Job openings, JOLTS, consumer price index, inflation, mortgage

June 08, 2021

Job openings continued to surge in April after a record-high number of openings seen at the end of March. The Bureau of Labor Statistics reports that there were 9.3 million job openings at the end of April after the 8.1 million seen in March. The JOLTS or Job Openings and Labor Turnover Summary showed openings increased in a number of industries with the largest increases in accommodation and food services (+349,000), other services (+115,000) and durable goods manufacturing (+78,000). In addition, the NFIB reports that a record high 48% of business owners have unfilled job openings. On Thursday, the inflation reading Consumer Price Index for May will be released and will be closely watched by both the Fed and the investing community. The 4.2% increase in April was the largest jump over a 12-month period since a 4.9% rise for the year ending September 2008. Most pundits saw an increase in prices in May and June and possibly even July with a decline seen beginning in August through the end of the year. Once again, headline inflation will be much higher than the average 30-year fixed-rate mortgage – something that has not been seen in 50-years and is unsustainable longer-term.

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Home borrowing costs, housing market low supply

June 02, 2021

Home borrowing costs were essentially unchanged last week and remain at historically low levels. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage was at 3.17% with 0.39 in points for the week ending May 28, 2021. The Market Composite Index, a measure of total mortgage loan application volume, fell 4%, the Purchase Index declined by 3.1% while the Refinance Index declined by 4.6% and was 6% higher from a year ago. Spokesperson Joel Kan said, “Tight housing inventory, obstacles to a faster rate of new construction, and rapidly rising home prices continue to hold back purchase activity.”

The housing market continues to heat up as low supply and high demand continues to push up home prices and the amount of homes that sold above listing prices. The report shows that a bit more than half of homes (51%) have sold above their listing price in the four week period ending May 23, 2021, up from 26% one year ago. Also, many other sales records were hit which include the median home sale price of $354,250 and the number of days on the market, 17, from 36 a year ago. Asking prices also reached an average of $361,875, another record high.

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First-time Unemployment falls, Home borrowing costs inch higher though still remain low

May 21, 2021

First-time unemployment claims fell to the lowest level since the shutdowns began last year. Weekly Initial Jobless Claims decreased to 444,000 for the week ended May 15, 2021, from 478,000 in the previous week. To put it into perspective, the week of April 4, 2020 claims were over 6 million as the shutdowns took hold. Continuing claims, or those receiving benefits for at least two weeks straight, were at 3.751 million from 3.640 million. With more and more states reopening their economies, many unemployed Americans should be able to go back to work.

Home borrowing costs inched higher this week and remain at historically low levels. Freddie Mac reports that the 30-year fixed-rate mortgage rose six basis points to 3.0% with 0.6 in points and fees. A year ago at this time, the rate was 3.24%. It is up from 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “Despite this favorable rate climate, there remains a shortage of homes for sale. The lack of housing supply has been compounded by labor disruptions and expensive building materials that are driving up the cost of new housing, making it difficult for homebuyers to find homes to purchase.”

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30-Year fixed Rate rose, US Economy slipped, Labor market continues rebound

May 05, 2021

Home borrowing costs were essentially unchanged in the latest week and remain at historically low levels. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage rose to 3.18% from 3.17% with 0.34 in points for the week ended April 30, 2021. The Market Composite Index, a measure of total mortgage loan application volume, fell 0.9%, while the Purchase Index declined by 2%. The Refinance Index was unchanged and is down 17% from a year ago. Spokesperson Joel Kan said, “Both conventional and government purchase applications declined, but average loan sizes increased for each loan type. This is a sign that the competitive purchase market, driven by low housing inventory and high demand, is pushing prices higher and weighing down on activity.”

Activity in the service sector of the U.S. economy slipped in April from March but remains at expansionary levels. The ISM Service Index fell to 62.7 in April from 63.7 in March. A reading above 50 indicates the services sector economy is generally expanding; below 50 indicates the services sector is generally contracting. Economic activity had expanded for 11 straight months and expanded for all but two of the last 135 months. The April reading is one point lower from the all-time high hit in March (63.7). Within the report, it showed that the employment component increased.

The U.S. labor market continues to rebound as the financial markets received a strong report from the private sector. ADP private payrolls rose by 742,000 in April, near estimates while March was revised higher to 565,000 from 517,000. Small business growth was 235,000, medium grew by 230,000 while large businesses were up 277,000. The labor market continues an upward trend of acceleration and growth, posting the strongest reading since September2020,” said Nela Richardson, chief economist, ADP.

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Home borrowing

April 28, 2021

Home borrowing costs fell in the latest week and remain at historically low levels. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage declined three basis points to 3.17% with 0.30 in points for the week ended April 23, 2021. The Market Composite Index, a measure of total mortgage loan application volume, fell 2.5%, while the Purchase Index declined by 4.8%. The Refinance Index fell 1.1% and is down 18% from a year ago. Spokesperson Joel Kan said, “The purchase market’s recent slide comes despite a strengthening economy and labor market. Activity is still above year-ago levels, but accelerating home-price growth and low inventory has led to a decline in purchase applications in four of the last five weeks.”

Earnings season is now well underway with the latest numbers slanting positive as the economy strengthens. With about a third of the companies in the S&P 500 having reported, 84% have turned in a positive earnings surprise, according to FactSet. On Tuesday, earnings from tech giants Google and Microsoft saw the search engine and the software provider both beat on revenues and profits but investors felt Microsoft numbers could have been better. Apple will report after the close today.

After a sharp rise in January, February and early March, gas prices have leveled off in the past month but rose 2 cents in the latest week. Gasoline demand recorded its second highest measurement since mid-March 2020, indicating that motorists are filling up more often. The national average price for a regular gallon of gasoline rose 2 cents to $2.88. A year ago the price was $1.76 at the height of the shutdowns.

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Bonds slighly lower, Save almost $300 a month on a refinance

April 19, 2021

As the week kicks off, bonds are slightly lower in the absence of any geopolitical or economic headlines so far today while yields inch higher. The uptick in yields is also putting some pressure on stocks as the are lower and hover near record highs. There will be no Fed speak this week as the quiet period begins ahead of next week’s two-day FOMC meeting. New and Existing Home Sales will be released later in the week. Earnings season will be in full bloom this week after Coca-Cola easily beat expectations this morning on both profit and revenue. Investors will be looking hard at the numbers to gauge if the economy is recovering from the COVID impact.

Due to the recent decline in mortgage rates, Black Knight reports that another two million potential borrowers could save an average of almost $300 a month on a refinance. The report showed that high-quality refinance candidates rebounded back to 13 million last week with the potential to add $3.6 billion into homeowners wallets. California was the top state for the number of candidates with 1.75 million with $672 million in savings in payments and interest.

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Home Mortgage, Interest Rates, Home Price growth

April 14, 2021

Home borrowing costs fell in the latest week and remain at historically low levels. The MBA reports that the 30-year fixed-rate mortgage declined nine basis points to 3.27% with 0.33 in points for the week ended April 9, 2021. The Market Composite Index, a measure of total mortgage loan application volume fell 3.7% while the Purchase Index declined by 1.4. The Refinance Index fell 5% and is down 31% from a year ago. Spokesperson Joel Kan said, “Last week’s Refinance Index level was the lowest in over a year, as mortgage rates continue to trend higher. Many borrowers have either already refinanced at lower rates or are unwilling – or unable – to refinance at current rates.” Freddie Mac released its quarterly forecast report today signaling that as ‘the economy recovers, the housing market remains healthy while mortgage rates move up.’ Freddie Mac went on to say that hurdles for potential homebuyers are low inventories and rising rates. The numbers: 30-year fixed-rate mortgage to average 3.2% in 2021, 3.7% in 2022. Home price growth to rise 6.6% in 2021 and decline to 4.4% in 2022. Total originations are expected to be $3.5% trillion in 2021, $2.4 trillion in 2022. Purchase originations $1.7 trillion in 2021 and $1.6 trillion in 2022. Refinance originations are expected at $1.8 trillion in 2021 and $770 billion in 2022. Homes sales should reach 7.1 million this year and 6.7 million next year.

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Consumer Price Index to be released, HPSI for March jumped, Gas prices level off

April 12, 2021

There are no economic reports today but the calendar is full this week. The closely watched inflation reading Consumer Price Index will be released tomorrow. The week also features housing and manufacturing data along with Retail Sales for March. The Retail Sales number will be closely watched after the $1,400 stimulus checks were released last month. Also, earnings season kicks off this week where expectations are very high for solid numbers.

Fannie Mae recently released its Home Purchase Sentiment Index (HPSI) for March revealing that housing sentiment jumped on consumers’ selling and personal finance optimism. The Index rose 5.2 points to 81.7 with four of the six components increasing for the month. The percentage of respondents who say it is a good time to buy a home increased from 48% to 53% while respondents who say it is a good time to sell a home increased from 55% to 61%. “The significant increase in the HPSI in March reflects consumer optimism toward the housing market and larger economy as vaccinations continue to roll out and the spring homebuying season began – perhaps with even more intensity this year, since 2020’s spring homebuying season was limited by virus-related lockdowns,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist.

After a swift rise since the beginning of the year, gas prices have leveled off the past few weeks as oil prices decline while refinery utilization is on the rise. AAA Motor Club reports that the national average prices for a regular gallon of gasoline was unchanged this week at $2.87 and just slightly higher than the $2.83 seen a month ago. A year ago the price was $1.86. Jeanette McGee, AAA spokesperson. “Cheaper crude oil prices will likely help to keep price fluctuation low this week.”

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Borrowing Costs, Unemployment, Manufacturing

April 02, 2021

Home borrowing costs were essentially unchanged this week and remain at historically low levels. Freddie Mac reports that the 30-year fixed-rate mortgage rose to 3.18% from 3.17% with 0.7 in points and fees. A year ago at this time, the rate was not much higher at 3.33%. It is up from 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “We even see that purchase demand is diminished today as compared to late May and early June of 2020, when mortgage rates were the same level. This is confirmation that while purchase demand remains strong, the marginal buyer is feeling the affordability squeeze resulting from the increases in mortgage rates and home prices we’ve experienced in recent months.”

First-time unemployment claims increased in the latest week but the numbers have been on a downward slope. Weekly Initial Jobless Claims rose by 719,000 from 658,000 for the week ended March 27, 2021. To put it into perspective the week of March 14, 2020 claims were 282,000. The week of March 21, 2020, they skyrocketed to 3.3 million as lockdowns took hold. Continuing claims, or those receiving benefits for at least two weeks straight, fell to 3.79 million from 3.84 million. With more and more states reopening their economies, many unemployed Americans should be able to go back to work.

The U.S. economy continues to grow with positive news from the manufacturing sector. The ISM National Manufacturing Index rose to 64.7 in March, the highest reading since 1983. Any number over 50 indicates expansion, below 50 contraction. Within the data, it showed gains for new orders, production and employment. The report also revealed that due to COVID-19 constraints, those surveyed reported that their companies and suppliers continue to struggle to meet increasing rates of demand.

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Housing, rates, and job growth

January 08, 2020

The housing market in 2020 has been upgraded in forecasts for single-family housing starts, new home sales and mortgage originations. Fannie reports that its Home Purchase Sentiment Index (HPSI) capped off a strong year in December with the index just below the survey high at 91.7. Three of the six HPSI components increased month over month, including the percentage of Americans who believe that home prices will go up over the next 12 months. Annually, the HPSI is up 8.2 points, driven primarily by consumers’ favorable mortgage rate expectations and a growing share reporting it’s a good time to buy a home.

Mortgage rates edged lower in the latest week and remain just above all-time lows. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage fell by four basis points to 3.91% with 0.33 in points. Mike Fratantoni, MBA Senior Vice President and Chief Economist said, “We expect that the strong job market will continue to support purchase activity this year, and the uptick in housing construction towards the end of last year should provide more inventory for prospective buyers.”

Private job growth surged in December as the labor market continues to be a big source of strength for the U.S. economy. ADP reports that private payrolls rose by 202,000 last month, well above the 155,000 expected. The November number of 67,000 jobs created was revised higher to 124,000. Ahu Yildirmaz, vice president and co-head of the ADP Research Institute said, “The service providers posted the largest gain since April, driven mainly by professional and business services. Job creation was strong across companies of all sizes, led predominantly by midsized companies.”

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