Lee Morof's Real Estate Blog

Last week’s economic news included readings on sales of new homes and pending home sales. A reading on consumer sentiment was also released along with weekly reports on mortgage rates and new jobless claims.

Sales of New Homes Slide to Near 2 – Year Low

According to Commerce Department readings on new home sales, the pace of sales slipped close to a two-year low in September; new homes sold at a seasonally-adjusted annual pace of 553,000 sales.

September’s reading was 5.50 percent lower than for August and was 13.20 percent lower year-over-year. Analysts expected a reading of 620,000 sales; August’s reading showed an annual pace of 585,000 new homes sold.

Real estate pros reported a 7.10-month supply of available homes, which was a six-year high. A six-month supply of homes for sale is considered a normal inventory in many markets.

Home prices had a median of $320,000 in September, which was 3.50 percent lower year-over-year. Strong demand for homes coupled with limited supplies have caused home prices to rise and buyers to compete with cash-buyers and ever escalating home prices. Rising mortgage rates and few choices of available homes have sidelined moderate and first-time buyers.

Pending Home Sales Rise in September

The National Association of Realtors® reported rising pending home sales, which provided hope for lagging home sales. Pending sales are sales for which a purchase contract is signed but the sale has not yet closed. Pending home sales had an index reading of 104.6 in September as compared to 104.1 in August. No change from August’s reading was expected in September. The pending sales index pending home sales index was one percent lower year-over-year.

Pending sales rose 4.40 percent in the West; The Midwest posted a gain of 1.20 percent and the South posted a negative reading of – 0.40 percent. The South posted a negative reading of -1.40 percent in pending home sales.

Pending home sales are considered a predictor of completed sales and new mortgages.

Mortgage Rates, New Jobless Claims Rise

Freddie Mac reported higher average mortgage rates last week. Rates for a 30-year fixed rate mortgage rose one basis point to 4.86 percent; the average rate for a 15-year fixed rate mortgage rose three basis points to 4.29 percent and the average rate for 5/1 adjustable rate mortgages was four basis points higher at 4.14 percent. Discount points averaged 0.50 percent for 30-year fixed rate mortgages, 0.40 percent for 15-year fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

First-time jobless claims rose last week to 215,000 new claims filed. Analysts expected no change from the prior week’s reading of 210,000 new claims filed. The University of Michigan reported a dip in its consumer sentiment index for October. September’s reading was adjusted from and index reading of 99 to 100.1. October’s reading was 99.  Lower consumer sentiment was based on stagnant wage growth according to analysts.

What‘s Ahead

This week’s scheduled economic news includes readings from Case-Shiller on home prices, Labor sector reports on private and public sector employment and the national unemployment rate.

Last week’s economic reports included readings on home builder confidence,sales of pre-owned homes and housing starts.  The Commerce Department also issued a report on building permits issued; weekly reports on mortgage rates and first-time jobless claims were also released.

Homebuilder Confidence Rises One Point

The National Association of Home Builders reported a reading of 68 for October,which surpassed August’s reading of 67. Any reading over 50 indicates most home builders are confident about housing market conditions. Builders cited ongoing headwinds including higher prices for materials,shortages of lots and labor and rising mortgage rates. Builders sought ways to provide more affordable housing options as they faced higher costs.

Regional readings of builder confidence readings,which are tracked on a three-month rolling average,were missed. The northeastern region gained three points for a reading of 57; the southern region gained one point for an index reading of 70. The midwestern region lost two points for a reading of 57. The western region was unchanged from September’s reading of 74.

Sales of Pre-owned Homes Slip toward 3 Year Low

The National Association of Realtors® reported fewer sales of pre-owned homes in September;5.15 million sales were reported on a seasonally adjusted annual basis as compared to August’s reading of 5.33 million sales. Analysts expected a reading of 6.27 million sales for September. Faced with high home prices and slim inventories of available homes,would-be buyers sidelined their searches for homes. Housing starts were 3.40 percent lower month-to-month and hit their lowest rate since November 2015.

According to the Commerce Department,housing starts also fell in September to 1.201 million starts on a seasonally adjusted annual basis. August’s reading was 1.268 million starts. Year-over-year,housing starts were 3.70 percent higher.,but fewer housing starts were bad news for housing markets as demand continued to exceed supplies of available homes. Building permits issued also fell in September to 1.242 million permits issued as compared to August’s reading of 1.249 million permits issued.

Mortgage Rates,New Jobless Claims Lower

Freddie Mac reported lower average mortgage rates last week. Rates for 30-year fixed rate mortgages were five basis points lower at 4.85 percent; rates for a 15-year fixed rate mortgage averaged three basis points lower at 4.26 percent. The average rate for 5/1 adjustable rate mortgages was three basis points lower at 4.10 percent.

First-time jobless claims also fell last week to 210,000 new claims filed,which matched expectations but was lower than the prior week’s reading of 215,000 new claims filed.

What‘s Ahead

This week’s scheduled economic releases include readings on new and pending home sales along with weekly reports on mortgage rates and new jobless claims.

Last week’s economic reports included readings on construction spending and labor reports on public and private-sector job growth. The national unemployment rate was released along with weekly reports on mortgage rates and weekly jobless claims.

Construction Spending dips in September, but Residential Construction Spending Rises

Construction spending rose 0.10 percent in September, but residential construction spending fell 0.70 percent month-to-month. Construction spending was 4.10 percent higher year-over-year. January through August construction spending was 5.30 percent higher than for the same period in 2017.

Analysts estimated a shortage of approximately four million homes; which accentuates demand and drives prices up. In recent years, builders have concentrated on higher-end homes, but analysts said that a shift to building super-affordable homes may be in the works. High home prices and ever-increasing rents are squeezing moderate-income families; providing more affordable housing options could lessen demand and help home price growth to normalize.

Mortgage Rates Little Changed, New Jobless Claims Lower

Freddie Mac reported little change in mortgage rates; 30-year fixed rate mortgages averaged one basis point lower at 4.71 percent. The average rate for a 15-year fixed rate mortgage was also one basis point lower at 4.15 percent. Rates for 5/1 adjustable rate mortgages averaged 4.01 percent and were four basis points higher. Discount points averaged 0.40 percent for fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

First-time jobless claims fell last week to 207,000 new claims filed as compared to expectations of 213,000 new claims filed and the prior week’s reading of 214,000 claims filed. Analysts said that fewer claims were filed as the impact of Hurricane Florence diminished.

Labor Reports: Job Growth Mixed as Unemployment Rate Nears 49 Year Low

Commerce Department readings on public and private-sector job growth showed more private sector jobs, while the government reading for public and private sector jobs dropped/ ADP reported 230,000 more private-sector jobs in September; the government’s Non-Farm Payrolls report showed 134,000 new public and private sector jobs as compared to 270,000 new jobs in the prior month. Analysts expected 168,000 new public ad private sector jobs and said that the shortfall in job growth for September was a consequence of Hurricane Florence.

The National Unemployment Rate fell to 3.70 percent in September, which was the lowest reading in nearly 49 years.

What‘s Ahead

This week’s scheduled economic releases include readings on inflation, core inflation and consumer sentiment. Weekly readings on mortgage rates and new jobless claims will also be released.

Last week’s economic releases included readings on the NAHB Housing Market Index, sales of pre-owned homes, and housing starts. Weekly readings on mortgage rates and first-time jobless claims were also released.

NAHB: Home Builder Confidence in Market Conditions Holds Steady

The National Association of Home Builders reported an index reading of 67 for September, which matched August’s reading. Growing concerns over impacts of tariffs on building material costs have slowed builders’ confidence in current and future market conditions.

Components of the NAHB Housing Market Index include readings on current conditions, which gained one point to 74; builder confidence in market conditions over the next six months gained two points to a reading of 74. The HMI reading for buyer traffic in new housing developments was unchanged with a reading of 49. Readings for buyer traffic are typically below the benchmark index reading of 50. Readings over 50 indicate that most home builders are confident about housing market conditions.

Builder confidence is considered an indication of future housing supplies as builders may adjust their construction plans on market conditions and building costs. The Commerce Department reported higher housing starts in August with a seasonally-adjusted annual rate of 1,282 million starts. Analysts predicated a rate of 1.249 million starts based on July’s reading of 1.168 million starts.

Sales of Previously-Owned Homes Unchanged

The National Association of Realtors® reported sales of previously-owned homes held steady in August, with homes sold at a seasonally-adjusted annual rate of 5.34 million sales. Analysts expected a reading of 5.37 million sales. Home sales have faced headwinds in recent years with high demand and low inventories of available homes driving up home prices faster than inflation and wage growth. Recently rising mortgage rates also impacted affordability and sidelined would-be buyers with moderate incomes.

Mortgage Rates Rise; New Jobless Claims Fall

Freddie Mac reported higher rates for fixed-rate mortgages with the average rate for a 30-year fixed rate mortgage rose five basis points to 4.65 percent. The average rate for 15-year mortgages also rose by five basis points to 4.11 percent. Rates for 5/1 adjustable rate mortgages dipped by one basis point to 3.92 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 fell to 201,000 claims filed as compared to expectations of 208,000 new claims filed and the prior week’s reading of 204,000 new claims filed. This was a 49-year low; analysts cited Hurricane Florence and overall economic expansion.

What‘s Ahead

This week’s scheduled economic news includes readings on home prices from Case-Shiller, new and pending home sales and inflation. Weekly reports on mortgage rates and new jobless claims will also be released.

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

Fed Reports Consumer Credit Jumps in July

The Federal Reserve reported that consumer credit rose from $9 billion in June to $17 billion in July. Analysts said a majority of consumer credit was issued for education loans and auto loans. June’s reading was revised downward to $8.50 billion from the original reading of $10.2 billion.

Credit card debt increased by 1.50 percent in July after declining by – 1.40 percent in June. Non-revolving consumer debt rose by 6.40 percent in July after growing 4.0 percent in June. July’s reading was the largest increase in eight months. The Fed’s Consumer Credit report does not include mortgage loans.

Inflation increased by 0.20 percent in August, which fell short of analyst expectations of 0.30 percent growth. Core inflation, which excludes volatile food and fuel sectors, rose by -0.10 percent and was lower than the expected reading of 0.20 percent growth. July readings for inflation and core inflation were 0.20 percent.

Mortgage Rates and Consumer Sentiment Rise as New Jobless Claims Fall

Freddie Mac reported higher average mortgage rates for the third consecutive week. Rates for a 30-year fixed rate mortgage rose six basis points to an average of 4.60 percent; rates for 15-year fixed rate mortgages averaged seven basis points higher at 4.06 percent and mortgage rates for 5/1 adjustable rate mortgages averaged 3.93 percent and were unchanged from the prior week. Discount rates were reported at 0.50 percent for fixed-rate loans and 0.30 percent for 5/1 adjustable rate mortgages.

First-time jobless claims fell last week to 204,000 claims filed against expectations of 210,000 new claims filed and the prior week’s reading of 205,000 first-time jobless claims filed.

Consumer sentiment rose in September. The University of Michigan reported an index reading of 100.8, which surpassed the expected index reading of 97.0 and the August reading of 96.2.

What‘s Ahead

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

Last week’s economic releases included readings from Case-Shiller on home prices, pending home sales and consumer sentiment. Weekly readings on mortgage rates and first-time jobless claims were also released.

Case-Shiller: Home Price Growth, Pending Home Sales Dip

Home price growth slowed in June according to Case-Shiller’s national home price index. Home prices rose 0.30 percent from May and were 6.30 percent year-over-year as compared as compared to 6.40 percent. In May. Analysts have predicted stabilizing home prices for months and June’s reading indicated that home prices may slow after surpassing inflation and wage growth in recent times.

The 20-City Home Price Index rose 0.10 percent in June and 6.30 percent year-over-year in June; Las Vegas, Nevada home prices toppled Seattle, Washington’s hold on highest home price appreciation with a reading of 1.40 percent in June and 13.00 percent year-over-year. Seattle home prices grew by 0.70 percent and 12.80 percent year-over-year. San Francisco, California home prices grew by 0.50 percent in June and 10.78 percent year-over-year.

Pending home sales, which indicate future home sales, were -0.70 percent lower in July; as compared to 1.00 percent growth in June. Lower home sales are typically expected as peak buying season ends, but short supplies of homes and high demand, which has driven home prices beyond affordability for first-time and moderate-income home buyers.

Mortgage Rates, New Jobless Claims Rise

Freddie Mac reported a higher average rate for 30-year fixed rate mortgages, which rose one basis point to 4.52 percent; rates for a 15-year fixed rate mortgage averaged 3.97npercent and were one basis point lower.  Rates for a 5/1 adjustable rate mortgage averaged 3.85 percent and were three basis points higher on average.

First-time jobless claims also rose last week with 213,000 new claims filed as compared to expectations of 212,000 new claims and the prior week’s reading of 210,000 new claims filed. The University of Michigan reported a lower consumer confidence reading of 96.2 for August as compared to July’s reading of 97.9. Analysts expected a reading of 95.4 for August.

What‘s Ahead

This week’s scheduled economic releases include readings on construction spending, labor reports on public and private sector job growth and the national unemployment rate. Weekly readings on mortgage rates and new jobless claims will also be released.

Last week’s economic readings included reports on sales of new and previously-owned homes, and weekly reports on mortgage rates and first-time jobless claims.

Sales of New and Pre-owned Homes Falter in July

Home sales were lower in July, with new and pre-owned home sales falling short of projections and June sales. According to the Commerce Department, new homes sold at an annual rate of 627,000 sales as compared to 640,000 new home sales projected and a pace of 638,000 homes sold in June.

Downward revisions for previous months contributed to a lower sales pace reported in July; but the average price of a new home was $3278,700 in July, which may indicate that home prices are tapping out. July prices dropped 1.70 percent from June but were 12.80 percent higher year-over-year.

Sales of previously-owned homes were also lower in July with an annual pace of 5.34 million homes sold as compared to the expected reading of 5.40 million sales and June’s reading of 5.38 million sales. July’s reading was the lowest in two and a half years and indicated that low inventories of available homes coupled with high home prices has sidelined would-be buyers who can’t find or afford homes they want to buy.

The National Association of Realtors ® reported that Inventories of homes were 0.70 percent lower in July after rising in June. Sales of pre-owned homes were 0.50 percent lower in July and were unchanged year-over-year.

Mortgage Rates, New Jobless Claims Lower

Freddie Mac reported lower average mortgage rates last week; the rate for a 30-year fixed rate mortgage fell two basis points to 4.51 percent. Mortgage rates for a 15-year fixed rate mortgage averaged 3.98 percent and three basis points lower than the prior week.

Rates for 5/1 adjustable rate mortgages averaged 3.82 percent and were five basis points lower. Discount points averaged 0.50 percent for fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

First-time jobless claims fell to 210,000 claims filed as compared to an expected reading of 215,000 new claims and the prior week’s reading of 212,000 first-time jobless claims.

What‘s Ahead

This week’s scheduled economic reports include readings from Case-Shiller’s Home Price Index, pending home sales and inflation. Weekly readings 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 and Commerce Department releases on Housing Starts and Building Permits issued. Weekly readings on mortgage rates and first-time jobless claims were released, along with a monthly report on consumer sentiment.

NAHB: Home Builder Housing Market Index Drops 1 Point

August’s reading for the National Association of Home Builders Housing Market Index dropped one point to 67. This was the lowest reading for home builder confidence in housing market conditions in 11 months. Analysts said that trade wars are causing concern among builders due to higher costs for building materials. Higher costs will be passed on to home buyers, many of whom are already challenged by rising home prices and strict mortgage approval requirements.

Housing starts reached 1.168 million on an annual basis in July; analysts expected 1.270 million starts based on June’s reading of 1.158 million starts. Building permits issued increased in Jul with 1.311 million permits issued on an annual basis. June’s reading was 1.292 permits issued. Lower numbers of available new homes were a potential problem for housing sector, but demand remains high.

Mortgage Rates and New Jobless Claims Lower

Freddie Mac reported lower average mortgage rates last week; the rate for 30-year fixed rate mortgages fell six basis points to 4.53 percent. The average rate for a 15-year fixed rate mortgages fell four basis points to 4.01 percent and rates for a 5/1 adjustable rate mortgage averaged three basis points lower at 3.87 percent.

First-time jobless claims fell to 212,000 new claims as compared to expectations of 215,000 new claims and the prior week’s reading of 214,000 new clams filed. The latest reading approached the level of new jobless claims seen as a post-recession low First-time unemployment claims indicate levels of lay-offs and are viewed by analysts as an indicator of job market performance.

The University of Michigan reported that consumer sentiment reached its lowest reading since 2006. Analysts said that consumer concerns were concentrated among the bottom third of income ranges surveyed. Rising consumer costs caused August’s consumer confidence index to slip to 95.3 as compared to an expected index reading of 98.5. July’s consumer sentiment reading was 97.9.

What‘s Ahead

This week’s scheduled economic reports include readings on new and pre-owned home sales and minutes from the most recent meeting of the Fed’s Federal Open Market Committee. Weekly readings on mortgage rates and new jobless claims will also be released.

Last week’s economic reports included readings on job openings and inflation along with weekly readings on mortgage rates and new jobless claims.

Job Openings Hit Third Highest Reading on Record

Job openings held steady at 6.70 million in June, which was the third highest reading since reporting started in 2000.

Analysts said that the high number of job openings combined with low unemployment rates indicates healthy labor markets. Fewer jobs were available in transportation, utilities and warehousing, but jobs in education increased.

Job quits remained at 2.20 percent for the fourth consecutive month. Quits are considered an indicator of worker confidence in job markets.

Inflation Inches Up

Inflation rose by 0.20 percent in July according to the Consumer Price Index. While analyst expectations were met, rising housing costs offset a decline in energy prices. Core inflation, which excludes volatile food and energy readings, held steady at 0.20 percent as compared to the same reading for analyst expectations and for June.

The Consumer Price Index rose 2.90 percent year-over-year, which matched June’s reading. The less volatile Core CPI, which excludes inflation readings for food and energy, rose by 2.40 percent year-over-year and was the highest   reading for core inflation since 2008.

Mortgage Rates, New Jobless Claims Lower

Freddie Mac reported lower average mortgage rates last week. The rate for a 30-year fixed rate mortgage was one basis point lower at 4.59 percent; the average rate for a 15-year fixed rate mortgage was three basis points lower at 4.05 percent. Rates for a 5/1 adjustable rate mortgage averaged 3.80 percent, which was three basis points lower than for the previous week.

First-time jobless claims fell to 213,000 new claims filed and were lower than the expected reading of 217,000 new claims and the prior week’s reading of 219,000 new claims filed. The less volatile monthly reading fell by 500 new claims to 214,250 first-time jobless claims.

What‘s Ahead

This week’s economic readings include reports from the National Association of Homebuilders, Commerce Department readings on housing starts and building permits issued. Weekly readings on mortgage rates and new jobless claims.

Last week’s economic reports included readings from Case-Shiller, Commerce Department reports on pending home sales and construction spending and an FOMC statement. Labor sector reports on job creation and the national unemployment rate were released along with the monthly Consumer Confidence Index. Weekly reports on mortgage rates and first-time jobless claims were also released.

Case-Shiller: Home Price Growth Holds Steady in May

Home price analysts Case-Shiller reported national home prices rose 0.40 percent in May and were 6.40 percent higher year-over-year. Case-Shiller’s 20-City Home Price Index was 0.20 percent higher in May and 6.50 percent higher year-over-year. Only seven cities reported home price growth in May, but home prices were higher than gains reported in April.

Home price gains were highest in in Seattle, Washington with a seasonally-adjusted year-over-year gain of 13.60 percent: Las Vegas, Nevada; reported seasonally-adjusted home price growth of 12.60 percent. San Francisco, California reported a seasonally-adjusted annual home price growth of 10.90 percent. Analysts said that home price growth may be slowing, but it grew faster than wages and inflation, which continued to present challenges for first-time and moderate-income hone buyers.

Pending home Sales Grow as Construction Spending Dips

The National Association of Realtors® reported an index reading of 106.9, which was 2.50 percent lower than in May. June was the sixth consecutive month that year-over-year pending sales were lower than in the preceding year-over-year period. Pending home sales increased by 0.90 percent in June as compared to a negative reading of -0.50 percent in May.

Construction spending fell by 1.10 percent in June as compared to 1.30 percent growth in May. Analysts expected construction spending to rise by 0.90 percent in June. Home builders continued to face headwinds such as rising materials costs, labor shortages and slim supplies of buildable lots.

Mortgage Rates, Jobless Claims Rise

The Federal Open Market Committee of the Federal Reserve announced its decision not to raise the federal funds rate, which held steady at a range of 1.75 – 2.00 percent. This news did not stop average mortgage rates from moving up. The average rate for a 30-year fixed rate mortgage rose six basis points to 4.60 percent; the average rate for a 15-year fixed rate mortgage also rose six basis points to 4.08 percent. Rates for 5/1 adjustable rate mortgages also rose six basis points and averaged3.93 percent.

Weekly jobless claims rose to 218,000 new claims and fell short of analyst expectations of 220,000 new claims filed, which was based on the prior week’s reading of 217,000 new claims.

Unemployment rate Falls Below 4 Percent

July’s National Unemployment Rate dipped to 3.90 percent and matched analyst expectations. In May, unemployment reached 4.00 percent.

Jobs grew in July with ADP posting 219,000 new private-sector jobs and the Commerce Department reported 157,000 new public and private sector jobs added in July. Analysts expected 195,000 new jobs to be added to Non-Farm Payrolls based on 248,000 mew jobs added in June.

The University of Michigan reported that its Consumer Confidence Index gained 0.30 points for an index reading of 127.40 percent.

What‘s Ahead

This week’s scheduled economic reports include readings on consumer expectations, July job openings, inflation and weekly reports on mortgage rates and new jobless claims.