Market Outlook Archives - Page 11 of 76

Whats Ahead For Mortgage Rates This Week – January 29, 2018 Last week’s economic releases included readings on pending home sales, Case-Shiller Home Price Indices and construction spending. The Federal Open Market Committee of the Federal Reserve released its monthly statement and weekly readings on mortgage rates and new jobless claims were released. Last week’s economic readings wrapped with a report on consumer confidence.

Case-Shiller: Home Prices Rise in November

Home prices rose an average of 0.70 percent monthly and 6.20 percent year-over-year according to Case-Shiller’s national home price index for November. Seattle, Washington posted the highest year-over-year home price growth rate at 12.70 percent. Las Vegas, Nevada posted year-over-year home price growth of 10.60 percent and San Francisco, California posted a home price growth rate of 9.10 percent. Home price gains were attributed to slim supplies of available homes in many areas.

While analysts suggested that strong housing markets (as reflected by high demand for homes) were good for the economy, issues of affordability, slim inventories of homes available and obstacles facing builders continue to impact housing markets.

Recent gains in home prices are fueled by artificially high demand caused by low inventories of homes for sale. Builders cited shortages of labor and buildable lots and said increasing materials costs were impacting rising prices for new homes. Construction spending rose 0.70 percent in December, which exceeded expectations of 0.50 percent and November’s month-to-month reading of 0.60 percent growth in construction spending.

Pending Home Sales Rise, Key Fed Interest Rate Unchanged

The National Association of Realtors® reported 0.50 percent growth in pending home sales in December and the highest month-to-month reading since March 2017. Year-over-year pending home sales gained only 0.50 percent. Pending sales reflect purchase contracts signed with sales not yet closed.

The Federal Reserve’s Federal Open Market Committee announced that it would not raise the target federal funds range of 1.25 to 1.50 percent, but indicated that inflation was nearing the Fed’s goal of 2 percent annually. Analysts said this could foreshadow a rate increase at the Committee’s next meeting in March.

Mortgage Rates, Weekly Jobless Claims

Mortgage rates rose last week according to Freddie Mac’s weekly Primary Mortgage Markets Survey. Rates for a 30-year fixed rate mortgage rose by seven basis points to an average of 4.22 percent; the average rate for a 15-year fixed rate mortgage rose six basis points to 3.68 percent. The average rate for a 5/1 adjustable rate mortgage ticked up one basis point to 3.53 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 dipped by 1000 claims to 230,000claims. Analysts expected 240,000 new claims. The University of Michigan reported a lower reading for consumer sentiment in January with an index reading of 95.7 as compared to an expected reading of 95.0 and December’s reading of 95.90. Consumer sentiment remains near pre-recession highs. Consumers cited tax breaks and large stock market gains as the basis for high confidence.

What‘s Ahead

This week’s economic releases include readings on job openings and consumer credit along with weekly reports on mortgage rates and new jobless claims.

Last week’s economic events included weekly releases on new jobless claims, mortgage rates and testimony by Fed Chair Janet Yellen concerning the Federal Reserve’s monetary policy. Here are the details:

Mortgage Rates, New Jobless Claims Drop

Freddie Mac reported that average mortgage rates fell across the board last Thursday, with the rate for a 30-year fixed rate mortgage seven basis points lower at 3.65 percent. The average rate for a 15-year fixed rate mortgage was six basis points lower at 2.95 percent, and the average rate for a 5/1 adjustable rate mortgage was two basis points lower at 2.83 percent. Discount points averaged 0.50 percent for 30 and 15 year fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

Lower mortgage rates may encourage first-time and moderate income home buyers to enter the market, although slim supplies of available homes and rising home prices have caused ongoing concerns about affordability in many markets.

Weekly jobless claims were also lower. 269,000 new claims were filed as compared to estimated claims of 280,000 new claims and the prior week’s reading of 285,000 new jobless claims. This was the lowest reading in two months and suggests healthy labor markets as more workers find jobs. Readings lower than 300,000 new jobless claims indicate healthy jobs markets. The four-week rolling average of new jobless claims was lower by 3500 claims at 281,250 new claims filed. Analysts consider the four-week reading as a more accurate indicator of labor markets as it smooths out anomalies in weekly claims.

Yellen Testimony: Fed Won’t Change Course on Rates

Federal Reserve Chair Janet Yellen said that she doesn’t expect interest rate cuts in view of slowing economic indicators. In testimony before the House Financial Services panel, Chair Yellen indicated that although there are signs of slower economic conditions, there was still room for economic growth. She cited a strong labor market and strong consumer and business spending as indicators of economic expansion. Analysts interpreted Chair Yellen’s testimony to indicate that the Fed would not likely raise its target federal funds rate in March.

Chair Yellen said that monetary policy is not on a “preset course”. Federal Reserve press releases consistently state that policy makers review current and developing domestic and global economic trends as part of any decision to raise rates. In view of this, Chair Yellen’s testimony did not cover what could happen if future economic developments influence Fed policy. Recent concerns over volatile financial markets caused by the weakening in China’s economy were cited as examples of “downside risks” that could impact the Fed’s monetary policy.

Readings for Consumer Sentiment suggest that consumers are also watching economic developments. February’s reading decreased to 90.7 as compared to January’s reading of 92.0.

What’s Ahead

This week’s scheduled economic events include the National Association of Home Builders Housing Market Index, federal reports on housing starts and building permits. FOMC minutes and weekly reports on mortgage rates and new jobless claims will also be released.

What’s Ahead For Mortgage Rates This Week – February 5th, 2018

What’s Ahead For Mortgage Rates This Week – February 16, 2016

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