MortgageTime™
Mortgage Market News for the week ended January 22, 2021
Compliments of
Jonathan White
President and CEO Mortgage Broker | NMLS ID: 3443
Blue Door Mortgage, LLC
NMLS: 2218
Call: 617.527.BLUE (2583)
jwhiteloan@bluedoormortgage.com www.bluedoormortgage.com
440 Harvard Street
Brookline, MA 02446
It was a relatively uneventful week for mortgage markets, and rates ended a little lower, a bit above the record low levels seen late in 2020.
The spectacular rebound in the housing sector from weakness during the spring due to the partial shutdown of the economy has continued. In December, Existing Home Sales unexpectedly increased from November and were 22% higher than a year ago. Looking at the full year, 2020 saw the strongest sales pace since 2006. The median existing-home price was 13% higher than a year ago.
Inventory levels, however, were down 23% from a year ago to record lows and remained the primary obstacle to even stronger sales activity. The number of homes for sale was at just a 1.9-month supply nationally, well below the 6.0-month supply which is considered a healthy balance between buyers and sellers. Encouragingly, though, Thursday's report on housing starts contained more optimistic news in this area. In December, single-family housing starts unexpectedly rose 12% from November and were 28% higher than a year ago. This was the eighth straight month of gains. Similarly, single-family building permits, a leading indicator of future construction, increased 8% from November and were 30% higher than a year ago.
The European Central Bank (ECB) made no policy changes at Thursday's meeting and repeated that its massive bond purchase program will run until at least March 2022. The meeting statement said that the ECB "decided to reconfirm its very accommodative monetary policy stance."
Looking ahead, investors will continue watching Covid case counts and vaccine distribution. The next Fed meeting will take place on Wednesday. Recent comments from officials have made it clear that rate hikes will not be seen any time soon, so investors mainly will be looking for guidance on the Fed's inflation outlook and its bond purchase program. Beyond that, fourth quarter GDP, the broadest measure of economic activity, will be released on Thursday. The core PCE price index, the inflation indicator favored by the Fed, will come out on Friday.
Weekly Change
10yr Treasury
fell
0.01
Dow
rose
100
NASDAQ
500
Calendar
Wed
1/27
Fed Meeting
Thu
1/28
GDP
Fri
1/29
Core PCE
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Mortgage Market News for the week ended November 22, 2019
Housing Sector Picks Up
It was a relatively quiet week for mortgage rates. The major economic data came in close to the expected levels, and there was little decisive news about the trade negotiations with China.
The most significant economic data released this week came from the housing sector, and lower mortgage rates have been boosting recent activity. In October, sales of previously owned (existing) homes increased from September and were 5% higher than a year ago. National median existing-home prices were up 6% from a year ago. A lack of inventory remained the primary trouble spot in many regions, as the number of homes for sale was at just a 3.9-month supply nationally, well below the 6.0-month supply which is considered a healthy balance between buyers and sellers.
However, the latest reports contained signs that the pace of construction may be picking up, which could help ease tight inventory levels. In October, housing starts showed solid improvement from September and were 9% higher than a year ago. Building permits, which are a leading indicator of future construction, posted even stronger monthly gains and were at the best level since May 2007. In addition, the NAHB housing index showed that home builder confidence remained around 70, far above the readings near 60 seen a year ago.
The minutes from the October 30 Fed meeting were consistent with recent comments from Fed officials and caused little reaction. In short, the minutes indicated that further changes in monetary policy will be unlikely as long as the economy performs roughly as expected with modest growth and inflation near the Fed's target level. Officials highlighted uncertainty about the impact of trade tensions on global economic activity as a potential risk to the economic outlook.
Looking ahead, New Home Sales will be released on Tuesday. Core PCE, Durable Orders, Personal Income, and Pending Home Sales will come out on Wednesday ahead of the holiday. In addition, news about the trade negotiations with China or the impeachment inquiry could have an influence. Mortgage markets will be closed on Thursday and will close early on Friday for Thanksgiving.
0.06
200
50
Tue
11/26
New Home Sales
11/27
Durable Orders
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MortgageTime
Mortgage Market News for the week ended April 26, 2019
1280 Centre Street
Newton, MA 02459
GDP Jumps
The big news this week was Friday's GDP report, and it was favorable for mortgage rates. As a result, rates ended a little lower, ahead of several major economic releases next week.
While the headline figure for first quarter GDP, the broadest measure of economic growth, was much stronger than expected, mortgage rates declined after its release. This was due to the details of the report. First quarter GDP increased 3.2%, which was far above the consensus forecast of 2.3%, and was up from 2.2% growth during the fourth quarter. This was the best reading for Q1 since 2015, and it took place despite an estimated 0.3% loss in growth resulting from the government shutdown.
However, a closer look revealed a couple of factors which were much more positive for mortgage rates. First, the broad measure of inflation contained in the report was much lower than expected during the first quarter. In addition, the surprising strength was seen in inventories and exports, which are volatile from quarter to quarter and thus are viewed by investors as less informative. The "core" components such as consumer spending and business investment, which better reflect the underlying trend in the economy, showed slower growth than during the previous quarter, and the housing sector again was weak.
The other news from the housing sector released this week was mixed. In March, sales of previously owned (existing) homes were weaker than expected and 5% lower than a year ago. On the other hand, sales of new homes surprised to the upside and were at the highest level since November 2016. Since new home sales represent signed contracts, while existing home sales are based on actual closings, the new home sales report is a more forward-looking indicator of housing market activity.
Looking ahead, it will be a packed week. The next Fed meeting will take place on Wednesday. No change in rates is expected, and investors will be looking for guidance about future monetary policy. The monthly Employment report will be released on Friday. As usual, these figures on the number of jobs, the unemployment rate, and wage inflation will be the most highly anticipated economic data of the month. In addition, the core PCE price index, the inflation indicator favored by the Fed, will be released on Monday. The ISM national manufacturing index will come out on Wednesday and the ISM national services index on Friday.
Mon
4/29
5/1
5/3
Employment
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Mortgage Market News for the week ended August 10, 2018
JonathanWhite
Newton,MA02459
Mixed Inflation Data
It was a quiet week with no major surprises. Mortgage rates ended the week slightly lower.
The most significant economic data released this week was the inflation data. The Consumer Price Index (CPI), the most closely watched monthly inflation report, looks at the price change for finished goods and services. Friday's release revealed that inflation has continued to rise in recent months. Core CPI, which excludes the volatile food and energy components, was 2.4% higher in July, up from an annual rate of increase of 2.3% in June. This matched the consensus forecast and was the highest level since September 2008.
By contrast, the Producer Price Index (PPI) focuses on the increase in prices of "intermediate" goods used by companies to produce finished products, which investors view as a little less indicative of the level of inflation in the economy as a whole. On Thursday, Core PPI was 2.7% higher in July, down from an annual rate of increase of 2.8% in June, and a little lower than expected. Since inflation is negative for bond yields, this report was mildly favorable for mortgage rates.
The JOLTS report measures job openings and labor turnover rates. Fed officials and investors value this data to help round out their views of the strength of the labor market. In June, there were 6.66 million job openings, which was close to the record levels seen in April. There were only 6.56 million people who reported that they were looking for work that month. It is rare to see more job openings than people seeking work. A large number of workers also willingly left their jobs. This is viewed as a sign of labor market strength, since people usually quit only if they expect that they can find better jobs.
Looking ahead, Retail Sales will be released on Wednesday. Consumer spending accounts for about 70% of all economic activity in the U.S., and the retail sales data is a key indicator of growth. Industrial Production, another important indicator of economic growth, also will come out on Wednesday. Housing Starts will be released on Tuesday.
Mortgage rates
0.03
8/15
Retail Sales
Industrial Production
8/16
Housing Starts
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Mortgage Market News for the week ended August 03, 2018
No Surprises
While there was major economic data released this week and a Fed meeting, there were no significant surprises. Mortgage rates ended the week a little higher.
Friday's key Employment report came in pretty much right on target across the board. Against a consensus forecast of 190,000, the economy gained 157,000 jobs in July. However, upward revisions added 59,000 jobs to the results for prior months. The economy has gained an average of 215,000 jobs per month so far this year, exceeding even the strong pace of 184,000 seen over this period last year.
The unemployment rate decreased from 4.0% to 3.9%, matching expectations. Average hourly earnings, an indicator of wage growth, also matched expectations. They were 2.7% higher than a year ago, the same annual rate of increase as last month.
As expected, the Fed made no policy changes at Wednesday's meeting. The Fed's statement was very similar to the prior one from the June meeting. The most notable change in the statement was that Fed officials modestly upgraded their assessment of the pace of economic growth. In particular, the statement said that economic activity "has been rising at a strong rate," while the prior statement described it as "solid." In addition, Fed officials noted that household spending and business investment have "grown strongly." In June, they just said that it had "picked up." Investors expect that the Fed will raise the federal funds for the third time this year at the next meeting on September 26.
Looking ahead, the JOLTS report, which measures job openings and labor turnover rates, will be released on Wednesday. Fed officials value this data to help round out its view of the strength of the labor market. The Consumer Price Index (CPI) will come out on Friday. CPI is a widely followed monthly inflation report that looks at the price change for goods and services. In addition, Treasury auctions on Wednesday and Thursday could influence mortgage rates.
0.02
300
150
8/8
JOLTS
8/9
PPI
8/10
CPI
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Mortgage Market News for the week ended July 27, 2018
U.S. and EU Take a Step Back
The main influence on mortgage rates this week was fresh news about tariffs, which was negative for mortgage rates. The major economic data came in mostly on target, and Thursday's European Central Bank meeting contained no policy changes and had just a minor impact. As a result, mortgage rates ended a little higher.
On Thursday, the Trump administration announced that the U.S. and the European Union (EU) had agreed not to escalate their trade dispute. Neither will impose further tariffs while the two sides attempt to work out their differences. If the U.S. and the EU can come to terms, it would allow them to work together to focus on improved trade agreements with other countries, most notably China. Investors reacted to the reduced chances of a trade war by shifting to riskier assets such as stocks from safer assets such as bonds, including mortgage-backed securities (MBS). The decrease in demand for MBS caused mortgage rates to rise a little.
Friday's release of second quarter gross domestic product (GDP), the broadest measure of economic growth, showed a massive increase of 4.1%, which was close to the expected levels. This was up from 2.2% during the first quarter and was the highest reading since the third quarter of 2014. Strength was seen in both consumer spending and business investment. Investors now will be watching to see if the underlying trend is closer to the first quarter or the second quarter levels.
Looking ahead, the important monthly Employment report will be released on Friday. As usual, these figures on the number of jobs, the unemployment rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, the Core PCE price index, the inflation indicator favored by the Fed, will be released on Tuesday. The ISM national manufacturing index will come out on Wednesday, and the ISM national services index will come out on Friday. The next Fed meeting will take place on Wednesday. No change in policy is expected.
10
7/30
8/1
8/3
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Mortgage Market News for the week ended July 20, 2018
Strong Retail Sales
It was a relatively quiet week for mortgage rates. The major economic data was mixed, and mortgage rates ended a bit higher.
Consumer spending accounts for about 70% of economic activity in the U.S., and the retail sales data is a key indicator of growth. Retail Sales unexpectedly turned negative for three months during the winter, causing investors to question the strength of the economy. Since then, however, sales have been very strong.
Monday's data showed a solid increase in June of 0.5% from May, and the May results were revised much higher to 1.3% from 0.8%, which was the largest monthly gain since September 2017. Given the strong retail sales data, along with other major reports, the Atlanta Fed's forecast for second quarter gross domestic product (GDP) is up to a whopping 4.5%, more than double the 2.0% growth seen in the first quarter.
The news from the housing sector was less encouraging. In June, housing starts fell 12% from May to the lowest level since September 2017. The decline was split roughly evenly between single-family and multi-family units. Single-family starts reached a 10-year high in November 2017, but they have fallen steadily since then. Despite a huge need for more inventory of homes in many regions, higher labor, land, and material costs are some of the reasons cited by homebuilders for the slowdown in new construction.
Looking ahead, Existing Home Sales will be released on Monday and New Home Sales on Wednesday. Durable Orders, an important indicator of economic activity, will come out on Thursday. The first reading for second quarter gross domestic product (GDP), the broadest measure of economic growth, will be released on Friday. In addition, a European Central Bank meeting on Thursday could influence U.S. mortgage rates.
75
25
7/23
Existing Home Sales
7/26
ECB Meeting
7/27
Mortgage Market News for the week ended July 06, 2018
Mixed Employment Data
The main influence on mortgage rates this week was Friday's Employment report which was viewed on balance as a little weaker than expected. The Fed minutes and the other data had just a minor impact. As a result, mortgage rates ended lower.
Against a consensus forecast of 190,000, the economy gained 213,000 jobs in June. In addition, upward revisions added 37,000 jobs to the results for prior months. The economy has gained an average of 215,000 jobs per month so far this year, exceeding even the strong pace of 182,000 seen over this period last year.
The unemployment rate increased from an 18-year low of 3.8% to 4.0%, above the consensus for a flat reading of 3.8%. There are two factors which influence the unemployment rate, and June's increase was due to a surge of workers entering the labor force rather than job losses, so this actually was viewed as a sign of strength.
Average hourly earnings, an indicator of wage growth, fell slightly short of expectations. They were 2.7% higher than a year ago, the same annual rate of increase as last month. Overall, the shortfall in wage growth was viewed by investors as more significant than the strong job gains, and mortgage rates moved a little lower after the data.
The minutes from the June 13 Fed meeting released on Thursday contained no major surprises and caused little reaction for mortgage rates. Noteworthy, though, Fed officials discussed both upside and downside risks to the economy. They pointed to the recent tax cuts as a potential source of support for economic growth in coming years, but also the risk that increased trade tensions could slow future investment activity, which would be negative for the economy.
Looking ahead, the inflation data will get the most attention. The Producer Price Index (PPI) focuses on the increase in prices of "intermediate" goods used by companies to produce finished products and will come out on Wednesday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Thursday. CPI looks at the price change for finished goods and services. In addition, Treasury auctions on Wednesday and Thursday could influence mortgage rates.
0.05
7/11
10-yr Auction
7/12
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Mortgage Time
Mortgage Market News for the week ended July 14, 2017
Fed and Data Benefit Rates
Over the past week, comments from Fed officials and weaker than expected economic data were positive for mortgage rates. After rising for the last two weeks, mortgage rates ended this week lower.
Every six months, the head of the U.S. Fed testifies before Congress. In her testimony on Wednesday, nearly all of Fed Chair Janet Yellen's comments simply reiterated what had already been communicated by Fed officials. However, she did provide one new piece of information regarding future Fed policy which caused a significant reaction. Yellen said that the Fed would not have to raise the federal funds rate "all that much further" to reach a "neutral policy stance," which is the rate which neither helps nor hinders economic growth. The practical implication of a lower "neutral" rate is that the Fed would stop raising rates sooner than investors had previously expected. A potentially smaller number of future rate hikes was viewed as good news for mortgage rates.
A shortfall in the retail sales and inflation data released on Friday also was positive for mortgage rates. Excluding the volatile auto component, retail sales in June declined for the second straight month, while the consensus was for a modest increase. This was the first period of back-to-back monthly declines since July and August of last year.
The inflation data also fell short of expectations. The core consumer price index (CPI), which excludes food and energy, remained well below the Fed's target level of 2.0%. Expectations for another rate hike by the Fed this year declined after the release of the retail sales and inflation data.
Looking ahead, the biggest event for U.S. markets next week likely will be the European Central Bank meeting on Thursday. While ECB officials have already said that they will wait for the meeting on September 7 to announce their plans for the bond purchase program, any guidance at this meeting about future policy will affect markets around the world. It will be a light week for U.S. economic data. The NAHB housing sentiment index will be released on Tuesday. Housing Starts will come out on Wednesday. The Philadelphia Fed regional manufacturing index will be released on Friday.
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Mortgage Market News for the week ended June 23, 2017
Fed Officials Debate Inflation
Comments from Fed officials caused some volatility this week but had little net effect. The economic data caused little reaction. Mortgage rates ended the week nearly unchanged, close to the best levels of the year.
Last week's weak inflation data had Fed officials talking this week. To the surprise of many, inflation has declined during each of the last few months. Fed officials seem divided on how to react. Some consider the recent decline transitory and want to continue monetary tightening. Others question this and want to slow things down. On Monday, New York Fed President Dudley said that he thinks rising wages will push inflation higher and that to slow the current pace of monetary tightening could do harm to the economy. On Tuesday, Chicago Fed President Evans said that the Fed "can afford" to wait "a little bit" to see if inflation moves higher. The debate caused some market volatility.
The existing-home sales data from the National Association of Realtors released on Wednesday revealed that a shortage of inventory continued to be an issue in May. Total inventory of existing homes available for sale was significantly lower than a year ago and was at just a 4.2-month supply. A 6-month supply is considered a nice balance between buyers and sellers. The low supply of inventory and robust buyer demand caused prices to rise and properties to be sold very quickly. The median existing-home price reached a record high in May, and it took just 27 days on average for properties to be sold. This was the shortest duration since tracking began in 2011.
Even with a low level of inventory in many markets, existing-home sales in May rose a little from April to the third highest level over the past twelve months. Sales of new homes, which make up roughly 10% of the market, also climbed in May, and the median price of new homes rose to a record high as well.
Looking ahead, Durable Orders, an important indicator of economic activity, will come out on Monday. Pending Home Sales will be released on Wednesday. The Core PCE price index, the inflation indicator favored by the Fed, will come out on Friday. In addition, there will be Treasury auctions on Monday, Tuesday, and Wednesday.
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