,000 new claims filed. Analysts said that more first-time claims were likely related to the Easter holiday and spring breaks.

According to the Consumer Sentiment Index for April, consumer sentiment rose to an index reading of 97.20 percent as compared to an expected reading of 97.0 and March’s reading of 96.9.

What‘s Ahead

This week’s scheduled economic news includes readings from Case-Shiller, and Commerce Department readings on construction spending and pending home sales. The Federal Open Market Committee of the Federal Reserve will issue its post-meeting statement and Fed Chair Jerome Powell will give a press conference. ADP and Non-Farm Payrolls reports will be released along with the national unemployment rate.

Last week’s economic news included readings on home builder confidence in housing market conditions and Commerce Department reports on housing starts and building permits issued. Weekly readings on mortgage ratees and first-time jobless claims were also released.

NAHB Housing Market Index: Builder Confidence Rises One Point in April

Home Builder Confidence readings posted by the National Association of Home Builders held steady for April and rose one point overall. Component readings for the NAHB Housing Market Index were mixed; builder confidence in current housing market conditions rose one point to an index reading of 69, but builder confidence in housing market conditions in the next six months fell one point to 62.

Home builder confidence in potential buyer traffic rose three points to 47. NAHB Housing Market index readings above 50 indicate that most builders view market conditions as positive, but the reading for buyer traffic seldom rises above 50.

Housing Starts and Building Permits Issued Fall Short of Expectations in March

Commerce Department reports on housing starts and building permits issued in March were lower than in February and fell short of analyst expectations. Housing starts were reported at a seasonally adjusted annual pace of 1.139 million starts. Analysts expected housing starts at an annual rate of 1,225 billion starts based on February’s reading of 1.142 million starts.

Builders continued to experience headwinds including higher materials costs, shortages of buildable lots and a lack of skilled labor. Analysts cited disparities between new housing developments, which tend to favor luxury homes and the need for affordable housing.

Exclusionary zoning and neighborhood politics can block construction of affordable housing in desirable areas; legal and zoning constraints prevent builders from producing enough affordable homes to meet demand. Housing starts year-to-date were 9.70 percent lower than for the same period in 2018.

Fewer building permits were issued in March than in February. 1.269 million permits were issued on a seasonally adjusted annual basis as compared to expectations of 1.300 million permits issued and February’s reading of 1.291 million permits issued.

Mortgage Rates Rise as New Jobless Claims Fall

Mortgage rates were higher last week as average rates for fixed rate mortgages rose. 30-year mortgage rates averaged five basis points higher at 4.17 percent. Rates for 15-year fixed rate mortgages averaged two basis points higher at 3.62 percent.  

Mortgage rates for 5/1 adjustable rate mortgages averaged two basis points lower at 3.78 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.30 percent 5/1 adjustable rate mortgages.

First-time jobless claims fell by 5000 new claims to 192,000 initial claims; this was significantly lower than 204,000 new claims expected.

What‘s Ahead

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