What’s Ahead For Mortgage Rates This Week – September 5, 2023

What's Ahead For Mortgage Rates This Week - September 5, 2023

Last week’s economic reporting included readings on inflation, consumer sentiment, and weekly readings on mortgage rates and jobless claims. 

 

Inflation Rates Are Similar in August

Month-to-month, the inflation rate holds relatively steady at 3.18 percent. This is slightly up when compared to 2.97 percent last month; however, it is significantly lower than the rate of 8.52 percent last year. When compared to the long-term average, inflation is trending in the right direction, as the long-term average is 3.2 percent.

Inflation rose at a pace of 0.20 percent in July and met analysts’ expectations. There was no change in the pace of month-to-month inflation from June’s reading of 0.20 percent growth. The Consumer Price Index also reported that year-over-year inflation reached 9.10 percent, which was the highest reading since reaching a 40-year high in mid-2022.

 

While we still wait for core inflation, experts predict it to come in at around 3.38 percent. Core inflation, also known as the CPI, excludes food and fuel prices, which are historically volatile. If core inflation comes in at 3.38 percent, this would be significantly lower than the July reading of 4.7 percent.

 

Right now, it is unclear whether the Federal Reserve will raise interest rates, as they are still waiting for other metrics, including the core inflation above.

 

Mortgage Rates Rise, Job Market Cools

The 30-year fixed, the preferred metric for mortgage rates, remains at around 7.53 percent. These are the highest mortgage rates of the last 20 years. Rates continue to rise when compared to July’s mortgage rates, which were just under 7 percent. This continues to put pressure on those interested in purchasing homes. The 15-year fixed mortgage rate is about 6.81 percent. This is slightly higher than the 15-year fixed for August, which was 6.55 percent on average.

 

When comparing these mortgage rates to last week, the 30-year fixed has gone up. It was 7.23 percent, on average, last week, and has jumped to 7.53 percent this week. The average rate for a 15-year fixed is 6.81 percent this week, which is slightly higher than last week, where the average 15-year fixed was 6.55 percent.

 

It appears that the increase in interest rates is finally having an impact on the job market. Unemployment rose to 3.8 percent, and the economy added 187,000 jobs in August. While these are still historically solid numbers, it is clear that the job market is cooling, when compared to July.


University of Michigan Consumer Sentiment Survey 

The University of Michigan released its monthly consumer sentiment report, and consumer sentiment has dropped slightly when compared to last month. The index reading was 72.0 in July, but it dropped to 69.5 in August. The overall sentiment regarding the economy also dropped from 76.6 in July to 75.7 in August. 

 

These numbers reflect that consumers are still a bit wary of economic conditions. While inflation continues to come down, many consumers are likely still nervous about the increase in interest rates and the cooling job market. While sentiment remains positive, there is some cooling in the economy.

 

What’s Ahead

During the next week, mortgage rates will get an update, and the Federal Reserve will receive some new metrics regarding the economy. These numbers will be very important for the Fed, as it decides whether it will raise interest rates again in September in an attempt to cool inflation further.

S&P Case-Shiller Housing Market Indices: Short Supply of Homes for Sale Pushes Prices Up

S&P Case-Shiller Housing Market Indices: Short Supply of Homes for Sale Pushes Prices UpApril readings for S&P Case-Shiller’s Housing Market Indices showed gains in home prices throughout the U.S. Rising prices were caused by shortages of previously-owned homes for sale and increasing buyer demand as the average 30-year mortgage rate exceeded six percent.  The southeastern region lost its top spot on S&P Case-Shiller’s 20-City Home Price Index as Chicago, Illinois, Atlanta, Georgia, and Tampa, Florida held the top three year-over-year home price growth rates for April.

Chicago, Illinois Breaks Southeast’s Lead on April Home Price Growth

The top three cities with the highest home price growth rates as reported in April’s   S&P Case-Shiller’s 20-City Home Price Index were Chicago, Illinois with a  year-over-year home price gain of 4.10 percent;  Atlanta, Georgia posted a year-over-year home price growth of 3.50 percent.  Tampa, Florida placed third in the 20-City Index with an average home price gain of 2.40 percent. All year-over-year readings for April home prices were seasonally adjusted.

Average home prices lagged in the West as the combined impact of high home prices and mortgage rates created affordability issues for would-be home buyers. Seattle, Washington saw average home prices drop by -12.40 percent year-over-year; San Francisco, California reported that year-over-year home prices declined by 11.10 percent in April. Home prices in Las Vegas, Nevada fell by 6.60 percent year-over-year.

Mortgage rates nearing 7 percent did not appear to impact home buyers to a great extent, but higher rates do increase the cost of home loans and monthly payments; current mortgage rates and rising home prices do not promote affordable opportunities for first-time and moderate-income home buyers.

FHFA House Price Index

In related news, the Federal Housing Finance Agency posted 0.50 percent month-to-month-home price growth in its  House Price Index for April. This index reports on home prices for homes sold by the Government Sponsored Enterprises Fannie Mae and Freddie Mac. These homes were acquired through foreclosure and were subject to original loan limits established by FHFA for mortgages acquired or guaranteed by Fannie Mae and Freddie Mac The GSEs’ loan limits cause a more moderate range of home price growth reported in  FHFA’s House Price Index as compared to data reported in the S&P Case-Shiller Home Price Indices.

The Importance Of Pre-Approval During The Homebuying Process

The Importance Of Pre-Approval During The Homebuying ProcessIf you want to buy a home in the near future, you are probably aware of just how competitive the housing market is. You need to put yourself in the best position possible to be successful by getting pre-approved for a home loan. This is a very important step, particularly when you compete against people making cash offers. Learn more about the importance of getting pre-approved below, and make sure your offer is taken seriously.

A Pre-Approval Letter Shows You Are Serious

The first reason why you need to get a pre-approval letter is that it will show any potential seller that you are serious about buying the home. One of the reasons why settlers like to accept cash offers is because they know the sale will go through. Without a pre-approval letter, the seller may not know if you will be approved by a reminder for a home loan. By showing a pre-approval letter, the seller will know that you will get financing for the home, and they do not necessarily need to worry about the sale falling apart.

Getting Pre-Approved Gives You A Budget

You also need to get a pre-approval letter because it will give you a budget with which to work. Even though it is fun to take a look at different houses and imagine what your life might look like, you need to know how much money you can spend on a house. The lender will let you know the maximum amount that you are approved for, and you can quickly narrow down your search and find the right home to meet your needs.

Get Pre-Approved Before You Start Your Housing Search

The housing market is constantly changing, so you need to take advantage of every opportunity given to you. If you want to make it easier to navigate a difficult housing market, you need to get pre-approved before you start the housing search. Remember that you do not necessarily need to get a loan from the lender that gave you a pre-approval letter, but the seller needs to know that you have been approved by at least one lender if you want your offer to be taken seriously. A pre-approval letter does exactly that.

 

What’s Ahead For Mortgage Rates This Week – August 1, 2022

What's Ahead For Mortgage Rates This Week - August 1, 2022Last week’s economic news included readings on home price growth, new and pending home sales, and inflation. Weekly reports on mortgage rates and jobless claims were also released.

S&P Case-Shiller: Home Price Growth Slows in May

Home prices rose at a slower pace in May according to the S&P Case-Shiller National Home Price Index. Year-over-year home prices rose by 19.70 percent in May as compared to April’s year-over-year reading of 20.60 percent in home price appreciation. Tampa, Florida led S&P Case-Shiller’s 20-City Home Price Index with 36.10 percent year-over-year home price growth. Miami, Florida followed with 34.00 percent home price appreciation. Dallas, Texas reported a 30.80 percent growth rate in home prices.

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, reported 1.40 percent growth in home prices month-to-month and 18.30 percent growth year-over-year for May. FHFA data covers purchase-only transactions associated with home loans owned or backed by Fannie Mae and Freddie Mac. Analysts said that slower growth in home prices signaled a cooling market after years of rapidly rising home prices.

The Commerce Department reported the lowest number of new home sales since the pandemic. New homes sold at a seasonally-adjusted annual pace of 590,000 sales in June as compared to May’s reading of 642,000 sales. Rising mortgage rates and high home prices eroded affordability for first-time and moderate-income home buyers.

Mortgage Rates and Jobless Claims Fall

Freddie Mac reported lower mortgage rates last week as rates for 30-year fixed-rate mortgages fell by 24 basis points to 5.30 percent; rates for 15-year fixed-rate mortgages averaged 4.58 percent and 17 basis points lower than for the previous week. Rates for 5/1 adjustable rate mortgages averaged 4.29 percent and were two basis points lower on average. Discount points averaged 0.80 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

Fewer first-time jobless claims were filed last week with 256,000 claims filed as compared to the previous week’s reading of 261,000 initial claims filed. Analysts expected 249,000 first-time jobless claims to be filed last week.

The Federal Reserve moved to slow inflation by raising its target interest rate range from 1.50 percent to 1.75 percent to 2.25 to 2.50 percent. Interest rates are expected to rise for consumer loans, credit cards, and variable-rate education loans. The Commerce Department’s personal consumption price index rose by one percent in June, which was the fastest month-to-month growth rate in 40 years. Analysts expected inflation to increase by 0.90 percent.  

What’s Ahead

This week’s scheduled economic reporting includes readings on construction spending and job growth; weekly readings on mortgage rates and jobless claims will also be released. 

Case-Shiller: Home Price Growth Slows in April

Case-Shiller: Home Price Growth Slows in April

U.S. home price growth continued but slowed in April according to the S&P Case-Shiller Home Price Indices. The national home price index posted year-over-year home price growth of 20.4 percent in April as compared to the corresponding home price growth rate of 20.6 percent in March. Analysts said that diminishing affordability was slowing rapid gains in home prices seen during the pandemic.

20-City Home Price Index: Florida and Arizona Report Top Home Price Growth Rates

The top three cities for year-over-year home price growth in April’s 20-City Home Price Index were Tampa, Florida with a reading of 35.8 percent; Miami, Florida reported 33.3 percent growth and Phoenix, Arizona reported a year-over-year home price growth rate of 31.3 percent.

Nine of the 20 cities included in the index reported higher price gains in April as compared to March. All 20 cities reported higher home prices in April than in March. While analysts noted the slower pace of home price growth, they cautioned against expecting falling home prices any time soon. Craig J. Lazzara, managing director of S&P Dow Jones Indices said that April’s increase in home prices ranked in the top 20 percent of historical experience for every city, and in the top 10 percent for 19 of the cities included in the 20-City Home Price Index.

FHFA House Price Index: Home Prices Rise in April

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, reported a year-over-year home price growth rate of 18.8 percent for single-family homes owned or financed by Fannie Mae or Freddie Mac. Home prices of homes owned or financed by Fannie Mae and Freddie Mac rose at a month-to-month pace of 1.6 percent in April.

The FHFA Home Price Index reports on home prices across the nine Census divisions; month-to-month home price growth ranged from 0.3 percent in the East South-Central division to 14.1 percent in the Mid-Atlantic division to 23.5 percent in the South Atlantic division. The FHFA Home Price Index is based on single-family home sales data from more than 400 cities in all 50 states. 

What’s Ahead For Mortgage Rates This Week – June 27, 2022

What's Ahead For Mortgage Rates This Week - June 27, 2022

Last week’s economic reporting included readings on home sales, Fed Chair Jerome Powell’s testimony on monetary policy to the House Financial Services Committee, and the University of Michigan’s Consumer Sentiment Index. Weekly reports on mortgage rates and jobless claims were also released.

New Home Sales Pace Rises as Pre-Owned Homes Sales Pace Slows

The Commerce Department reported a seasonally-adjusted annual pace of 696,000 new homes sold in May; analysts predicted a year-over-year pace of 587,000 new homes sold as compared to April’s year-over-year pace of 629,000  new homes sold. While the year-over-year pace of new home sales increased by 10.70 percent month-to-month in May, the year-over-year sales pace for new homes fell by 5.90 percent.

Increasing materials and labor costs continued to challenge home builders, but high demand for homes fueled sales of new homes even as mortgage rates and home prices rose.  The median price of new homes sold in May fell to $449,000 from April’s record high of $454,700. The inventory of available homes fell by 7.20 percent in May, which equaled a 7.70-month supply of new homes for sale.

Regional results for new home sales were mixed; sales of new homes fell by -51.10 percent in the Northeast and were -18.30 percent lower in the Midwest. New home sales rose by 12.80 percent in the South and were 39.30 percent higher in the West.

In other news, Fed Chair Jerome Powell spoke on monetary policy before the House Financial Services Committee and explained the Fed’s strategy to ease inflation through a series of interest rate increases intended to cut into consumers’ purchasing power. 

Mortgage Rates Rise; New Jobless Claims Fall

Freddie Mac reported higher average mortgage rates last week as the rate for 30-year fixed-rate mortgages rose by three basis points to 5.81 percent. Rates for 15-year fixed-rate mortgages averaged 4.92 percent and were 11 basis points higher than in the previous week. The average rate for 5/1 adjustable rate mortgages was eight basis points higher at 4.41 percent. Discount points averaged 0.80 percent for 30-ye

ar fixed-rate mortgages and 0.90 percent for 15-year fixed-rate mortgages.

Initial jobless claims fell to 229,000 new filings last week as compared to 231,000 new claims filed in the previous week. Analysts expected 225,000 new jobless claims last week. Continuing jobless claims inched up with 1.32 million continuing claims filed as compared to the previous week’s reading of 1.31 ongoing jobless claims filed.

The University of Michigan’s Consumer Sentiment Index fell to an index reading of 50.0 for June as compared to May’s reading of 50.2 and the expected June reading of 50.2. Consumer concerns over fuel prices and rising inflation eroded consumer confidence in the economy. Readings above 50 indicate that most consumers have a positive outlook on current economic conditions.

What’s Ahead

This week’s scheduled economic reports include readings from Case-Shiller on home prices, pending home sales,  and construction spending. Weekly readings on mortgage rates and jobless claims will also be released.

Many Millennials Need More Space

Many Millennials Need More SpaceThere are many Millennials who are looking for a home, and many of them are getting ready to trade up for more space. If you think you need more space, you may have more buying power than you realize. The coronavirus pandemic has led to a lot of changes, and you might be able to use the equity in your home to purchase a bigger house with more features.

Why Millennials Are Looking For Bigger Homes

There are a few reasons why many Millennials are looking for bigger homes. First, the coronavirus pandemic forced many people to work from home. This meant that a lot of people, including Millennials, needed a home office. In some cases, this means looking for a home with an extra room. 

In addition, many Millennials have had children during the past few years. This means they need one or two extra bedrooms, and probably another bathroom. This means moving into a home that has more space. 

Millennials Can Use The Equity In Their Homes

A lot of Millennials are still cash-strapped by student loans, but they might have more buying power than they realize. Due to the skyrocketing home prices during the past few years, Millennials may have built up a lot of equity in their homes. They can tap into this equity by selling their current houses for a significant profit. Then, they can roll this profit into a bigger house with a home office, extra bedrooms, more bathrooms, and a variety of extra features. 

How To Choose A New Home

Many Millennials are ready to use their newfound purchasing power to purchase a bigger house, but it is important to find the right one. Just because the house has more space doesn’t necessarily mean it is laid out properly. The bedrooms have to be the right size, particularly if their children are going to have a lot of toys. The home office also needs to be in a location where people will not be distracted while working. Finally, it might be beneficial to find a home office that can be used for more than one purpose. Some Millennials may be getting ready to go back to a physical office in the near future, and it would be beneficial to have a home office that can be used for different things. 

 

Case-Shiller, FHFA Post New Records for Home Price Growth

Case-Shiller, FHFA Post New Records for Home Price GrowthS&P Case-Shiller’s National Home Price Index rose by 19.80 percent year-over-year in February and was the third-largest pace of home price growth since the National Home Price Index’s inception. The 20-City Home Price Index reported that Phoenix, Arizona held its first-place ranking with year-over-year home price growth of 32.90 percent. Tampa, Florida maintained its second-place standing with year-over-year home price growth of 32.60 percent. Miami, Florida reported year-over-year home price growth of 29.70 percent year-over-year. Home prices rose faster for all 20 cities in February than in January.

Rapid Home Price Growth Expected to Slow as Rising Mortgage Rates Take Hold

All 20 cities included in the 20-City Home Price Index posted double-digit price growth in February, but analysts cautioned that the two-month lag in reporting didn’t accurately reflect current market conditions.  Recent data on home sales and mortgage applications indicated that demand for homes is slowing due to affordability challenges caused by rapidly rising home prices and mortgage rates. Economists expect the housing market to cool as would-be home buyers face mortgage qualification and affordability challenges.

Craig J. Lazzara, managing director of S&P Dow Jones Indices, said: “The macroeconomic environment is evolving rapidly and may not support extraordinary home-price growth for much longer.” Mr. Lazzara also said that rising mortgage rates have not yet impacted home-price data, but would likely do so soon.

Selma Hepp, a  chief deputy economist at CoreLogic, said: “With diminished buying power and mortgage rates pushing above five percent in recent weeks, home- price growth is likely to take a step back in coming months.” Economists generally expect home price growth to slow as sales volume declines.

FHFA Reports  Record Home Price Growth in February

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, reported that home prices rose by 19.40 percent year-over-year; home prices for single-family homes owned by Fannie Mae and Freddie Mac rose by 1.10 percent from January to February.  FHFA reported higher home prices across all nine census divisions. Home prices grew fastest in the Mountain Division, where home prices rose by 24.30 percent year-over-year in February.

Will Doerner, Ph. D   and Supervisory Economist at FHFA’s Division of Research and Statistics, said: “House prices rose to a new historical record in February. Acceleration approached twice the monthly rate as seen a year ago. Housing prices continue to rise owing in part to supply constraints.” Rising materials costs, labor, and lot shortages continued to rein in new home construction.

What’s Ahead For Mortgage Rates This Week – February 28, 2022

What’s Ahead For Mortgage Rates This Week – February 28, 2022Last week’s economic reporting included readings on home prices from S&P Case-Shiller and the Federal Housing Finance Agency; data on pending home sales and sales of new homes were also released. The University of Michigan released its final February reading on consumer sentiment and weekly reports on average mortgage rates and jobless claims were also published.

S&P Case-Shiller Home Price Indices: Home Price Growth Expected to Slow in 2022

December readings from S&P Case Shiller suggested a slowing pace of home price growth in 2022 but analysts said that home prices are not expected to decrease. Case-Shiller’s National Home Price Index showed an 18.80 percent increase in home prices year-over-year. S&P Case-Shiller’s 20-City Home Price Index reported that Phoenix, Arizona held on to its first-place standing for home price growth with home prices increasing by 32.50 percent year-over-year. Tampa, Florida home prices rose by 29.40 percent, and the Miami, Florida metro area reported home price growth of 27.30 percent. Analysts expect that home prices will continue to rise, but not at the extreme pace seen in 2021.

The Federal Housing Finance Agency, which oversees properties owned and financed by Fannie Mae and Freddie Mac, reported year-over-year home price growth of 17.60 percent as of December. Analysts said that January’s bad weather, rising mortgage rates, and continued impacts of  Covid-19 and its variants decreased sales of new homes by 9.30 percent in January. The National Association of Realtors® reported supplies of available homes were in the normal range with a 6.1-month supply of homes available. A six-month supply of available homes is considered an average inventory.

Mortgage Rates, Jobless Claims

Freddie Mac reported lower average rates for fixed-rate mortgages as the average rate for 30-year fixed-rate mortgages fell by three basis points to 3.89 percent; rates for 15-year fixed-rate mortgages dropped one basis point to an average of 3.14 percent. Rates for 5/1 adjustable-rate mortgages were unchanged at 2.98 percent. Discount points averaged 0.80 percent for 30-year fixed-rate mortgages and 0.70 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable-rate mortgages averaged 0.30 percent.

Initial jobless claims were lower last week with 232,000 new claims filed as compared to the prior week’s reading of 249,000 initial claims filed. Analysts expected 235,000 new jobless claims to be filed last week. 1.48 million continuing jobless claims were filed last week as compared to the prior week’s reading of 1.59 million continuing jobless claims filed.

What’s Ahead

This week’s scheduled economic reading includes data on construction spending, public and private sector jobs, and the national unemployment rate. Weekly reports on mortgage rates and jobless claims will also be released.

S&P Case-Shiller Indices: December Home Price Growth Hits Record High

 S&P Case-Shiller Indices: December Home Price Growth Hits Record HighWhile U.S. home prices grew at record speed in December, rising mortgage rates threatened rapid price appreciation as buyers were sidelined by affordability concerns. S&P Case-Shiller’s National Home Price Index reported 18.80 percent year-over-year home price growth in December.

The 20-City Home Price Index posted a year-over-year gain of 18.60 percent as compared to November’s year-over-year home price gain of 18.30 percent. Home prices rose by 1.50 percent from November to December 2020. Phoenix, Arizona held on to first place in the 20-City Index with year-over-year home price growth of 32.50 percent; Tampa, Florida held second place with 29.40 percent year-over-year home price growth. The Miami, Florida metro area held third place with year-over-year home price growth of 27.30 percent.

Rising Mortgage Rates Impact Affordability for Prospective Homebuyers

Analysts predicted slowing home price growth as mortgage rates rise and affordability issues impact prospective home buyers. Danielle Hale, a chief economist at Realtor.com, said: “Home prices continued to surpass expectations in December, but a marked change may be ahead for growth as rising mortgage rates eat into buyers’ purchasing power.”

Ms. Hale described a trend that could signal slower home price growth. “While typical asking prices continue to accelerate, the pace of median sales price growth has slowed, signaling a potential gap between what buyers are willing and able to pay and what sellers are hoping to receive.”

The quarterly report issued by the Federal Housing Finance Agency supported trends evident in the S&P Case-Shiller Home Price Indices. Prices for homes owned or financed by Fannie Mae and Freddie Mac rose by 17.50 percent year-over-year in December. The FHFA reported the strongest home price growth in Arizona, Utah, and Idaho during the fourth quarter of 2021.

The strongest state housing markets for  FHFA were Arizona, Utah, and Idaho, while the weakest housing markets were in Washington, DC, Louisiana, and North Dakota. Homebuyers continued to seek homes in less congested suburban and rural areas due to rising home prices. This trend originally started as Covid-19 outbreaks and work-from-home opportunities prompted city dwellers to relocate to areas less affected by the virus.

Analysts recognized that rising home prices sidelined moderate-income and first-time homebuyers, but did not expect home prices to fall in the coming months.