Tag Archives: Housing Analysis

Housing Market Index Shows Builder Confidence Remains Above 50

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new2The National Association of Home Builders released its Housing Market Index  for November on Monday. This month’s HMI reading was 54 against expectations of a reading of 55. October’s reading was also 54 after being downwardly revised.

Readings over 50 generally indicate that a majority of builders surveyed are confident in current housing market conditions, but the current pause came after two months of decline in home builder confidence. While the short term index readings are lower than in past months, the HMI is currently 20 percent higher than last year.

David Crowe, chief economist for NAHB said that “the fact that builder confidence remains above 50 is an encouraging sign.” Mr. Crowe also cited federal debt and budget issues as factors that keep builders and consumers from building and buying homes.

Fluctuating Mortgage Rates Of Concern To Builders, Home Buyers

Home builders are also subject to the impact of volatile mortgage rates, which can create affordability issues for first time and moderate income home buyers. There is some good news concerning mortgage rates as the Federal Reserve announced its plant to keep its quantitative easing program in effect in the coming months.

QE was implemented in 2012 and consists of the Fed purchasing $85 billion per month is treasury and mortgage-backed securities with the goal of keeping long-term interest rates and mortgage rates low.

Home builder confidence readings are not in synch with construction rates, as builder confidence was rapidly driven by excessive demand for homes against minimal inventories of available homes in many areas.

Components of November’s HMI provide more precise indications of builder confidence. November’s reading for confidence in sales of single family homes within the next six months fell from 61 in October to 60 in November.

Builder sentiment for current home sales was unchanged at 58 and the November reading for builder confidence in buyer foot traffic fell by one point from 43 in October to 42.

Regional Home Builder Confidence Readings Mixed

Regional builder confidence readings for November were as follows:

Northeast: This region gained 14 points with a reading of 44 for November.

South: Builder confidence rose by one point to a reading of 55.

Midwest: November’s reading declined by eight points to 54.

West: The reading for November was one point lower at 58.

Home sales are typically slower during the holiday season and winter months.

What’s Ahead For Mortgage Rates This Week – November 18, 2013

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mortgage rates6The Veterans Day holiday on Monday contributed to a quiet week for economic news. On Wednesday the reading for the federal budget deficit for October fell from September’s reading of -$120 billion to -$92 billion.

Freddie Mac Released Its Primary Mortgage Market Survey On Thursday

The average mortgage rates increased across the board, but remain below historical levels. The rate for a 30-year fixed rate mortgage rose by 9 basis points from 4.16 percent to 4.35 percent with discount points decreasing from 0.80 percent to 0.70 percent.

The average 15-year mortgage rate rose from 3.27 percent to 3.35 percent with discount points the same at 0.70 percent. The rate for a 5/1 adjustable rate mortgage increased from 2.96 percent to 3.01 percent with discount points moving from 0.50 percent to 0.40 percent.

Weekly Jobless Claims were released Thursday and were reported at 339,000 new claims. This was higher than the expected number of 335,000 new claims, but lower than the prior week’s reading of 341,000 new claims.

In other news, Janet Yellen, the President’s choice for chairing the Federal Reserve, defended the Fed’s quantitative easing policy during her first confirmation hearing before the Senate Banking Committee. QE, which involves Fed purchases of $85 billion monthly in Treasury and mortgage backed securities, was designed to keep long-term interest rates and mortgage rates low.

Credit Reporting Agency: Mortgage Defaults Reach 5-Year Low In Q3 2013

TransUnion, one of three major credit reporting agencies in the U.S., reported that mortgage defaults fell to a five-year low to a reading of 4.09 percent for the third quarter of 2013.

This reading is lower year-over-year than the revised reading of 5.33 percent for the third quarter of 2012. The reading for third quarter 2013 mortgage defaults is also lower than the reading of 4.32 percent for the second quarter of 2013.

A mortgage default is defined as a home loan that is at least two months past due on payments.

Analysts cite moderate but stable job gains, comparatively low mortgage rates and a short supply of available homes as factors contributing to improvements in the housing sector. Analysts noted that mortgage defaults have declined during the past five quarters.

As defaulted mortgage loans made before the economy crashed are foreclosed, mortgage defaults were expected to continue falling. TransUnion reported that it expects mortgage defaults to fall below 4.00 percent by year-end.

What’s Coming Up: NAHB Index, FOMC Minutes

This week, the National Association of Home Builders is scheduled to release its Home Builder Confidence Index for November.

Along with the weekly releases of Jobless Claims and Freddie Mac’s PMMS report on mortgage rates, the FOMC is expected to release the minutes of its last meeting. Existing Home Sales for October are also set for release.

What’s Ahead For Mortgage Rates This Week – November 4, 2013

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mortgage rates4Last week’s economic news came from a variety of sources. Most significant was the Fed’s Federal Open Market Committee statement after its meeting ended Wednesday. The statement indicated that the Fed saw moderate economic growth. FOMC did not taper its purchase of MBS and Treasury securities.

The FOMC statement announced the committee’s intention to closely monitor economic and financial developments “in the coming months,” which suggested that the FOMC is taking a wait-and-see position on reducing its $85 billion monthly asset purchases.

Mortgage Rates, Jobless Claims Fall

The Fed’s asset purchase program, also known as quantitative easing, was implanted in 2012 with a goal of stabilizing mortgage rates and other long-term interest rates.

The National Association of REALTORS® reported that pending home sales fell by 5.60 percent in September. Uncertainty over the FOMC’s decision concerning tapering its asset purchases during its September meeting and concerns over a then potential government shutdown.

These were noted as primary reasons for the drop in pending home sales, which are measured by signed real estate contracts. Pending Home Sales are used for estimating future closings and mortgage loan activity.

Tuesday’s economic reports included the Case-Shiller Home Price Indices for August. Home prices increased by 12.80 percent year-over-year in August as compared to 12.30 percent year-over-year for August 2012. August’s reading shows a dampened pace of rising home prices.

The Conference Board, a research organization, reported that consumer confidence fell from a reading of 80.2 in September to 71.2 in October. A reading of 75.00 was expected, but consumer confidence crashed as the government shutdown and its consequences diminished consumer and investor confidence.

According to ADP, a payroll administration firm, private-sector payrolls came in well shy of the expected 150,000 new jobs with a reading of 130,000 jobs. October’s reading was also lower than September’s reading of 145,000 new jobs.

Weekly jobless claims brought good news; new jobless claims came in at 340,000 and fell by 10,000 new claims from the previous week’s 350,000 new jobless claims. Expectations had been for 335,000 new jobless claims.

Freddie Mac reported that average mortgage rates fell. The rate for a 30-year fixed rate mortgage dropped by three basis points to 4.10 percent, with discount points down from 0.80 percent to 0.70 percent.

The average rate for a 15-year mortgage fell by four basis points to 3.20 percent, with an uptick in discount points from 0.60 percent to 0.70 percent. The rate for a 5/1 adjustable rate mortgage dropped by four basis points to 2.96 percent with discount points unchanged at 0.40 percent.

What‘s Coming Up

There is no housing or mortgage economic news scheduled this week other than Freddie Mac’s PMMS due on Thursday.

Reporting for this week includes Leading Economic Indicators, Weekly Jobless Claims, Non-farm Payrolls and the National Unemployment Rate will be posted. The University of Michigan’s Consumer Sentiment Index will be released Friday.

This week’s economic reports are expected provide a general gauge of the economy and information about how consumers are responding to recent economic events and news.

What You Should Know About Pending Home Sales This Month

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pending salesPending home sales fell in September by -5.60 percent, and were 1.20 percent lower year-over-year. This is the first time in more than two years that pending home sales have fallen below year-earlier readings. September’s reading was below August’s reading of -1.60 percent.

The National Association of REALTORS®, which released the report, expects lower home sales for the fourth quarter of 2013 and flat sales into 2014. NAR provided good news in its forecast of 10 percent growth in existing home sales in 2013 as compared to 2012.

A spike in mortgage rates in August coupled with rapidly rising home prices were seen as major factors leading to lower pending sales.

Real estate analysis firm CoreLogic has reported that August home prices were 12.4 percent higher than for the previous 12 months; this was the fastest annual growth rate for home prices since February 2006.

While positive news for homeowners and housing markets, rapidly rising home prices can cause some buyers to postpone or cancel their plans for purchasing a home.

Economic, Government Policy Challenges Reduce Buyer Enthusiasm

In addition to higher mortgage rates and home prices, recent concerns of investors and consumers about the government shutdown and its consequences were noted as factors contributing to lower pending home sales.

High unemployment rates are a lingering influence, as would-be home buyers waver in their decisions to take on a long-term obligation when unemployment rates remain higher than normal and job security is questionable.

Fed Expected To Maintain Bond–Buying At Current Level

The Federal Open Market Committee of the Federal Reserve meets this week and is expected to maintain its current level of $85 billion per month in Treasury securities and mortgage-backed securities. The fed’s program is intended to keep long-term interest rates, including mortgage rates, low as a means of supporting the economic recovery.

Mortgage rates are affected by bond prices; if the fed reduces its monthly bond purchases, demand for bonds would fall, and mortgage rates would be expected to rise.

Mortgage rates spiked in August on expectations that the FOMC would taper its monthly bond-buying, but have since trended lower.

What’s Ahead For Mortgage Rates This Week – October 28, 2013

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mortgage rates1Federal government agencies issued reports that were delayed by the government shutdown; and Freddie Mac reported that average mortgage rates fell for all types of loans it reports. The National Association of REALTORS issued its Existing Home Sales report on Monday. While 5.30 million home sales were expected an annual basis, September’s reading fell short at 5.29 million sales.

August’s reading was adjusted from an original reading of 5.48 million, which equaled July’s reading. Higher mortgage rates and home prices were cited as contributing to the slip in September’s sales.

The Bureau of Labor Statistics issued the Nonfarm Payrolls report for September on Tuesday. September’s reading indicated that only 148,000 jobs were created as compared to economists’ expectations of 185,000 jobs and August’s reading of 173,000 new jobs.

National Unemployment Rate Dropped

Analysts indicated that the modest reading for September was caused by uncertainty over the government shutdown, and also indicated that the economy is growing, but continues to experience ups and downs. The national unemployment rate for September fell from August’s reading of 7.30 percent to 7.20 percent.

According to the Commerce Department, construction spending rose by 0.60 percent in August as compared to expectations of 0.50 percent and July’s revised reading of 1.40 percent, of which 1.20 percent represented spending on residential construction. The Federal Reserve characterized residential construction as growing at a “moderate pace” in September.

The Federal Housing Finance Agency reported that August sales of homes connected with Fannie Mae and Freddie Mac grew by 8.50 percent on a seasonally adjusted year-over-year basis. This represented monthly growth of 0.30 percent and was the smallest rise since September 2012.

Good News! Mortgage Rates Fall

Thursday brought encouraging news with Freddie Mac’s Primary Mortgage Market Survey. Average mortgage rates fell across the board with the average rates for a 30-year fixed rate mortgage falling from last week’s 4.28 percent to 4.13 percent.

The rate for a 15-year fixed rate mortgage dropped from 3.33 percent to 3.24 percent, and the rate for a 5/1 adjustable rate mortgage dropped from 3.07 percent to 3.00 percent. Discount points rose to 0.8 percent for 30 and 15-year fixed rate mortgages and stayed steady for 5/1 adjustable rate mortgages at 0.4 percent.

Weekly Jobless claims were higher than expected at 350,000 new claims; analysts had expected 337,000 new claims. The latest reading was below the prior reading of 362,000 new jobless claims.

The University of Michigan’s Consumer Sentiment Index was released Friday with some telling results. October’s reading 73.2 from September’s revised reading of 77.5. A reading of 74.8 had been expected based on September’s original reading of 75.2. Consumers interviewed for the October CSI indicated that the federal government was the major factor in lower confidence in the economy.

What’s Coming Up

A number of federal agencies are still delaying their reports. Next week’s scheduled economic news includes the Case-Shiller Housing Market Index, Consumer Confidence report and ADP’s Employment Report. Weekly Jobless Claims and the Freddie Mac PMMS will be issued Thursday.

Why Should One Consider Refinancing Their Mortgage Now?

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refi2Refinancing a mortgage is a golden opportunity to lock in today’s low interest rate for the next 15 or 30 years. While interest rates now are still low, there’s a good chance they will be heading up in the coming months.

The Fed won’t maintain the current bond purchasing level forever, and just as rates spiked in September when the Fed hinted the bond purchasing would change, rates will spike even more when purchasing levels actually do change.

As interest rates remain very low for 30-year and 15-year mortgages, homeowners can benefit greatly from a refinance. Several types of people in particular should consider refinancing.

Carrying A High Rate

Anyone with an interest rate well above today’s level should think about a refinance. Unless the homeowner is planning to sell within the next few years, a refinance will almost always save money in the long run if the rate can be lowered by at least a percent.

Switching From FHA To Conventional

Given that FHA mortgages now carry mortgage insurance premiums for the life of the loan, it makes a lot of sense for borrowers to switch away from them when they can. Refinancing may be possible once the homeowner has built up enough equity to qualify for a mortgage from a traditional lender, without the burden of mortgage insurance.

ARM Coming Up On Adjustment

The low rate of an adjustable rate mortgage sticks only for the first few years of the mortgage. After this point, the rate adjusts each year based on market trends. Rather than paying the adjusted rate, which is almost always higher, homeowners can refinance into a new fixed rate mortgage to lock in one of today’s low fixed rates for the duration of the mortgage.

Cash Out To Consolidate Debt

Homeowners carrying high-interest debt, like credit cards and personal loans, can often benefit from consolidating it into their mortgage. As long as they maintain at least 20 percent equity in their home, they can get a cash-out refinance for an amount higher than their current mortgage balance. They can then use the difference to pay off high-interest debt.

The Government Shutdown And Its Effect On Existing Home Sales

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existing homes2Existing home sales for September fell by 1.90 percent from August’s revised reading of 5.39 million sales to 5.29 million sales. Economists had expected 5.30 million sales for September, so a slow-down in existing home sales had been anticipated.

The National Association of REALTORS cited higher home prices and mortgage rates as factors contributing to fewer sales of previously owned homes.

Home Prices Easily Outpaced Income Growth

According to Lawrence Yun, NAR’s chief economist, home prices “easily outpaced income growth.” Consequently, affordability has fallen to a five-year low. Mr. Yun also indicated that a government shutdown was expected to affect home sales in October.

NAR also cited a “notable increase” in federal flood insurance premiums as a deterrent to homebuyers in flood zones. The premium increase was set for October 1.

There is some good news. The NAR reported that existing home sales had increased from 4.78 million in September 2012. As compared to the reading for September 2013, this was an annual increase of 10.70 percent in existing home sales.

This increase represented the 27th consecutive month for increasing sales of existing homes on a year-over-year basis.

Higher National Median Home Price

According to the NAR report, the national median home price increased by 11.70 percent to $199,200 as compared to one year ago. This was
the 10th consecutive month of double-digit year-over-year increases in existing home prices.

NAR estimated that it would take five months to sell the 2.21 million previously owned homes currently available, which indicates that available existing homes remain in short supply.

Sales of distressed properties rose to 14.00 percent share of existing home sales, up from August’s share of 12.00 percent. August’s level was the lowest share of distressed properties sold since NAR began tracking monthly sales of distressed properties in October 2008. Sales of distressed properties during September included 9.00 percent foreclosed properties and 5.00 percent short sales.

Distressed properties typically sell for less than market value; fewer distressed properties included in existing homes for sale would contribute to higher prices. September’s percentage of distressed sales is down by 10 percent year-over-year.

What’s Ahead For Mortgage Rates This Week – October 21, 2013

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mortgage rates3Many of the economic and housing reports typically scheduled were delayed by the federal government shutdown.

The National Association of Homebuilders Wells Fargo Housing Market Index for October was released Wednesday with a reading of 55, lower than the projected 58 and previous month’s revised reading of 57. The original reading for September was 58, which was the highest measure of builder confidence since 2005.

NAHB cited concerns over mortgage rates and the federal government shutdown and its consequences as reasons for homebuilder confidence slipping.

While the NAHB HMI reading was lower than last month, it remains in positive territory as any reading over 50 indicates that more home builders are confident about housing market conditions than those who are not.

Pent-up demand for homes is fueling home builder confidence, which grew by 34 percent over the past year and exceeded the rate of home construction growth.

NAHB Releases Housing Starts Data For September

The Census Bureau was unable to release data on housing starts for September. NAHB released a report estimating September housing starts would be approximately 900,000 units on a seasonally-adjusted annual basis.

Single family home construction is expanding while multi-family home construction remains volatile. The NAHB report estimates single-family housing starts for September at between 620,000 and 630,000 homes annually.

Fed Beige Book: Residential Real Estate Improved, 4 Districts Report Slower Growth

The Fed released its “Beige Book” survey of its 12 banking districts on Wednesday. eight districts reported little or no change in economic conditions and 4 districts reported slower economic growth for September and October.

Real estate and home construction were improved, although several Fed districts reported concerns over rising mortgage rates.  The Beige Book report was based on data gathered October 7, one week after the government shutdown began.

Mortgage Rates, Weekly Jobless Claims Jump

Freddie Mac reported increases in average mortgage rates; the rate for a 30-year fixed rate mortgage was 4.28 percent with discount points unchanged at 0.70 percent.This was five basis points higher than the previous week.

The rate for a 15-year fixed rate mortgage rose by two basis points to 3.33 percent. The average rate for a 5/1 adjustable rate mortgage rose by two basis points to 3.07 percent. Discount points for both 15 year mortgages and 5/1 adjustable rate mortgages were unchanged at 0.70 percent and 0.40 percent respectively.

Weekly jobless claims reported on Thursday rose from the prior week. 358,000 new jobless claims were filed as compared to the expected number of 335,000. During the prior week, 373,000 new jobless claims were filed. The latest data was from the week of October 7, the second week the government was shut down.

What‘s Ahead: Delayed Government Data Expected

Some federal agencies have given dates for releasing data delayed by the shutdown. These included Nonfarm Payrolls and the Unemployment rate for September, which are set for release October 22. The Consumer Price Index and Core CPI for September are scheduled for October 30.

What’s Ahead For Mortgage Rates This Week – September 16, 2013

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Whats-Ahead-Mortgage-Rates-6Last week didn’t feature any housing-related news other than Freddie Mac’s weekly survey of mortgage interest rates.

Reports on consumer credit, job openings and weekly jobless claims suggest that without some relief in the jobs market, Americans may be taking a “wait-and-see” stance toward buying homes.

Consumer Credit Rose By $10.40 Billion In July

The Federal Reserve reported Tuesday that revolving credit fell by an annual rate of 2.60 percent as compared to an annual decrease of 5.20 percent in June. Non-revolving consumer credit such as vehicle and education loans rose at an annual rate of 7.40 percent.

Freddie Mac’s Primary Mortgage Market Survey indicated that mortgage rates were unchanged for both 30-year and 15-year fixed rate mortgage loans. The average rate for a 30-year FRM was 4.57 percent with discount points of 0.80 percent; this was higher than last week’s 0.70 percent.

Average rates for a 15-year fixed rate mortgage were unchanged at 3.57 percent with 0.70 percent in discount points. The average rate for a 5/1 adjustable rate mortgage fell by six basis points from 3.28 to 3.22 percent with discount points unchanged at 0.50 percent.

Mortgage rates are likely to change next week in response to any announcement by the Federal Reserve regarding its plan for reducing the amount of monthly bond purchases in its current quantitative easing program.

Mortgage rates would likely rise if the Fed begins tapering its $85 billion monthly purchase of securities, but if the Fed maintains its current rate of purchases, mortgage rates could remain steady or fall in response to the news.

Retail sales fell short of expectations on Friday. The Department of Commerce reported a seasonally-adjusted growth rate of 0.20 percent in August against an expected reading of 0.50 percent and July’s revised reading of 0.40 percent, which was initially reported at 0.20 percent.

The University of Michigan/Thompson Reuters Consumer Sentiment Index for September fell to its lowest reading since April. The September reading was 76.80 percent as compared to expectations of 81.50 percent and August’s reading of 82.10 percent.

What’s Coming, Will The Fed Taper Its Securities Purchases?

This week’s economic news is highlighted by the Fed’s FOMC statement scheduled on Wednesday after its two-day meeting. The announcement is expected to include an indication of the Fed’s intention concerning its QE program and whether or not monthly securities purchases will be reduced. Fed chairman Ben Bernanke is scheduled to give a press conference after the FOMC statement.

Other scheduled economic news for this week includes the Consumer Price Index and Home Builders Housing Market Index on Tuesday; Wednesday brings reports on Housing Starts and Building Permits in addition to the FOMC statement and press conference. Thursday’s economic reports include Weekly Jobless Claims and the Freddie Mac PMMS along with Existing Home Sales and Leading Indicators.