Stock Prices may be too high, Signed contracts to purchase homes declined due to lack of inventory, mortgage rates remain steady
June 28, 2017
Fed Chair Yellen was speaking in London yesterday and mentioned that she feels that, “asset valuations are somewhat rich if you use some traditional metrics like price earnings ratios.” Translation: Stock prices may be too high. Ms. Yellen also soothed the Mortgage Bond market by saying the Fed intends to very gradually and predictably shrink its massive $4.5 trillion balance sheet. Ms. Yellen went on to say that she believes there will not be another financial crisis in our lifetimes.
Signed contracts to purchase homes declined for the third straight month due in part to the same theme … a lack of homes on the market for sale. The National Association of REALTORS® reported on Wednesday that Pending Home Sales in May fell 0.8%, below the +0.5% expected, but better than the -1.7% recorded in April. The index was down 1.7% from May 2016 and was the second straight annual decline. Lawrence Yun, NAR chief economist, says “Buyer interest is solid, but there is just not enough supply to satisfy demand. Prospective buyers are being sidelined by both limited choices and home prices that are climbing too fast.”
Mortgage rates remained steady in the latest week and remain at the 2017 lows and just above all-time lows. The Mortgage Bankers Association reports that the 30-year fixed conforming mortgage rate ($424,100 or less) was unchanged at 4.13% with 0.32 in points. The 30-year jumbo rate (greater than $424,100) was essentially unchanged at 4.09% with 0.20 points, while the FHA rate was also near unchanged at 4.02% with 0.41 in points. The survey covers over 75% of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.