Equity Source Mortgage

3/29/21 Median home prices, Private Payrolls Report, Easter

March 29, 2021

Redfin reports that the median home price rose 16% annually to a record-high of $331,590 for the week ended March 21. The number of homes listed for sale on the market at any point during the period declined fell 42% from 2020 to a new all-time low. Redfin Chief Economist Daryl Fairweather said, “When the pandemic is over, purchasing a home is going to cost much more than ever before, putting homeownership much further out of reach for many Americans.”

There is a huge government spending package due out this week while investors will be closely watching two key labor market reports for March with a holiday-shortened trading week. The ADP Private Payrolls Report will be released on Wednesday and the government Jobs Report for March will be delivered on Friday. The bond markets will close early on Friday at noon ET while stocks are closed for the session in observance of Good Friday. The Biden Administration is set to unveil a $3 trillion infrastructure package this week aimed at spurring on the economy, reduce carbon emissions and narrow economic inequality.

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.”

December 23, 2019

The U.S. economy continued to generate growth in the final reading on Gross Domestic Product (GDP) for 2019. Final Q3 GDP remained unchanged at a solid 2.1%. Within the numbers, it showed that consumer spending, which accounts for two-thirds of U.S. economic activity, was revised higher to 3.2% from 2.9%. The consumer continues to be a key factor driving the economic expansion here in the U.S.GDP measures the market value of all the final goods and services produced in a specific time period, often annually.

Consumer Sentiment remained at very favorable levels in the second of two reading in December at 99.3. Inflation expectations declined in the December survey, with both the year-ahead and five-year expected inflation rates falling and backs up the federal reserves assertion that it will remain low for the foreseeable future. In addition, the impeachment hearing had a barely noticeable impact on economic expectations, as it was mentioned by just 2% of all consumers in the December survey.

U.S. stocks are at fresh record highs on this last full week of trading in 2019. The closely watched S&P 500 is up nearly 30% this year due to an expanding economy, low unemployment, strong consumer spending and confidence along with tame inflation and low-interest rates. The Goldilocks economy continues with chances of a recession extremely low or zero for the foreseeable future.

December 10, 2019

The good news continues to stream in from the small business sector of the economy. The NFIB (National Federation of Independent Business) Small Business Optimism Index saw its largest month-over-month gain since May 2018, up 2.3 points to 104.7 in November. The NFIB said that overall, the Main Street economic machine continued to push the economy forward. “Owners are aggressively moving forward with their business plans, proving that when they’re given relief from the government, they put their money where their mouth is, and they invest, hire, and increase wages,” said NFIB Chief Economist William Dunkelberg.

Mortgage credit availability increased across all loan types in November, reports the Mortgage Bankers Association. The mortgage credit availability index rose by 2.1% to 188.9 last month. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012. Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said, “Expanding credit availability will continue to support active levels in mortgage lending, even as refinance activity starts to level off.”

The December 15 tariff deadline on Chinese exports into the U.S. could be delayed as the two sides continue to negotiate. The White House continues to stress that Beijing commit to large purchases of U.S. farm products in order for the tariffs to be delayed. The headlines are supporting the U.S. stock markets though the gains are modest at best as the market looks ahead to the Federal reserve’s release of its monetary policy statement on Wednesday afternoon.

December 02, 2019

Freddie Mac recently reported its forecast on the housing market revealing that a strong labor should continue to buoy the sector into 2020. Freddie Mac is forecasting that mortgage rates will remain low while originations will be robust. The 30-year fixed-rate mortgage is expected at 3.8% in Q4 2019 with 2020 averaging 3.8%. Total originations are expected at $2.101 trillion this year and $2.132 trillion in 2020. The GSE went on to say that with low-interest rates, modest inflation, and a solid labor market, the U.S. housing market continues to show strength. Freddie Mac’s forecast is for the U.S. housing market to maintain momentum over the next two years. Manufacturing activity across the U.S. contracted for the fourth straight month in November due in part to the trade issues between the US and China. The ISM Manufacturing Index fell to 48.1 last month from 48.3 in October. The new orders index slipped, while the employment component also declined. A reading above 50 indicates that the manufacturing economy is generally expanding; below 50 indicates that it is generally contracting. The major stock indexes here in the US have had a banner year due in part to a strong labor market along with solid consumer spending. The Dow Jones Industrial Average is up 20% year-to-date, the S&P is up 25% while the tech-heavy NASDAQ is higher by 30%. With such lofty gains this year, could stock prices move even higher still in December? That depends upon if whether or not a “Phase One” trade deal between the US and China is hammered out by the December 15 deadline. Will there be a Santa Claus rally at year’s end … it remains to be seen. A Santa Claus rally is a calendar effect that involves a rise in stock prices during the last 5 trading days in December and the first 2 trading days in the following January.

November 27, 2019

11/27/19

The second reading on Q3 Gross Domestic Product (GDP) rose to 2.1% from 1.9%. Within GDP it showed that consumer spending rose a solid 2.9%. The holiday shopping season is expected to robust given the strong job market and a healthy consumer. However, business investments slid in Q3.

October Durable Orders were up 0.6% versus the -0.7% expected while Weekly Initial Jobless Claims fell by 15,000 to 213,000 hovering near 50-year lows. The Core PCE, the Fed’s favorite inflation gauge, rose 1.6% annually in October from 1.7% in September. Personal Incomes were flat while Spending rose 0.3%. And the last data point today showed that Pending Home Sales unexpectedly fell 1.7% in October from September.

Mortgage rates were essentially unchanged in the week ended November 22, 2019. The 30-year fixed-rate mortgage was 3.97% with 0.30 in points. The Refinance Index rose 4% while the Purchase Index fell by 1%. The Market Composite Index, a measure of total mortgage loan application volume, was up 1.5%. Rates remain historically low and should remain low for quite some time which will continue to support the housing market.

January 09, 2019

Mortgage rates continued to edge lower in the latest week to levels not seen since the spring of last year. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage fell 10 basis points to 4.74% with 0.47 in points. “This drop in rates spurred a flurry of refinance activity – particularly for borrowers with larger loans – and pushed the average loan size on refinance applications to the highest in the survey (at $339,800),” said Joel Kan, MBA’s Associate Vice President.

Home price gains are beginning to ease back to more normal levels after the big increases seen since the housing market recovery began. Black Knight reports that home price growth has slowed in 33 states and in 71 of the 100 largest markets. Black Knight said the West saw the most deceleration with California the hardest hit. Gains of +7% or more year-over-year couldn’t last forever.

The Fed minutes from the December meeting will be released today at 2:00 p.m. ET. The minutes are sort of in the rear view mirror after Fed Chair Powell spoke last Friday and sparked a rally in the U.S. stock markets with his dovish remarks on monetary policy. Fed Fund Futures show a zero percent chance of a rate hike at least through the first half of this year and maybe none at all in 2019, given the current low inflation environment. A dovish tone means that Fed members favor looser, more accommodating interest rate policies. A hawkish policy is the opposite.

January 08, 2019

The NFIB Small Business Optimism Index was essentially unchanged in December just below record highs at 104.4. The NFIB said that unfilled jobs and the lack of skilled qualified applicants continue to be the primary driver of the frothy index, with job openings setting a record high and job creation plans strengthening. “Optimism among small business owners continues to push record highs, but they need workers to generate more sales, provide services, and complete projects,” said NFIB President and CEO Juanita D. Duggan.

The JOLTS report (Job Openings and Labor Turnover Survey) showed that there were 6.9 million job openings at the end of November, just below record high of 7.1 million set back in August, strengthening the data from the NFIB. Job openings increased in transportation, warehousing, and utilities while declines were seen in other services and construction. The December Jobs Report showed a whopping 312,000 new workers were hired as the labor market continues to move to greener pastures.

January 02, 2018

CoreLogic reports that home prices nationwide, including distressed sales, jumped 7% from November 2016 to November 2017 and increased 1% month over month from October to November. Looking ahead, price gains are expected to cool a bit as CoreLogic sees a 4.2% increase from November 2017 to November 2018. CoreLogic’s chief economist, Frank Nothaft, said, “Growing numbers of first-time homebuyers find limited for-sale inventory for lower-priced homes, leading to both higher rates of price growth for starter homes and further erosion of affordability.”

Online real estate database company Zillow reports that the total value of all U.S. homes in 2017 was $31.8 trillion. The top cities for value were Los Angeles at number one worth $2.7 trillion followed by New York at $2.6 trillion. The $31.8 trillion is more than 1.5 times the Gross Domestic Product (GDP) of the U.S. and approaching three times the size of China’s GDP. In 2017, renters spent a record $485.6 billion with renters in New York and Los Angeles spending the most.

The last week of 2017 saw mortgage rates hit a five-month high though still below the rates seen at the end of 2016 and early 2017. Freddie Mac reported last Thursday that the 30-year fixed-rate mortgage hit 3.99% with an average 0.5 in points and fees. Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage.

December 27, 2017

Pending home sales squeaked out a minor gain in November on a monthly and annualized basis, according to the National Association of REALTORS® (NAR). The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 0.2 percent to 109.5 in November from 109.3 in October. The index remains at its highest reading since June (110.0), and is now 0.8 percent above 2016. The 3.4-month supply of existing homes for sale on the market is the lowest since NAR began tracking inventory in 1999. A 6-month supply is considered normal. Heading into 2018, existing-home sales and price growth are forecast to slow, primarily because of the altered tax benefits of homeownership affecting some high-cost areas.

Consumer Confidence retreated in December after reaching a 17-year high in November. The Consumer Confidence Survey® monthly report reflects prevailing business conditions and likely developments for the months ahead and details consumer attitudes and buying intentions. The decline was fueled by a less optimistic outlook for business and job prospects in the coming months. Despite the decline in confidence, consumers’ expectations remain at historically strong levels, suggesting economic growth will continue well into 2018.

And now for how the “other half” lives. The world’s wealthiest became $1 trillion richer in 2017 with a 23 percent increase in fortunes from 2016, bringing their cumulative total to $5.3 trillion. That’s according to the Bloomberg Billionaires Index, a daily ranking of the world’s 500 richest people. The increase was more than four times last year’s gain. Amazon.com Inc. founder Jeff Bezos added the most in 2017, a $34,2 billion gain that knocked Microsoft Corp. co-founder Bill Gates out of his spot as the world’s richest person, which he’s held since May 2013. The U.S. has the largest presence on the index with 159 billionaires. China has 38 billionaires on the index, a 65 percent increase that marks the biggest gain of the 49 countries represented. Tech moguls number 57 billionaires on the index, the most of any sector.

Blog

3/29/21 Median home prices, Private Payrolls Report, Easter

March 29, 2021

Housing, rates, and job growth

January 08, 2020

U.S. economy – show me the numbers

December 23, 2019

Good news, mortgage credit, and China

December 10, 2019

Freddie Mac, Trade, and Santa Claus

December 02, 2019

GDP, October Durable Orders, Mortgage Rates

November 27, 2019

Rates, Home Prices and the Federal Reserve

January 09, 2019

Business and Hiring Remain Strong

January 08, 2019

Home prices nationwide jumped|Mortgage rates last week of 2017

January 02, 2018

Pending Home Sales | Consumer confidence retreated | How the “Other half” lives

December 27, 2017

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