What's Ahead For Mortgage Rates This Week - December 1, 2014

Last week's scheduled economic events were packed into Tuesday and Wednesday, but several housing-related reports were released including the Case-Shiller National and 10-and 20-City Home Price Indices for September, The FHFA House Price Index also for September, and New and Pending Home Sales for October.

Case-Shiller, FHFA Report Slower Growth in Home Prices

According to Case-Shiller home price indices released Tuesday, the national rate of home price growth has slowed from August's year-over-year reading of 5.60 percent to September's reading of 4.90 percent. This was the lowest rate of home price growth in two years and was seen by analysts as a positive development in terms of sustainable price growth.

Double-digit percentage gains in home price growth in 2013 and earlier this year drove many would-be home buyers to the sidelines as narrow inventories of homes caused bidding wars in high-demand areas. 20 cities tracked by Case-Shiller had mixed results, with home prices falling in nine cities, rising in nine cities and prices were unchanged in two cities.

FHFA, the Federal Housing Finance Agency and overseer of Fannie Mae and Freddie Mac, reported year-over-year price growth of 4.30 percent in September against August's reading of 4.80 percent. Lower price gains for September were expected as the prime period of summer sales wound down. FHFA reports on home prices related to mortgages and properties held by Fannie Mae and Freddie Mac.

Pending and New Home Sales Show Mixed Results

The National Association of Realtors® reported that the Pending Home Sales Index dipped to 104.3 in October as compared to September's reading of 105.1.Lawrence Yun, chief economist for the National Association of Realtors®, said that lagging wage growth and tight mortgage credit conditions were stalling demand for homes. Pending home sales usually close within two months and serve as a gauge for upcoming home sales and mortgage activity. A reading of 100 for the Pending Home Sales Index is equivalent to pending home sales performance in 2001.

Better news came from the Department of Commerce New Home Sales report for October. New home sales achieved a five month high with a reading of 458,000 new homes sold on a seasonally-adjusted annual basis. October's reading was 0.70 percent higher than September's reading of 455,000 new homes sold, but missed analysts' expectations of 469,000 new homes sold. New home sales increased by 1.80 percent year-over-year with regional rates as follows:

• Midwest: +15.8 percent

• Northeast +7.1 percent

• West -2.7 percent

• South -1.9 percent

The median price of new homes rose to a record high of $305,000 in October. The supply of new homes rose to a 5.60 month supply from September's reading of a 5.50 month supply of new homes.

Mortgage Rates Fall or Flat, Jobless Claims Rise

Freddie Mac reported that the average rate for a 30-year fixed rate mortgage fell from 3.99 percent to 3.97 percent; the average rates for 15 year mortgages and 5/1 mortgages were unchanged at 3.17 percent and 3.01 percent respectively. Average discount points were unchanged for all loan types at 0.50 percent.

New Jobless Claims rose to 313,000 last week and surpassed 300,000 for the first time in several weeks. Analysts had expected a seasonally-adjusted reading of 288,000 new jobless claims. Analysts said that a rise in claims could indicate a slower pace in hiring, but said that weekly readings are too volatile to indicate a trend. The four-week average of jobless claims was 294,000 new claims, which was near an eight-year low.

What's Ahead

Next week's scheduled economic events include Construction Spending, the Fed's Beige Book Report, Non-Farm Payrolls and the National Unemployment Rate. Freddie Mac's PMMS report on mortgage rates and Weekly Jobless claims will also be released as usual.

Existing Home Sales Show Improvement In The Northeast And Midwest Region

March sales of existing homes exceeded expectations at a seasonally adjusted annual rate of 4.59 million sales according to the NAR. Analysts projected that existing home sales would reach 4.55 million based on February's reading of 4.50 million sales.

The pace of existing home sales declined by 0.20 percent as compared to February's reading.

Headwinds Cause Slower Pace Of Home Sales

Analysts cited poor winter weather and rapidly rising home prices as factors that kept buyers away, although the Northeast and Midwest regions reported improvements in home sales in March. NAR said that the national average home price increased to $198,500, which was a year-over-year increase of 7.90 percent.

New mortgage regulations, which have caused mortgage lenders to take a conservative position with their lending policies, are also seen as a discouragement to buyers with less-than-perfect credit, first-time and moderate income home buyers.

Experts expressed concerns that current home prices and tight lending standards could create a shortage of first-time buyers.

Home sales to investors have fallen as higher home prices and fewer distressed (foreclosure and short sale) properties cause deals on cheap homes to dry up.

Fannie And Freddie Revise Construction, Housing Market Forecasts

Fannie Mae reduced its forecast for home construction started in 2014 from 1.55 million to 1.05 million. Doug Duncan, Fannie Mae's chief economist, said that constraints on credit and labor contributed to the revised forecast.

Freddie Mac reduced its forecast of homes sold in 2014 from 5.60 million to 5.50 million. Frank Nothaft, Freddie Mac's chief economist, said that tight inventories of homes in some areas could cause significant challenges for home buyers.

FHFA Home Price Index Posts March Gain

FHFA, the agency that oversees Fannie Mae and Freddie Mac, reported that February home prices related to mortgages that Fannie and Freddie own or guarantee, gained 0.60 percent as compared to a revised January reading of a 0.40 percent gain.

Year-over-year, home prices rose by 6.90 percent as compared to January's year over year reading of 7.20 percent.

Analysts said that smaller month-to-month dips in home prices could indicate a turnaround for lagging housing markets and also noted that sales lost during severe winter weather may be recouped as the spring buying season gains momentum.

What's Ahead For Mortgage Rates This Week - March 31, 2014

Last week's economic news includes several reports about housing markets.

The S&P Case-Shiller 10 and 20 city housing market indices, the FHFA House Price Index, New Home Sales and Pending Home sales reports suggest that the national housing market continues to grow, but at lower rates.

Regional readings varied and suggested that winter weather was a negative influence on affected markets.

In a press conference held on March 19 Federal Reserve Chair Janet Yellen said that severe winter weather had interfered with the Fed's ability to get a clear reading on economic developments.

The Case-Shiller 10 and 20-City Home Price Indices for January showed year-over-year growth of 13.50 and 13.20 percent respectively. The 20-City Home Price Index reported that 12 of 20 cities reported slower rates of home price appreciation.

The 10-City Index ticked upward, but was little changed. The 20-City index posted its third consecutive month-to-month decline in home prices with a reading of -0.10 percent.

Las Vegas, Nevada led cities posting gains with a month-to-month reading of +1.10 percent, but home values remain 45 percent below peak prices achieved in August 2006.

David M. Blitzer, chair of the Index Committee at S&P Dow Jones Indices, noted that home prices were up 23 percent over their lows in 2012.

FHFA Data Reflects Slower Growth in Home Prices

The FHFA House Price Index reports home price trends for sales of homes with mortgages owned or guaranteed by Fannie Mae or Freddie Mac. January's data reported a year-over-year gain of 7.40 percent, which is approximately 8.0 percent below its peak in April 2007.

Month-to-month home prices varied within the nine U.S. Census regions and ranged from -0.30 percent to +1.30 percent.

FHFA reported that year-over-year, all nine regions reported gains in home prices that ranged from +3.20 percent in the Middle Atlantic region to 14.0 percent home price growth in the Pacific region.

New and Pending Home Sales Slow

According to the U.S. Department of Commerce, February sales of new homes matched projections at 440,000 as compared to January's revised reading of 455,000 new homes sold, which was a year-over-year high.

New home sales improved by 37 percent in the Midwest, but fell in the Northeast, South and West. This suggests that while winter weather played a role, but that housing markets are cooling in general.

Rising mortgage rates and concerns over new lending standards likely contributed to the drop in sales.

Pending home sales slumped in February according to the National Association of REALTORS®.

February's index reading of 93.9 as compared to January' index reading of 94.7 represented the eighth consecutive monthly drop for pending home sales and was the lowest reading since October 2011.

Pending home sales indicate future completed sales. Lawrence Yun, the NAR's chief economist, noted that home sales delayed by winter weather may be completed this spring.

Mortgage Rates Rise, Jobless Claims Lower Than Predicted

Freddie Mac reported that average mortgage rates rose across the board last week with the rate for a 30-year fixed rate mortgage rising eight basis points to 4.40 percent. 15-year fixed mortgage rates rose 10 basis points to 3.42 percent.

Average rates for a 5/1 adjustable rate mortgage rose from 3.02 percent to 3.08 percent.

Discount points for fixed rate mortgages were unchanged at 0.60 percent and ticked upward from 0.40 to 0.50 percent for 5/1 adjustable rate mortgages.

What's Coming Up This Week

This week's scheduled economic news includes Construction Spending for March,  ADP payrolls for March along with Freddie Mac's PMMS weekly report on mortgage rates and the BLS Non-Farm Payrolls report. 

What's Ahead For Mortgage Rates This Week - March 17th, 2014

Last week's economic reports provided rays of light as compared to the recent slump in positive economic news.

Unusually severe winter weather conditions affected housing-related indicators as home builders and home buyers stayed on the sidelines.

With spring on the horizon, last week's economic news showed welcome signs of growth.

Job Openings Up, New Jobless Claims Fall

Employment is a major factor in the decision to buy a home; would-be home buyers received a vote of confidence last week as January's job openings increased by one million to 40 million as compared to December's reading of 39 million job openings.

February's reading will likely reflect a lull in activity due to winter weather conditions in much of the U.S.

Weekly jobless claims fell from 324,000 to 315,000. The Bureau of Labor Statistics reported expectations of 330,000 new jobless claims, so the latest report was good news.

Weekly reports are more volatile than monthly statistics; analysts typically track employment trends by reviewing rolling averages of several weeks' new jobless claims data.

Mortgage Rates, Retail Sales Rise

Freddie Mac reported that average mortgage rates rose last week. The rate for a 30-year fixed rate mortgage rose by nine basis points to 4.37 percent. 15-year fixed rate mortgages had an average rate of 3.38 percent; this was an increase of six basis points

The average rate for a 5/1 adjustable rate mortgage was 3.09 percent, up from the previous week's reading of 3.03 percent.

Discount points dipped from 0.70 to 0.60 percent for a 30-year fixed rate mortgage, were unchanged for 15-year and 5/1 adjustable rate mortgages at 0.60 and 0.40 percent.

Retail sales increased for the first time in three months according to the Commerce Department.

February retail sales surpassed expectations of a 0.20 percent gain and came in at 0.30 percent. January figures were downwardly adjusted to -0.60 percent. Retail sales exclusive of automotive sales were also higher at 0.30 percent than expectations of 0.10 percent.

The University of Michigan Consumer Sentiment index for mark was slightly lower at 79.9 than expectations of 80.8.

This was the lowest reading in four months, and was attributed in part to higher gas prices and consumer concerns over developments in Ukraine.

What's Coming Up

This week's economic news includes several housing-related reports.

The NAHB Home Builder Index for March, Housing Starts and Building Permits for February, and Existing Home Sales are set for release.

On Wednesday, the Fed's FOMC statement will be released and Fed Chair Janet Yellen will give a press conference. The Fed is expected to continue its ongoing tapering of quantitative easing.

Leading economic indicators will be released along with the Weekly Jobless Claims report and Freddie Mac's Primary Mortgage Market Survey.

What's Ahead For Mortgage Rates This Week - March 10, 2014

Last week's economic news included construction spending and the CoreLogic Home Price Index for January.  Reports for February included ADP Employment, Non-Farm Payrolls and national unemployment data.

The Federal Reserve's Beige Book report and weekly reports on mortgage rates and new unemployment claims rounded out the week's economic news.

Highlights for last week include:

Consumer spending gained 0.40 percent for January. The expected reading was 0.20 percent and the reading for December was flat.

The Commerce Department reported that increased spending was less an indicator of consumer discretionary spending than an indicator of high utility costs caused by severe winter weather.

Construction spending ticked upward in January with gain of 0.10 percent as compared to expectations of -0.40 percent and the prior month's reading of 0.10 percent.

January's reading translates to a seasonally adjusted annual figure of $943.1 billion.  

Federal Reserve: Winter Weather Obscures Accurate Economic Outlook

According to the Fed's Beige Book report, much of the U.S. economy was impacted by severe winter weather. The report is based on anecdotal information provided by business contacts and industry leaders throughout the 12 regions of the U.S. Federal Reserve System.

Eight regions reported slow economic growth. Janet Yellen, chairwoman of the Fed, noted that winter weather was not expected to alter the Fed's plan to continue reducing its asset purchases under its quantitative easing program. She also said that it may be months before accurate economic readings can be obtained in the aftermath of winter weather conditions.

Freddie Mac's Primary Mortgage Market Survey brought good news on Thursday as mortgage rates fell across the board and discount points were also lower in most cases.

Average mortgage rates were down nine basis points for a 30-year fixed rate mortgage at 4.28 percent. The average rate for a 15-year fixed rate mortgage was 3.32 percent, a decrease of seven basis points.

The rate for a 5/1 adjustable rate mortgage was 3.03 percent, down by two basis points from the prior week. Discount points were unchanged for 30-year fixed rate mortgages at 0.70 percent, but dropped to 0.50 percent for 15-year fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

Employment Sector: Surprise Results

The ADP payroll report showed a reading of 139,000 jobs added in February as compared to the prior month's 127,000 jobs. ADP tracks private sector jobs. The BLS released its Non-Farm Payrolls report for February, which also surpassed expectations.

175,000 jobs were added against expectations of 140,000 jobs added and January's reading of 129,000 jobs added. The national unemployment rate rose to 6.70 percent against an expected drop to 6.50 percent from January's reading of 6.60 percent. Once again, foul weather was seen as a major influence.

What's Ahead This Week

This week's economic news schedule is relatively light with no releases set for today.

Mortgage rates will be released by Freddie Mac on Thursday, along with weekly jobless claims. Retail sales and the University of Michigan consumer sentiment index round out next week's schedule.