03
Apr
By First Rate Financial Group
Financial Reports

What’s Ahead For Mortgage Rates This Week – April 3, 2023

What's Ahead For Mortgage Rates This Week - April 3, 2023Last week’s economic reporting included readings on home prices, inflation, and pending home sales. Weekly readings on mortgage rates and jobless claims were also published.

S&P Case-Shiller Home Price Indices Report Slower Home Price Growth in January

Home price growth cooled in January according to S&P Case-Shiller’s 20-City Home Price Index. Home prices increased by 2.50 percent year-over-year in January but rose at a slower pace than December’s reading of 4.60 percent. The FHFA Home Price Index also showed slower growth in January with year-over-year home price growth of  5.30 percent as compared to December’s home price growth rate of 6.60 percent.

The top three cities for home price growth in the 20-City Home Price Index were Miami, Florida, Tampa, Florida, and Atlanta, Georgia. In contrast, western U.S. cities posted the most declines in home prices. San Francisco, California, Seattle, Washington, and Portland, Oregon posted the steepest declines in home values in January. Home prices in western cities grew rapidly before the pandemic and are falling in post-pandemic markets.

Rapidly rising mortgage rates have narrowed the pool of qualified homebuyers and ongoing shortages of available homes are keeping home prices relatively high. As long as demand for homes exceeds available homes, it’s unlikely that housing markets will crash, but prospective buyers seem wary of recently rising mortgage rates and a slowing economy.

Mortgage Rates Fall as Jobless Claims Rise

Freddie Mac reported lower average mortgage rates last week as the rate for 30-year fixed-rate mortgages fell by 10 basis points to 6.32 percent. Rates for 15-year fixed-rate mortgages fell by 12 basis points and averaged 5.56 percent. Lower rates were welcome especially when some analysts expect mortgage rates to climb past eight percent in coming months.

198,000 new jobless claims were filed last week and outstripped predictions of 195,000 claims filed and the prior week’s reading of 191,000 first-time claims filed.

The final edition of the University of Michigan’s Consumer Sentiment Survey for March fell from an index reading of  67 to 62. Index readings above 50 indicate that most consumers surveyed have a positive view of current economic conditions, Current sentiment remains below an index reading of 101 recorded before the pandemic.

What’s Ahead

This week’s scheduled economic reporting includes readings on construction spending, public and private-sector reports on job growth, and the national unemployment rate. Weekly readings on mortgage rates and jobless claims will also be released.

02
Mar
By First Rate Financial Group
Financial Reports

S&P Case-Shiller: December Home Price Growth Slows

S&P Case-Shiller: December Home Price Growth SlowsHome price growth slowed in December according to the S&P Case-Shiller 20-City Home Price Index. Year-over-year home prices rose by 4.6 percent in December as compared to November’s reading of 6.8 percent growth. Rising mortgage rates caused home prices to dip as potential buyers delayed home purchases and demand for homes fell.

Craig J. Lazzara, managing director of S&P Dow Jones Indices, said: “The prospect of stable, or higher mortgage rates means that mortgage financing remains a headwind for home prices, while economic weakness, including the possibility of a recession, may also constrain potential buyers. Mr. Lazzara concluded: “Given these prospects for a challenging macroeconomic environment,  home prices may well continue to weaken.”

The S&P Case-Shiller National Home Price Index fell by a seasonally-adjusted figure of -0.30 percent in December but rose by 5.80 percent year over year.

S&P Case-Shiller 20-City Index Shows Slowing Home Price Growth for December

Nationally home prices fell by -0.30 percent month-to-month and were 5.80 percent higher year-over-year.

Case-Shiller’s 20-City Home Price Index is widely used as a benchmark for U.S. home prices; December’s top three cities for rising home prices were Miami, Florida with 15.90  percent year-over-year home price growth; Tampa, Florida followed with 13.9 percent home price growth and Atlanta, Georgia reported 10.4 percent year-over-year home price growth in December.  The 20-City Index reported 4.60 percent year-over-year home price growth as compared to November’s reading of 6.80 percent year-over-year home price growth.

Home prices fell the most in formerly hot markets; in San Francisco, California home prices dropped by -4.20 percent year-over-year and home prices fell by -1.80 percent in Seattle, Washington. Portland, Oregon had the lowest pace of home price growth with a year-over-year reading of 1.10 percent.

In related news, the Federal Housing Finance Agency reported home price growth data for homes owned or financed by Fannie Mae and Freddie Mac. Home prices rose 8.40 percent year-over-year between the fourth quarters of 2021 and 2022.

Analysts said that lower home prices were caused by rising mortgage rates and lower demand for homes caused by buyers’ concerns about a possible recession. Limited supplies of available homes helped reduce potential losses caused by less buyer demand for homes. High mortgage rates, competition with cash buyers, relatively high home prices, and slim supplies of available homes continue to present challenges to first-time and moderate-income home buyers.

 

21
Feb
By First Rate Financial Group
Financial Reports

What’s Ahead For Mortgage Rates This Week – February 21, 2023

What's Ahead For Mortgage Rates This Week - February 21, 2023Last week’s economic news included readings on housing markets, inflation, retail sales, and data on housing starts and building permits issued. Weekly readings on mortgage rates and jobless claims were also published.

NAHB: Homebuilder sentiment improves in February

The National Association of Home Builders reported higher builder confidence in current U.S. housing market conditions with an index reading of 42 for February; Analysts expected a reading of 37 and January’s reading was 35. NAHB index readings over 50 indicate that most home builders have a positive view of housing market conditions.

Factors influencing positive builder sentiment included lower mortgage rates and expectations of less severe winter weather conditions as spring approaches. February’s reading was the second consecutive month for improved builder sentiment since September 2022; and was the first time builder sentiment improved at its current pace since June 2013. The NAHB said in its statement that “the housing market may be turning a corner.”

In related news, The Commerce Department reported that 1.34 million building permits were issued in January, which fell short of the expected reading of 1.35 million building permits issued and matched December’s reading. Year-over-year housing starts were reported at  1.31 million starts in January; analysts expected a reading of 1.35 million housing starts and December’s reading showed 1.37 million housing starts.

January retail sales rose by 3 percent and exceeded expectations of a 1.9 percent increase in retail sales and surpassed December’s negative reading of  -1.1 percent. Retail sales excluding the automotive sector rose by 2.3 percent in January and exceeded expectations of a 0.9 percent increase and December’s negative reading of  -0.9 percent.

Mortgage rates rise as jobless claims fall

Freddie Mac reported higher average mortgage rates last week as the rate for 30-year fixed-rate mortgages rose by two basis points to 6.32 percent. The average rate for 15-year fixed-rate mortgages rose by 15 basis points to 5.51 percent.

First-time jobless claims fell to 194,000 initial claims filed last week as compared to the expected reading of 200,000 claims filed and the prior week’s reading of 195,000 first-time claims filed. 1.70 million continuing jobless claims were reported last week as compared to the previous week’s reading of 1.69 million ongoing claims filed.

What’s ahead

This week’s scheduled economic reporting includes readings on sales of new and previously-owned homes, minutes of the February 1 meeting of the Federal reserve’s Federal Open Market Committee, and monthly data on inflation and consumer sentiment. Weekly readings on mortgage rates and jobless claims will also be released.