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Producer Price Index, Small Business Optimism rose, Mortgage applications strong

November 14, 2017

The October Producer Price Index (PPI) rose 0.4% versus the 0.1% expected, fueled by higher costs for services. Core PPI also rose 0.4%, above the 0.2% expected. Year over year, PPI rose 2.8%, the biggest increase since February 2012, while Core PPI increased 2.4%. The PPI is a family of indexes that measures the average change in selling prices received by domestic producers of goods and services over time.

The NFIB’s Small Business Optimism Index rose to 103.8 in October from 103 the previous month as more owners expect higher sales and think now is a good time to expand. Thirty-five percent of all owners reported job openings they could not fill in the current period, up 5 points, the highest reading since November 2001. “Owners became much more positive about the economic environment last month, which suggests a longer-run view,” said NFIB Chief Economist Bill Dunkelberg. “In the nearer term, they are more optimistic about real sales growth and improved business conditions through the end of the year.”

The Mortgage Bankers Association reports that its Builder Application Survey soared 23% in October after plunging 20% in September due in part to hurricanes Harvey and Irma. It was the strongest month in 2017. From a year ago, the index is up 16.1%. By product type, conventional loans made up 71.8% of loan applications while the average loan size for new homes hit a high of $339,534.

Antique store owner

November 10, 2017

The U.S. Senate released its version of a tax cut bill yesterday with the focal point being mortgage interest deductions. The Senate bill will keep in place the current mortgage interest deduction cap of $1,000,000. The House would cap the deduction at $500,000. The corporate tax rate for the Senate bill would be slashed to 20% from the current 35%, but implementation would come in 2019, as opposed to 2018 for the House bill. The House and Senate seem to have a tough road ahead to come to some sort of compromise on the new tax bill.

Consumer Sentiment unexpectedly declined in early November after hitting the highest level in early October since 2004. The Consumer Sentiment Index fell to 97.8, below the 100.5 expected and down from 100.7 recorded in late October. The index measures 500 consumers’ attitudes on future economic prospects, in areas such as personal finances, inflation, unemployment, government policies and interest rates. Richard Curtin, chief economist for Surveys of Consumers, attributed that decline in consumer attitudes to “widespread losses across current and expected economic conditions.”

digital visualization of a dollar symbol

November 09, 2017

The Senate is supposed to introduce its tax bill later this morning. There is growing sentiment that that tax cuts don’t go far enough, parts will be phased in and there is major concern that middle-to-high income earners in high-tax states like CA, NJ and NY will see little to no tax benefit. This is causing uncertainty and anxiety in the U.S. Stock markets.

After holding steady last week, mortgage rates edged lower this week and remain just above historic lows. Freddie Mac reports that mortgage rates fell four basis points to 3.90% with an average point of 0.5. Last year at this time the rate was 3.57% while the rate was 4.20% in the first week in January 2017. Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Borrowers may still pay closing costs which are not included in the survey.

With Black Friday still two weeks away, some retailers have already begun to discount hundreds of items. Walmart, Best Buy and Amazon are a few that are rolling out some super sales. Retailers are trying to lure shoppers into their stores earlier than Black Friday to capture shopper loyalty and to win their money. An industry watcher says as soon as the calendar turned to November 1, promotions and discounts began.

November 08, 2017

The Mortgage Bankers Association (MBA) reported this week that mortgage credit availability tightened a bit in October following some loosening in September. The MBA’s Mortgage Credit Availability Index (MCAI) fell by 0.2% to 181.0 with two of the four components decreasing. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. Lynn Fisher, MBA’s Vice President of Research and Economics says, “While government and conforming credit programs saw slight increases in availability in October, a moderate decrease in the number of investor jumbo offerings resulted in a decrease in the total index.”

Government sponsored entity Fannie Mae released its Home Price Sentiment Index (HPSI) on Tuesday slipping on diminished home buyer and seller sentiment. Fannie’s HPSI fell 3.1 points on October to 85.2, falling from its all-time high matched in September. The net share of respondents who said now is a good time to sell a home decreased 8 percentage points compared to September while the net share who reported that now is a good time to buy a home fell 6 percentage points in October.

Mortgage rates edged lower in the latest week as reported by the Mortgage Bankers Association. The 30-year conforming fixed-rate mortgage fell four basis points to 4.18%, while the 30-year fixed-rate mortgage with jumbo loan balances declined to 4.12% from 4.16%. The MBA also reported that its refinance index fell 0.5%, purchase index +0.5%. Mortgage rates remain just above all-time lows.

Man counting using calculator and stress in problem with expenses.

October 25, 2017

The Commerce Department reported on Wednesday that New Home Sales surged 18.9% in September from August to their highest level since October 2007. This was the largest monthly gain since January 1992! Sales came in at 667,000 units versus the 555,000 units expected and were up 17% year over year. Currently, there is a five-month inventory of houses on the market, down from six months in August. A six-month supply is seen as a healthy balance between supply and demand.

The Mortgage Bankers Association (MBA) reports that it expects that total purchase originations will increase to $1.2 trillion in 2018, a 7.3% increase from 2017. However, the MBA anticipates that refinance originations will decrease 28.3% in 2018 from 2017 to approximately $430 billion. The MBA went on to forecast that total mortgage origination will fall to $1.60 trillion in 2018 from $1.69 trillion in 2017. Looking ahead to 2019, total originations should rise to $1.64 trillion, purchase originations of $1.24 trillion and refinance originations of $395 billion.

Mortgage rates edged higher in the latest week though they still remain historically attractive as reported by the Mortgage Bankers Association (MBA). The average contract interest rate for 30-year fixed conforming loan balances rose four basis points in the latest week to 4.18% with points decreasing to 0.42 from 0.44. The MBA’s Market Composite Index, a measure of total mortgage loan application volume, fell 4.6% in the latest week. In addition, the refinance index fell 3%, while the purchase index declined 6.1%.

Handshake of buyer and vendor of real estate

October 24, 2017

Seasonal holiday hiring is hot this year due to the fact that the labor market is at its best levels in years. The Unemployment Rate has fallen to 4.2%, the lowest level in seven years. Some retailers are going as far as offering permanent positions to score workers for the holiday shopping season. Employers will also be adding perks to land seasonal workers such as flexible hours, free food at work, or sick days and vacation time. The National Retail Federation reports that retailers will hire between 500,000 and 550,000 seasonal holiday workers this year, compared to 575,000 in 2016.

Freddie Mac recently reported that mortgage rates will average 4.4% in 2018 due in part to the fact that the Fed will be less supportive in keeping rates low. Freddie also forecasts that total home sales will come in around 6.3 million in 2018 with total mortgage originations coming in at $1.695 trillion. In addition, Freddie Mac sees home prices rising by nearly 5% next year.

The Dow Jones Industrial Average surged today after several strong earnings reports from McDonald’s, 3M and Caterpillar. The Dow hit an intraday all-time high of 23,476.88 after having hit numerous high closing records in the past few weeks. The Dow is up nearly 32% since the presidential election. Also helping to drive Stocks higher is the hope of tax reform from Washington.

October 18, 2017

Hurricanes Harvey and Irma put a dent in new home construction in Florida and southern Texas. The Commerce Department reported that total September Housing Starts fell 4.7% from August to an annual rate of 1.127 million units versus the 1.160 million expected. It was the lowest level since September 2016; however, from September 2016 to September 2017, starts were up 6.1%.

Single family Housing Starts fell 4.6% percent from August, although they were up 5.9% from September 2016. Multi-dwelling starts with five or more units, saw a drop of 6.2% from August and a 7.9% rise over September 2016. Overall, the South saw a 9.3% decline in September, while gains were seen in the Northeast, Midwest and West. Building Permits, a sign of future construction, fell 4.5% from August to an annual rate of 1.215 million units, just below the 1.225 million expected.

Mortgage rates were essentially unchanged in the latest week as reported by the Mortgage bankers Associaiton (MBA). The 30-year fixed-rate mortgage with conforming loan balances ($424,100 or less) decreased to 4.14% from 4.16%, with points remaining unchanged at 0.44. The MBA’s Market Composite Index, a measure of total mortgage loan application volume, rose 3.6% in the latest week. The refinance index rose 3%, while the purchase index was up 4%.

Mortgage Calculator Showing Purchase Of Home Loan

October 16, 2017

Regional manufacturing data from New York State surged in October due in part to strong gains in employment, new orders and shipments. The Empire State Index jumped to 30.2 in October, well above the 20.0 expected and well above the 24.4 recorded in September, the highest in three years. Looking ahead, firms are optimistic about upcoming conditions as future business, new orders and employment are expected to increase.

At an international banking seminar on Sunday, Fed Chair Yellen said that the outlook looks bright for the U.S. economy and for inflation prospects in coming months; this is weighing on Bond prices this morning. Ms. Yellen was speaking “Economic activity in the United States has been growing moderately so far this year, and the labor market has continued to strengthen,” said Ms. Yellen.

Banking giant Citigroup reported third quarter earnings last week and within the numbers it revealed that mortgage originations continued to decline. The bank is slowly pulling away from mortgage originations as it focuses in on other lines of business. Total mortgage originations fell to $3.2 billion in the third quarter, down from $6.5 billion in the third quarter of 2016. There is no clear reason as to why the bank is moving out of the mortgage servicing business, but the increase in regulations could be one of the bigger reasons.

Growing Piggy Showing Increasing Investment And Growth

October 11, 2017

Mortgage rates continued to edge higher in the latest week, as reported by the Mortgage Bankers Association. The 30-year conforming mortgage rate ($424,100 or less) rose to 4.16% from 4.12% with an average point of 0.44. Jumbo 30-year rates also rose from 4.09% to 4.11% with 0.31 points. The 30-year fixed FHA was essentially unchanged at 4%. The survey covers over 75% of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.

Federal Reserve Bank of Chicago President Charles Evans was speaking in Zurich on Wednesday, saying that low inflation levels here in the U.S. may not be a temporary phenomenon. Mr. Evans also said that the fundamentals for the economy here in the States are really very strong. Just recently, the Fed’s favorite inflation gauge, the annual Core Personal Consumption Expenditures (PCE), fell to 1.3% from 1.6% in April and well below the Fed’s target range of 2%.

Corporate earnings season ramps up this week with numbers from JPMorgan Chase and Citigroup on Thursday and Bank of America and Wells Fargo on Friday. The S&P 500 companies are expected to post a 4.6% rise in earnings year-over-year. According to Thomson Reuters, the 4.6% forecast is down from 5.9% at the beginning of the month, and 14.9% a year earlier.

Earnings On Monitor Showing Profitable Incomes And Lucrative Profits

October 10, 2017

Fannie Mae reported its September Home Purchase Sentiment Index (HPSI) on Monday revealing overall housing confidence is up on rising renter optimism. The Fannie Mae HPSI increased 0.3 points in September to 88.3, matching the all-time high set in June. Americans who feel that it is a good time to buy a home rose last month. Renter respondents also showed increased optimism on purchasing a home. “The biggest driver for the increase in the HPSI is the rebound in the good time to buy sentiment, which outweighed the largest drag—a sizable reduction in the net share of consumers expecting home prices to rise over the next year,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.

The NFIB Index of Small Business Optimism fell in September from 105.3 to 103.0, led by a big drop in sales expectations, not just in the storm-affected states, but across the nation. Within the report it showed that the number of small business owners who expected better sales plunged a net 12 points last month. Owners who think that it’s a good time to expand dropped a net 10 points. The NFIB says that the index remains very high by historical standards.

Analytics firm CoreLogic reports that the U.S. foreclosure rate remained at a 10-year low in July as the housing market continues to improve. The report showed that in July 2017, 4.6% of mortgages were delinquent by at least 30 days or more including those in foreclosure. That is below the 5.5% rate in July 2016. In addition, as of July 2017, the foreclosure inventory rate was 0.7% lower from 0.9% in July 2016.

Barber in barbershop

Blog

Producer Price Index, Small Business Optimism rose, Mortgage applications strong

November 14, 2017

Tax Cut Bill released, Consumer Sentiment unexpectedly declined

November 10, 2017

Tax cuts don’t go far enough, Mortgage rates edged lower this week, Black Friday

November 09, 2017

Mortgage Credit, Home Price Sentiment Index, Mortgage rates edged lower in latest week

November 08, 2017

New Home Sales Surged in Sept, Total Purchase Originations will increase in 2018, Mortgage Rates higher

October 25, 2017

Seasonal holiday hiring, Freddie Mac reports on rates, Dow Jones Industrial Average surged

October 24, 2017

Hurricanes put a dent in hew home construction, Single family housing starts fell, mortgage rates unchanged

October 18, 2017

Regional Manufacturing data from NY, US Economy bright, Citigroup mortgage originations decline

October 16, 2017

Mortgage Rates edge higher, Low Inflation levers may not be temporary, Corporate Earnings season ramps up

October 11, 2017

Home Purchase Sentiment Index is up, Small Business Optimism fell in September, US Foreclosure rate at low

October 10, 2017

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