Last week’s economic news included the minutes from the most recent FOMC meeting, which indicated that the Fed’s monetary policymakers are eyeing a potential increase in the target federal funds rate, but don’t expect to do so immediately.
Members of the Federal Open Market Committee expressed concerns about lagging housing markets and noted that inflation has not yet achieved the Fed’s two percent goal. When the Fed decides to raise its target federal funds rate, which now stands at 0.00 to 0.25 percent, Interest rates and mortgage rates can be expected to rise as well.
Mortgage Rates Lower, Jobless Claims Rise
Freddie Mac reported that mortgage fell last week. The average rate for a 30-year fixed rate mortgage fell by four basis points to 3.66 percent; the average rate for a 15-year mortgage dropped by six basis points to 2.93 percent. The average rate for a 5/1 adjustable rate mortgage was nine basis points lower at 2.83 percent. Discount points were unchanged across the board at 0.60 percent for fixed rate mortgages and 0.50 percent for 5/1 adjustable rate mortgages.
New jobless claims rose to 281,000 against projections of 285,000 new claims and the prior week’s reading of 267,000 new claims. Analysts said that the Easter holiday week affected weekly jobless claims, and that the varied dates of the Easter holiday and spring break weeks for schools can impact weekly readings for new unemployment claims.
The four-week rolling average of jobless claims fell to its lowest reading since June 2000. The four-week rolling average is considered a more dependable source for identifying labor force trends, as it lacks the volatility associated with holidays and one-time events that can cause great variation in weekly readings for new jobless claims.
What’s Ahead
Next week’s scheduled economic reports include retail sales, retail sales not including the automotive sector, the Federal Reserve’s Beige Book report, which includes anecdotal reports of economic conditions reported to the Fed, and Housing Starts. The usual reports for weekly jobless claims and Freddie Mac’s mortgage rates survey will be released Thursday.
On Friday, the University of Michigan will release its Consumer Sentiment report, which provides indications of how American consumers view current economic conditions. While general in scope, consumer sentiment can suggest how consumers view buying homes.
A lack of positive sentiment about the economy in general and jobs in particular suggests that fewer Americans may be ready to buy homes. Increasing positive sentiment indicates less concern about economic conditions and could point to more Americans entering the housing market as the peak home- buying season gets underway.
The minutes of the March meeting of the Fed’s Federal Open Market Committee (FOMC) were released Tuesday and included a staff review of current economic conditions. The minutes noted that while labor markets continued to grow, inflation to the Fed’s target rate of 2.00 percent was impeded by dropping fuel prices. The Committee noted that expectations for longer-term inflation remained stable.
Mortgage rates ticked upward for fixed rate loans and were unchanged for 5/1 adjustable rate mortgages according to Freddie Mac. Weekly jobless claims were lower in spite of slower job growth reports.
According to the S&P Case-Shiller Home Price Index report for January, home prices grew by 4.50 percent year-over-year as compared to January 2014’s year-over-year price growth rate of 10.50 percent. This was the lowest rate of home price growth since 2012.
Last week’s economic reports included reports on new and existing home sales and FHFA’s monthly home price index for properties associated with Fannie Mae and Freddie Mac mortgages. The details:
The Federal Housing Finance Agency (FHFA) reported that home prices rose by a seasonally-adjusted rate of 0.30 percent in January, and were 5.10 percent higher as compared to home prices in January 2014.
Last week’s events included the National Association of Home Builder’s Housing Market Index, which fell to its lowest reading since last summer. Other news included reports on housing starts and building permits, the FOMC meeting statement and Fed Chair Janet Yellen’s press conference.
The post-meeting statement of the Federal Reserve’s Federal Open Market Committee indicated that while the Fed is considering raising its target rate as early as June, the agency is in no hurry to cast anything in cement. The statement cited stronger labor markets and low unemployment rates as encouraging, but noted that FOMC members remain concerned about economic growth due to low inflation failing to meet the FOMC goal of two percent.
Last week’s economic reports included job openings, retail sales, retail sales except automotive, consumer sentiment for March and the usual reports on weekly jobless claims and mortgage rates.
Last week’s economic news was light on housing related reports, but several employment reports were released along with the national unemployment rate, which dipped to 5.50 percent. This was a full point below the Federal Reserve’s original target rate of 6.50 percent. Construction spending was incrementally lower than expected and mortgage rates also fell.