Lee Morof's Real Estate Blog

Last week’s economic reports included readings on inflation and retail sales. Weekly readings on mortgage rates and new jobless claims were also released.

Retail Sales Grow, Inflation Unchanged in November

November retail sales grew by 0.20 percent in November as compared to expectations of 0.10 percent and October’s reading of 1.10 percent growth. Core retail sales, which exclude automotive sales, grew by 0.20 percent and met expectations. Analysts said online stores pushed retail sales growth in November.

Inflation held steady in November as expected. Inflation grew by 0.30 percent in October. Core inflation, which excludes volatile fuel and food sectors, rose by 0.20 percent, which matched October’s reading. Lower fuel prices contributed to the higher Core Price Index reading.

Mortgage Rates, New Jobless Claims

Freddie Mac reported lower mortgage rates last week, which caused an uptick in demand for homes. Rates for a 30-year fixed rate mortgage dropped by 12 basis points and averaged 4.63 percent. Mortgage rates for 15-year fixed rate mortgages dropped 14 basis points and averaged 4.07 percent.

Rates s for 5/1 adjustable rate mortgages averaged 4.06 percent and were three basis points lower than the prior week. Discount points averaged 0.50 percent for fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

Last week’s average mortgage rates were the lowest in three months and prompted would-be be home buyers to enter the market.

First-time Jobless claims fell to 206,000 new claims filed as compared to the prior week’s reading of 233,000 new jobless claims filed. Analysts expected 226,000 new claims to be filed. The surge in unemployment claims during the prior week was connected to an early Thanksgiving holiday.

What‘s Ahead

This week’s scheduled economic reports include the National Association of Home Builders Housing Market Index, Commerce Department reports on housing starts and building permits issued. Sales of previously owned homes will be reported.

The Fed’s Federal Open Market Committee will issue its post-meeting statement along with economic projections for 2019. Weekly readings on mortgage rates and new jobless claims will be released along with a monthly report on consumer sentiment.

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

Fed Raises Key Interest Rate on Strong Economic Indicators

The post-meeting announcement by the Federal Open Market Committee of the Federal Reserve indicated that committee members voted to raise the target federal funds rate to 0.175 to 2.00 percent from the prior rate of 1.50 to 1.75 percent.

The post-meeting announcement cited strong economic conditions and stated that FOMC had altered their outlook from three rate increases in 2018 to four increases. This news is significant to consumers as banks and credit card companies typically raise lending rates in response to Federal Reserve actions.

Committee members were closely divided on interest rate forecasts for 2018. Eight members said that the Fed rate would likely increase four times in 2018 while seven members said three rate increases would be appropriate. The post-meeting statement also cited concerns over inflation and Fed Chair Jerome Powell said that raising interest rates too fast could increase the risk of recession.

Consumer Price Index, Retail Sales Rise in May

The Consumer Price Index rose from 0.10 percent in April to 0.20 percent in May according to the Commerce Department. The Core CPI, which excludes volatile food and fuel sectors, was unchanged at 0.20 percent against expectations of 0.20 percent growth and 0.20 percent in April.

Retail sales rose 0.80 percent in May as compared to expectations of 0.40 percent growth and April’s growth rate of 0.40 percent. Retail sales excluding the automotive sector rose 0.90 percent in May; analysts expected a reading of 0.50 percent based on April’s reading of 0.40 percent growth.

Mortgage Rates Rise, New Jobless claims Fall

Freddie Mac reported higher mortgage rates last week. The average rate for a 30-year fixed rate mortgage averaged eight basis points higher at 4.60 percent; the average rate for a 15-year fixed rate mortgage rose six basis points to 4.07 percent.

Rates for a 5/1 adjustable rate mortgage were nine basis points higher at 3.83 percent on average. Freddie Mac analysts said that demand for homes is holding steady despite higher mortgage rates.

First-time jobless claims fell by 4,000 new claims to 218,000 new claims filed. Analysts expected 225,000 new claims to be filed based on the prior week’s reading of 222,000 new jobless claims filed.

What‘s Ahead

This week’s scheduled economic reports include NAHB Housing Market Indices, Commerce Department readings on housing starts and building permits issued and National Association of Realtors® reports on sales of previously-owned homes. Weekly readings on mortgage rates and new jobless claims will also be released.

Last week’s economic news included reports on retail sales, inflation, and weekly reports on mortgage rates and new jobless claims.

Retail Sales Slip as Consumer Prices Inch Up

Retail sales dipped into negative territory in August with a reading of -0.30 percent as compared to expectations of -0.10 percent and July’s reading of +0.10 percent. Retail sales excluding auto sales were better at +0.30 percent. Analysts expected a reading of +0.20 percent based on July’s reading of -0.40 percent. August’s negative reading for retail sales was the first negative report since March.

Inflation fared better than retail sales with August’s Consumer Price Index reading at 0.20 percent. Analysts expected a reading of 0.10 percent; July’s reading was flat. Core Consumer Price Index readings for August are less volatile, as the Core CPI does not include readings for food and energy costs. August’s Core CPI reading was 0.30 percent. A reading of 0.20 percent was expected; July’s reading was 0.10 percent. It appears that inflation is creeping upward, but remains well below the Fed’s target reading of 2.0 percent.

Mortgage Rates, New Jobless Claims Rise

Freddie Mac reported higher mortgage rates across the board last week. The average rate for a 30-year fixed rate mortgage rose six basis points to 3.50 percent; the average rate for a 15-year fixed rate mortgage rose one basis point to 2.76 percent and the average rate for a 5/1 adjustable rate mortgage rose one basis point to an average of 2.82 percent. Average discount points were 0.50 for 30 and 15-year fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

Low mortgage rates have helped home buyers, especially first-time and moderate income buyers, meet affordability challenges. Home prices have risen due to low numbers of available homes and high demand for homes. If mortgage rates continue to rise, fewer buyers will be able to qualify for mortgages and or afford asking prices for available homes.

Next week’s meeting of the Fed’s Federal Open Market Committee is expected to bring news of a Fed decision on raising the target federal funds rate. If the Fed raises its rate, consumer interest rates for mortgages, vehicles and other goods can be expected to increase as well.

What‘s Ahead

This week’s economic news includes the NAHB Housing Market Index, Commerce Department reports on housing starts and building permits issued and a Fed Statement at the conclusion of its Federal Open Market Committee meeting on Wednesday. Fed Chair Janet Yellen is also slated to give a press conference after the FOMC statement. The National Association of Realtors will also release a report on sales of previously owned homes.

Retail Sales, Consumer Confidence Up

Retail sales rose for the third consecutive month. May sales increased at a seasonally adjusted rate of 1.20 percent according to Commerce Department data. Auto and gasoline sales led the charge to higher retail sales, but analysts said that most retail sectors posted gains. Upward revisions of March and April’s retail sales provided evidence of stronger economic conditions.

Consumer sentiment jumped nearly four points from May’s reading of 90.7 to 94.6 in June. This appears to be great news compared to the year before the recession, when consumer sentiment averaged a reading of 86.9.

Weekly Jobless Claims, Mortgage Rates

Weekly jobless claims rose last week and were also higher than expected. 279,000 new jobless claims were filed against an expected reading of 275,000 new claims and the prior week’s reading of 277,000 new jobless claims. This was the fourteenth consecutive week that new jobless claims remained below 300,000, an accomplishment that hasn’t occurred in 15 years.

Mortgage rates rose sharply last week according to Freddie Mac. The average rate for a 30-year fixed rate mortgage jumped from 3.87 percent to 4.04 percent; the average rate for a 15-year fixed-rate mortgage rose from 2.08 percent to 3.25 percent and the average rate for a 5/1 adjustable rate mortgage increased by five basis points from 2.96 percent 3.01 percent. Average readings for discount points were 0.60 percent for 30 and 15 year mortgages and 0.40 percent for 5/1 adjustable rate mortgages. Higher mortgage rates may sideline some home buyers as they wait to see if rates will drop or are priced out of the market. Expectations that the Fed will raise its target federal funds rate this fall may be fueling higher rates.

What’s Ahead

Next week’s economic news schedule includes more housing-related readings. The National Association of Home Builders Housing Market Index, the Commerce Department’s reports on Housing Starts and Building Permits along with the weekly reports on new Jobless Claims and Freddie Mac’s mortgage reports are set for release. On Wednesday, the Federal Open Market Committee of the Federal Reserve will release its post-meeting statement and Fed Chair Janet Yellen will also give a press conference. These events are important as they may shed light on the Fed’s intentions for raising rates. When the Fed raises the target federal funds rate, mortgage rates and interest rates for consumer credit are expected to rise as well.