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Thursday - June 9, 2022  

Home borrowing costs increased this week after several weeks of declines. Freddie Mac reports that the 30-year fixed-rate mortgage rose to 5.23% this week from 5.09% last week with an average of 0.9 in points and fees. A year ago the rate was 2.96%. The 15-year inched higher to 4.38% from 4.32% with a 0.8 point. A year ago that 15-year was 2.23%. Sam Khater, Freddie Mac’s Chief Economist said, "The material decline in purchase activity, combined with the rising supply of homes for sale, will cause a deceleration in price growth to more normal levels, providing some relief for buyers still interested in purchasing a home."

Mortgage credit availability fell in May according to the Mortgage Credit Availability Index (MCAI) from the MBA. The MCAI declined by 0.9% to 120.0 in May. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. "Mortgage credit supply declined for the third month in a row to the lowest level since July 2021. The index remains more than 30 percent below pre-pandemic levels, as recent months’ credit tightening has occurred in refinance loan programs," said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.

Americans filing for first time unemployment benefits rose in the latest week as the cockeyed labor market continues to raise questions. Weekly Initial Jobless Claims rose 27,000 to 229,000 and above the 210,000 expected. Continuing claims were unchanged at 1.306 million. There are currently 11.5 million jobs available with 6.5 million unemployed while 47% of small business owners recently reported job openings that could not be filled.

 

Wednesday - June 8, 2022  

Mortgage rates rose in the latest week after the recent decline in borrowing costs. The 30-year fixed-rate mortgage rose to 5.40% from 5.33% with 0.60 points for the week ended June 3, 2022, reports the MBA. Within the data it showed that the Market Composite Index, a measure of total mortgage application volume, declined 6.5%, the Refinance Index fell 6% and the Purchase Index declined 7%. Spokesperson Joel Kan said, "The purchase market has suffered from persistently low housing inventory and the jump in mortgage rates over the past months. These worsening affordability challenges have been particularly hard on prospective first-time buyers."

There were no economic reports due for release today as the markets look out to tomorrow's European Central Bank's monetary policy decision and Friday's inflation reading Consumer Price Index report. Next week things heat up with the two-day Federal Open Market Committee meeting kicking off on Tuesday with the monetary policy statement at 2:00 p.m. ET. Consumer credit card debt has recently jumped while the savings rate declined.

 

Tuesday - June 7, 2022  

CoreLogic reports that home prices nationwide, including distressed sales, matched a record high of 20.9% from April 2021 to April 2022. Monthly, prices rose 2.6%. Looking ahead, home prices are expected to increase 1.2% from April to May and a 5.6% rise from April 2022 to April 2023. This comes at a time when the 30-year fixed-rate mortgage is currently just over 5% from the 3% seen in April 2021. "With 30-year fixed mortgage rates much higher now, we expect to see waning buyer activity because of eroding affordability. As a consequence, our forecast projects slowing price growth over the coming year," said Patrick Dodd, President and CEO for CoreLogic.

Freddie Mac reports that would-be homebuyers are feeling the squeeze of higher home prices and mortgage rates. Only 17% of consumers report It's a "Good Time to Buy" a home. The Fannie Mae Home Purchase Sentiment Index remained relatively flat in May, decreasing by only 0.3 points but inching nearer its 10-year- and pandemic-low of 63.0 from April 2020. Additionally, 70% of respondents expect mortgage rates to continue their recent ascent over the next 12 months. A greater share of consumers also expressed concern that they may lose their job in the next 12 months, but that component remains firmly positive generally, with only 16% of consumers expressing pessimism.

In the news ... the global financial markets await the European Central Bank headlines on Thursday and the looming Fed meeting next week. Target is saying that the soaring costs of food and energy are causing the consumer to pause on other purchases or use their credit card. Apple announced a new service yesterday called "Buy now, pay later" as companies do everything to keep the consumer spending. The national average price for a regular gallon of gasoline hit yet another record high of $4.91 today! In California, prices are seen at $7.

Monday - June 6, 2022 

U.S. investors, as well as Federal Reserve members, are eagerly awaiting the Consumer Price Index (CPI) for May when the numbers are released this Friday. Inflation at the consumer level is currently running at a 40-year high driving the price for goods and services considerably higher. The national average price for a regular gallon of gasoline hit yet another record high of $4.86 today with $6 and $7 seen in parts of the country. The CPI is a measure of the average change over time in the prices paid by consumers for a market basket of consumer goods and services.

Home builders and prospective new home buyers are getting a bit of a reprieve from surging supply costs over the past few years. The price of lumber has fallen to the low for the year at $606 per thousand board feet from the $1,733 seen in 2021. The peak in prices added nearly $19,000 to the price of a new single-family home. The Wall Street Journal reports that
'lumber buyers have slowed orders and wood is piling up at mills, which are slashing prices, according to Random Lengths.

 

Thursday - June 2, 2022  

Private payroll growth was sluggish in May, the slowest gain in two years. ADP Private Payrolls rose 128,000 in May versus the 300,000 expected and down from 202,000 in April which was revised from 247,000. Small businesses took the brunt of the slowdown as companies employing fewer than 50 workers reduced payrolls by 91,000. "Under a backdrop of a tight labor market and elevated inflation, monthly job gains are closer to pre-pandemic levels," said Nela Richardson, chief economist, ADP. "The job growth rate of hiring has tempered across all industries, while small businesses remain a source of concern as they struggle to keep up with larger firms that have been booming as of late."

Home borrowing costs were essentially unchanged this week after the significant rise seen since a year ago. Freddie Mac reports that the 30-year fixed-rate mortgage is 5.09% this week with an average of 0.8 in points and fees. The 15-year was also near unchanged at 4.32% with a 0.8 point. A year ago that 15-year was 2.27%. Sam Khater, Freddie Mac’s Chief Economist said, "Heading into the summer, the potential homebuyer pool has shrunk, supply is on the rise and the housing market is normalizing. This is welcome news following unprecedented market tightness over the last couple years."

Americans filing for first-time unemployment benefits continued to hover near multi-decade lows last week. Weekly Initial Jobless Claims fell 11,000 to 200,000. Continuing claims fell to 1.309 million from 1.343 million. The government jobs report will be released tomorrow where it is expected that Non-Farm Payrolls rose 325,000.

 

Wednesday - June 1, 2022

And as volatile a month May was ... the closely watched S&P 500 was unchanged from the last day of trading in April. The 10-year yield inched lower to the current 2.86% from 2.93%. The FNMA 30-year 4% coupon closed at $99.78 on April 29 and is now at $100/par. 

The JOLTS report for April and the ISM Index for May will be released at 10:00. We'll have the Fed's Williams and Bullard making comments later today.

Home borrowing costs fell for the third straight week for the 30-year fixed rate to 5.33% though application volume declined.

Mortgage Bonds are flat and off the worst levels while the 10-year yield is 2.84% from 2.88% seen earlier. Stocks are modestly higher. WTI hit almost $118/bbl while the national average gas prices hits another record high of $4.67, up 5 cents overnight.   

The Fed will purchase up to $1.668B in mortgage-backed-securities today. There are two operations with FNMA 30-year 3.5% through 4.5% coupons seeing the bulk of the buying.

Technically, the FNMA 30-year 4% coupon is near support at par/$100. In the Treasury market, we still have a 40-year trend in place with the 3.25% level serving as an important lid or ceiling. The 10-year is 2.83%.

 

Tuesday - May 31, 2022 

Home prices continue to rise despite the surge in borrowing costs. The S&P CoreLogic Case-Shiller 20-City Home Price Index jumped 21.2% year-over-year in March, up from 20.3% in the previous month. The U.S. National Home Price Index, covering all nine U.S. census divisions, rose 20.6% annually. "Those of us who have been anticipating a deceleration in the growth rate of U.S. home prices will have to wait at least a month longer. March's price increase ranked in the top quintile of historical experience for every city, and in the top decile for 19 of them," says Craig J. Lazzara, Managing Director at S&P DJI.

In the news, today consumer prices in Germany have been reported to have risen at the fastest pace in 50 years while Eurozone inflation as a whole rose to a record high in May. WTI oil hit $119/bbl this morning and will endure headline inflation remains high. The national average price for a regular gallon of gasoline hit a record high of $4.62 at the pumps. The Fed's Waller said this morning that he sees 50bp hikes at every future Fed meeting until the central bank sees substantial reductions in inflation.

The Conference Board released its Consumer Confidence Index today revealing that purchasing intentions for cars, homes, major appliances and more all cooled. The May Consumer Confidence Index fell to 106.4 versus 103.9 expected and down from 108.6 which was revised higher from 107.3. Lynn Franco, Senior Director of Economic Indicators at The Conference Board said, "Looking ahead, expect surging prices and additional interest rate hikes to pose continued downside risks to consumer spending this year."

  

Thursday - May 26, 2022  

Home borrowing costs fell again this week after the significant rise seen since a year ago. Freddie Mac reports that the 30-year fixed-rate mortgage slipped to 5.10% from 5.25% last week with an average of 0.9 in points and fees. A year ago the rate was 2.95%. The 15-year fell to 4.31% from 4.43% with a 0.8 point. A year ago that 15-year was 2.27%. Sam Khater, Freddie Mac’s Chief Economist said, "Despite the recent moderation in rates, the housing market has clearly slowed, and the deceleration is spreading to other segments of the economy, such as consumer spending on durable goods."

In economic news, the second read on Q2 2022 Gross Domestic Product came in at -1.5% versus -1.3% expected and down from the first read of -1.4%. Within the GDP data, it showed that consumer prices (inflation) increased from the initial reading. Tomorrow, the Fed's favorite inflation gauge, the Core PCE, will be released. Weekly Initial Jobless Claims fell to 210,000 from 218,000. April Pending Home Sales fell 3.9% from the decline of 1.6% in March.

Redfin reports nearly 1 in 5 sellers is dropping their price, the highest rate since October 2019 during the four week period ending May 22. The technolgy powered real estate brokerage went on to say that its seasonally-adjusted Redfin Homebuyer Demand Index, a measure of requests for home tours and other home-buying services from Redfin agents, fell 12% year over year during the week ending May 22. This was the largest decrease since April 2020 when the shutdowns halted most homebuying activity.

 

Wednesday - May 25, 2022  

Mortgage rates inched lower in the latest week after pushing higher since the beginning of the year. The 30-year fixed-rate mortgage fell to 5.46% from 5.49% with 0.60 points for the week ended May 20, 2022, reports the MBA. Within the data it showed that the Market Composite Index, a measure of total mortgage application volume, declined 1.2%, the Refinance Index fell 4% and the Purchase Index was unchanged. Spokesperson Joel Kan said, "Currently, higher rates, low inventory, and high prices are keeping prospective buyers out of the market."

With the Memorial Day weekend upon us and the unofficial start to summer, motor club AAA predicts 39.2 million people will travel 50 miles or more from home this extended weekend. This is an increase of 8.3% from 2021, almost in line with those in 2017. “Memorial Day is always a good predictor of what’s to come for summer travel,” said Paula Twidale, senior vice president, AAA Travel. “Based on our projections, summer travel isn’t just heating up, it will be on fire. People are overdue for a vacation and they are looking to catch up on some much-needed R&R in the coming months.”

The Fed Minutes from the May Fed Meeting are due out at 2:00 p.m. ET. This news could shake the markets and will be closely watched. From the tidbit file: Durable Orders rose 0.4% versus 0.6% expected. Bankrate reports that the 30-year fixed-rate mortgage fell to 5.28% today from 5.40% last week. The current prime rate is 4%. The highest average price for a regular gallon of gasoline is seen in California at $6.06.Tuesday - May 24  

 

Tuesday - May 24, 2022

Surging mortgage rates coupled with record-high prices weighed on sales of new single-family homes in April as purchases fell to a two-year low. New Home Sales dropped 16.6% from March to April to an annual rate of 591,000 units versus the 750,000 expected and were down nearly 17% from April 2021. Sales fell across the four major U.S. regions. The median sales price of new houses sold in April 2022 rose to a record high of $450,600, up almost 20% from a year ago. The average sales price was $570,300, up 23% from April 2021. Inventories were healthy at an 8.3-month supply.

The national average price for a regular gallon of gasoline hit another record high today of $4.59 while WTI oil hovers near $111. Such high gas prices are an enormous cost for the average consumer. Diesel prices around $6 a gallon are also at record highs. Today’s national average for a gallon of gas is $4.59, which is 47 cents more than a month ago, and $1.56 more than a year ago. AAA sees the average gas price at $5 ... soon.

The number of home borrowers still in forbearance has declined to the lowest level since June 2020, reports the MBA. The number dropped in April to 0.94%, with 470,000 borrowers remaining with an active plan. The total number of loans in forbearance fell by 11 basis points, to 0.94% in April from 1.05% in March. “With the number of borrowers in forbearance decreasing to less than half a million, the pace of monthly forbearance exits reached its lowest level since MBA started tracking exits in June 2020,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis.

 

Monday - May 23, 2022 

Home sales showed signs of slowing last month due in part to the surge in borrowing costs since the beginning of the year. The MBA reports that mortgage applications for new home purchases in April fell 10.6% compared to April 2021 and were down 14% monthly from March. The average loan size of new homes increased from $436,151 in March to $436,576 in April. “New home purchase activity declined on a monthly and annual basis in April, as the spike in mortgage rates cooled demand, and homebuilders continued to grapple with rising costs, supply-chain issues, and extended completion timelines,” said spokesperson Joel Kan.

Redfin reports that in April, the housing shortage showed signs of easing up as sales fell across the nation. The number of homes for sale declined at its slowest pace in April since the start of the pandemic. The technology-powered real estate company said that the 9% year-over-year drop in homes for sale was the smallest since March 2020 and the first single-digit decline since the start of the pandemic-related shutdowns. Spokesperson Taylor Marr said, "As demand continues to soften, more sellers will likely be forced to drop their prices in order to get offers. The good news is that this should finally bring more balance to the market.

In its latest survey, Fannie Mae reports that rapidly rising rates and persistent inflation further soften the economic outlook. Housing activity is expected to slow further as affordability worsens. Gross Domestic Product will grow at the reduced rate of 1.3% for full-year 2022, 0.8 percentage points less than previously predicted. Also, with mortgage rates having risen faster in the last 5 months than in any period since 1981, expect both purchase and refinance originations to decline meaningfully. With only 1.4% of mortgages now predicted to have a 50-

 

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