Housing

Stocks Fall – October 2018 Edition

Monday, October 15th, 2018

The big news this week was a major selloff in the stock market, with the Dow down more than 1,000 points. Normally that would be positive for mortgage rates, but this time the impact was minor. Weaker than expected inflation data was mildly positive, and mortgage rates ended slightly lower, but remain near their highest levels in many years.

It is common to see mortgage rates fall when the stock market declines, and vice versa, but this is not always the case. It depends on the reason for the movement. Most of the time, the cause is shifting expectations for economic growth based on newly released data. Stronger growth is good for stocks, but it raises the outlook for future inflation, so it is negative for mortgage rates, and the reverse is true as well.

This week, a wider range of factors influenced financial markets, most of which were negative for stocks. However, their expected impact on mortgage rates was mixed, and the net overall effect was small. For example, tariffs generally are a drag on economic growth, but they also raise prices, which leads to higher future inflation. In addition, the supply of bonds around the world is increasing. One reason is that global central banks are reducing their holdings of bonds. Also, the U.S. budget deficit is growing due to boosted spending and tax cuts, forcing the government to issue more bonds. To summarize, higher inflation and greater supply roughly offset slower growth.

The most significant economic report released this week was Thursday’s inflation data. The Consumer Price Index (CPI), the most closely watched monthly inflation report, looks at the price change for finished goods and services. Thursday’s data revealed that inflation was lower than expected in September.

Core CPI, which excludes the volatile food and energy components, was 2.2% higher than a year ago, the same annual rate of increase as the prior month. Since lower inflation is good for mortgage rates, this weaker than expected data caused rates to decline a bit.

Looking ahead, Retail Sales will be released on Monday. Since consumer spending accounts for about 70% of all economic activity in the U.S., the retail sales data is a key indicator of growth. The minutes from the September 26 Fed meeting will come out on Wednesday. These detailed minutes provide additional insight into the debate between Fed officials about future monetary policy and have the potential to move markets. In the housing sector, Housing Starts will be released on Wednesday and Existing Home Sales on Friday.

 

Weekly Change
Mortgage rates fell 0.02
Dow fell 1,100
NASDAQ fell 300
Calendar
Mon 10/15 Retail Sales
Wed 10/17 Housing Starts
Fri 10/19 Existing Home Sales

October 2018 Edition – Strong Data

Wednesday, October 10th, 2018

Since it raises the outlook for future inflation, the stronger than expected economic data released this week was bad news for mortgage rates, and rates reached their highest levels in many years.

The biggest surprise in the data released this week came from Wednesday’s report on the services sector of the economy. The ISM national services index surged to 61.8, well above the consensus, and the highest level ever recorded since they began to track the data in 2008. Readings above 50 indicate that the sector is expanding. In their biggest move of the week, mortgage rates rose sharply following this news.

Friday’s highly anticipated Employment report revealed that solid improvement in the labor market continued. Against a consensus forecast of 180,000, the economy gained just 134,000 jobs in September. However, upward revisions added 87,000 jobs to the results for prior months, bringing the total gains above the expected levels.

Because job gains are volatile month to month, investors also look at longer-term trends, and the economy has added an average of 211,000 workers per month so far in 2018, above even the strong pace of 182,000 seen over the same period last year.

In addition, the unemployment rate unexpectedly declined from 3.9% to 3.7%, the lowest level since 1969. Average hourly earnings, an indicator of wage growth, were 2.8% higher than a year ago, the same annual rate of increase as last month.

Looking ahead, the Consumer Price Index (CPI) will come out on Thursday. CPI is a widely followed monthly inflation report that looks at the price change for goods and services. The JOLTS report also will be released on Thursday. JOLTS measures job openings and labor turnover rates, and Fed officials value this data to help round out their view of the strength of the labor market. In addition, Treasury auctions on Wednesday and Thursday could influence mortgage rates. Mortgage markets will be closed on Monday in observance of Columbus Day.

Weekly Change
Mortgage rates rose 0.15
Dow rose 100
NASDAQ fell 200
Calendar
Wed 10/10 PPI
Thu 10/11 CPI
Thu 10/11 JOLTS

Multi-Year Highs – September 2018 Edition

Friday, September 21st, 2018

A rally in the stock market drew assets away from bonds this week, which was negative for mortgage rates, while the economic data released this week caused little reaction. As a result, mortgage rates rose, reaching the highest levels in several years.

Current economic conditions provide many reasons for improving levels of home sales. These include record highs in the stock market, a solid labor market, faster wage increases, and consumer confidence at historically strong levels. For example, the most recent reading for weekly jobless claims dropped to the lowest reading since 1969. Despite all the good news, though, home sales have been disappointing this year.

After four straight months of declines, sales of previously owned (existing) homes were flat in August. The inventory of existing homes for sale also was flat from July at a 4.3-month supply, which was not particularly encouraging since a 6.0-month supply is considered a healthy balance between buyers and sellers. A small bright spot was that inventory levels were a little higher than a year ago, which marked the first year-over-year increase in about three years.

A lack of inventory has been holding back home sales, and the latest data on new construction looked great based on the headline figure. Below the surface, however, there was less reason for optimism. In August, overall housing starts rose a strong 9% from July, which was well above the expected level. Most of the increase was due to multi-family units, though, as single-family starts were up just 2% from July, and single-family building permits fell short of the consensus with a decline of 6% from July. Builders point to rising land, material, and labor costs as obstacles to a faster pace of new construction.

Looking ahead, the next Fed meeting will take place on Wednesday. Investors expect a 25 basis point increase in the federal funds rate and will be focused on comments from Fed officials. In addition, New Home Sales will be released on Wednesday. Durable Orders, an important indicator of economic activity, will come out on Thursday. The core PCE price index, the inflation indicator favored by the Fed, will be released on Friday.

Weekly Change
Mortgage rates rose 0.05
Dow rose 500
NASDAQ rose 10
Calendar
Wed 9/26 Fed Meeting
Thu 9/27 Durable Orders
Fri 9/28 Core PCE

Rates Inch Higher – September 2018 Edition

Tuesday, September 18th, 2018

Although this week’s major U.S. economic data and European Central Bank meeting contained more good news than bad for mortgage rates overall, rates ended slightly higher.

The most recent inflation data came in at lower than expected levels. The Consumer Price Index (CPI), a widely followed monthly inflation report that looks at the price change for goods and services, was just 2.2% higher than a year, down from an annual rate of increase of 2.4% last month. Lower inflation is positive for mortgage rates, but the reaction to the data was small.

The Retail Sales report released this week was mixed. Excluding the volatile auto component, retail sales in August rose just 0.3% from July, which was below the consensus for an increase of 0.5%. However, the July results were revised higher by an amount comparable in size to the August shortfall. As a result, the data was essentially neutral for mortgage rates.

Thursday’s European Central Bank (ECB) meeting produced no significant surprises and had little impact on U.S. mortgage rates. The ECB lowered its forecast for economic growth this year and next, but confirmed its plans to wind down its massive 2.5 trillion euro bond purchase program by the end of this year. ECB officials also said that they plan to hold the benchmark interest rate at current levels at least through the summer of 2019.

Looking ahead, the housing data will be the main focus. The NAHB home builder confidence index will be released on Tuesday. Housing Starts will come out on Wednesday. Existing Home Sales will be released on Thursday.

Weekly Change
Mortgage rates rose 0.02
Dow rose 250
NASDAQ rose 125
Calendar
Tue 9/18 NAHB Housing
Wed 9/19 Housing Starts
Thu 9/20 Existing Home Sales

All material Copyright © Ress No. 1, LTD (DBA MBSQuotelin

Trade Negotiations – August 2018 Edition

Friday, August 31st, 2018

While there was some major economic data released this week, there were no significant surprises, and its impact on mortgage rates was minor. By contrast, news on trade deals caused a negative reaction, and mortgage rates ended a little higher.

The Trump administration long ago expressed an intention to end the NAFTA trade agreement which has been in place with Canada and Mexico since the start of 1994. On Monday, it was reported that a new trade deal had been reached with Mexico. Later in the week, the administration said that progress had been made with Canada, and at the time of this writing there remained hope for an agreement by the end of the day. The uncertainty surrounding the trade situation and the potential for escalation prompted investors to shift in recent months to relatively safer assets, including U.S. mortgage-backed securities (MBS). This added demand for MBS has been positive for mortgage rates. Thus, an easing of trade tensions this week caused the reverse effect, and the reduced demand for MBS pushed mortgage rates higher.

The latest reading for the primary indicator of confidence in current and future U.S. economic conditions suggested that consumer spending may remain strong in coming months. Consumer Confidence surged far more than expected to the highest level since 2000. A strong labor market, solid economic growth, and record stock prices have contributed to a high level of optimism.

There are two major inflation reports released each month. The core consumer price index (CPI) is more closely watched by investors, while the core PCE price index is the inflation indicator favored by the Fed. Earlier this month, core CPI for July rose to the highest annual rate of increase since 2008. On Thursday, core PCE showed a continuation of a similar upward trend. In July, Core PCE, which excludes the volatile food and energy components, was 2.0% higher than a year ago, up from an annual rate of 1.9% last month. After running at lower levels for most of the past six years, core PCE has climbed to the Fed’s stated target level for inflation of 2.0%. If the upward trend continues, at some point it might cause the Fed to tighten monetary policy more quickly, but comments from Fed officials suggest that we are not particularly close to undesirably high levels.

Looking ahead, the important monthly Employment report will be released on Friday. As usual, these figures on the number of jobs, the unemployment rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, the ISM national manufacturing index will come out on Tuesday and the ISM national services index on Thursday. In addition, news on trade deals could influence mortgage rates.

Weekly Change
Mortgage rates rose 0.03
Dow rose 200
NASDAQ rose 50
Calendar
Tue 9/4 ISM Manufacturing
Thu 9/6 ISM Services
Fri 9/7 Employment

All material Copyright © Ress No. 1, LTD (DBA MBSQuotelin

No Surprises

Wednesday, August 8th, 2018

While there was major economic data released this week and a Fed meeting, there were no significant surprises. Mortgage rates ended the week a little higher.

Friday’s key Employment report came in pretty much right on target across the board. Against a consensus forecast of 190,000, the economy gained 157,000 jobs in July. However, upward revisions added 59,000 jobs to the results for prior months. The economy has gained an average of 215,000 jobs per month so far this year, exceeding even the strong pace of 184,000 seen over this period last year.

The unemployment rate decreased from 4.0% to 3.9%, matching expectations. Average hourly earnings, an indicator of wage growth, also matched expectations. They were 2.7% higher than a year ago, the same annual rate of increase as last month.

As expected, the Fed made no policy changes at Wednesday’s meeting. The Fed’s statement was very similar to the prior one from the June meeting. The most notable change in the statement was that Fed officials modestly upgraded their assessment of the pace of economic growth. In particular, the statement said that economic activity “has been rising at a strong rate,” while the prior statement described it as “solid.” In addition, Fed officials noted that household spending and business investment have “grown strongly.” In June, they just said that it had “picked up.” Investors expect that the Fed will raise the federal funds for the third time this year at the next meeting on September 26.

Looking ahead, the JOLTS report, which measures job openings and labor turnover rates, will be released on Wednesday. Fed officials value this data to help round out its view of the strength of the labor market. The Consumer Price Index (CPI) will come out on Friday. CPI is a widely followed monthly inflation report that looks at the price change for goods and services. In addition, Treasury auctions on Wednesday and Thursday could influence mortgage rates.

Weekly Change
Mortgage rates rose 0.02
Dow rose 300
NASDAQ rose 150
Calendar
Wed 8/8 JOLTS
Thu 8/9 PPI
Fri 8/10 CPI

All material Copyright © Ress No. 1, LTD (DBA MBSQuotelin

Quiet Week

Monday, July 16th, 2018

This week was one of the quietest of the year. The major economic data generally matched the expected levels, and mortgage rates ended nearly unchanged.

Core CPI July 2018

The most significant economic data released this week was the inflation data. The Consumer Price Index (CPI), the most closely watched monthly inflation report, looks at the price change for finished goods and services. Thursday’s release revealed that inflation has continued to rise in recent months. Core CPI, which excludes the volatile food and energy components, was 2.3% higher in June, up from an annual rate of increase of 2.2% last month. This was the highest level since January 2017.

While it had little market impact, Fed officials took careful note of the latest JOLTS report. The data revealed that there were 6.6 million open positions, but only 6.1 million unemployed people in the labor force. 36% of small businesses reported not being able to fill open positions in June, matching the record peak seen in 2000. Also, a very high level of employees willingly left their jobs, which is an indication that they are confident in their prospects for finding another job. All of these signs point to a tightening labor market.

Looking ahead, Retail Sales will be released on Monday. Consumer spending accounts for about 70% of economic activity in the U.S., and the retail sales data is a key indicator of growth. Industrial Production, another important indicator of economic growth, will come out on Tuesday. Housing Starts will be released on Wednesday.

Weekly Change
Mortgage rates flat 0.00
Dow rose 700
NASDAQ rose 300
Calendar
Mon 7/16 Retail Sales
Tue 7/17 Industrial Production
Wed 7/18 Housing Starts

All material Copyright © Ress No. 1, LTD (DBA MBSQuotelin

Italy and U.S. Job Gains – June 2018 Edition

Tuesday, June 5th, 2018

News from Italy was positive for mortgage rates this week. However, this was partially offset by stronger than expected U.S. labor market data. Mortgage rates ended the week a little lower.

Italy has one of the largest economies in the European Union (EU). In recent years, Italy’s economic growth has been below the average for the EU as a whole, and its unemployment rate has been higher than average. The newly formed coalition government is proposing some major changes to attempt to address these issues. In particular, it would like to reduce the government spending constraints imposed by EU rules. Investors are concerned that this will lead to an increase in Italy’s already large budget deficit and that the risk has increased that Italy could one day exit the EU. The resulting uncertainty caused investors to shift to safer assets, including U.S. mortgage-backed securities (MBS), which helped push mortgage rates lower this week.

By contrast, stronger than expected labor market data pressured mortgage rates a little higher on Friday. Against a consensus forecast of 190,000, the economy added 223,000 jobs in May. In addition, upward revisions added 15,000 jobs to the results for prior months. The economy has gained an average of a very healthy 207,000 jobs per month so far this year.

The unemployment rate declined from 3.9% to 3.8%, the lowest level since 2000. Average hourly earnings, an indicator of wage growth, were 2.7% higher than a year ago, up from an annual rate of increase of 2.6% last month.

Looking ahead, Factory Orders will be released on Monday. The ISM national services index will come out on Tuesday. The JOLTS report, which measures job openings and labor turnover rates, will be released on Wednesday. In addition, news about Italy could influence mortgage rates again next week.

All material Copyright © Ress No. 1, LTD (DBA MBSQuotelin

ECB Spooks Investors – May 2018 Edition

Tuesday, May 22nd, 2018

The market moving economic news this week again was viewed as negative for mortgage rates. This time the source was the European Central Bank (ECB). The U.S. economic data mostly came in on target and caused little reaction. Mortgage rates reached the highest levels in seven years.

On Monday, a speech from a top ECB official was viewed by investors as unexpectedly hawkish, meaning in favor of tighter monetary policy. Galhau, the governor of the Bank of France, said that the ECB might soon provide guidance about the timing of its first rate hike in years. While investors anticipate that the ECB will end its bond buying program later this year, they were somewhat surprised by the talk about rate hikes, and some investors viewed his speech as opening the door for rate hikes to take place sooner than expected. Bond yields around the world moved higher after the speech, including U.S. mortgage rates.

Next to the Employment data, the report on retail sales is one of the most closely watched each month. Consumer spending accounts for about 70% of economic activity in the U.S., and the retail sales data is a key indicator of growth. Following the hurricanes, retail sales showed very strong gains for three months last fall.

Sales then unexpectedly posted three months of losses, causing investors to worry that economic growth was slowing. However, the most recent data released this week showed a healthy increase in April of 0.3% from March. Combined with the solid gains seen in March, it appears that the three weak months were not indicative of a longer-term trend.

Looking ahead, New Home Sales will be released on Wednesday and Existing Home Sales on Thursday. Durable Orders, an important indicator of economic activity, will come out on Friday. In addition, Treasury auctions on Wednesday and Thursday could influence mortgage rates.

All material Copyright © Ress No. 1, LTD (DBA MBSQuotelin

13 Tips to Help Sell Your Home This Winter

Wednesday, November 27th, 2013

Fewer Late On Mortgage Payments = Housing Strength:

The winter is usually the slowest home selling season. The main focus is on family and the holidays, not on buying a home. Most homeowners take their homes off the market for the winter.  Time to hibernate and wait for spring!

Or is it?  Columnist and Realtor Jessica Roberts suggest that you follow these simple and effective home care and staging tips to ensure your home sells this winter:

1.       Take photographs of your home outside before the snow falls. A snow-covered home may look festive, but the features of your home will be hidden.

2.       Clear the driveway, sidewalks, and steps from snow and ice. Use sand and deicers as needed to keep walking areas neat and safe for visitors.

3.       Keep holiday decorations simple and clean. Less is more.

4.       Inform buyers of town plowing schedules and upkeep of neighborhood streets.

5.       Keep scents from candles, plug-in air fresheners, and room sprays to a minimum. Use warm and gentle fragrances. Lavender and rosemary bouquets are a natural way to scent your home.

6.       Encourage showings during daylight hours for maximum lighting.

7.       Have a timer set for indoor and outdoor lights if you won’t be home before a showing.

8.       Hire a professional window cleaner for indoor and outdoor cleaning. Crystal clear windows will help maximize light in the house.

9.       Make sure the house is warm and cozy. Add blankets, throws, and area rugs to each room. Turn the thermostat up for the showing. Have a timer set if you won’t be home.

10.    Keep indoor decorations simple, green, natural, and seasonally appropriate.

11.    Show buyers you take exceptional care of your home. Request guests to take off shoes and offer paper booties.

12.    Keep shovels, snow blowers, deicing materials, and winter gear stowed away.

13.    Provide buyers with a list of local winter and seasonal activities.

Time to create a seasonal strategy and increase your chances of selling your home this winter. Seasonal opportunities, current market trends, and simple home care and staging tips will help sell your home this winter.