Home in snowy winter

Daily Rate Update: January 19th-22nd

Friday – January 22, 2021

The U.S. housing market continues to be a stronghold for the economy as positive data hit the airwaves. The National Association of REALTORS® (NAR) reports that Existing Home Sales in December rose 0.7% to an annual rate of 6.760,000 units, above the 6,500,000 expected. Sales were up 22% from December 2019 while. Sales across the four major U.S. regions were mixed. The NAR also said 31% of total sales were made up of first-time home buyers which were unchanged from December 2019 but down 32% from November 2020.

The downside to the Existing Home Sales report showed that housing inventories plunged 23% year over year, fell 16% monthly and are at an all-time inventory low of 1.9 months. The median home price in December was $309,800, up 12.9% from December 2019. “Home sales rose in December, and for 2020 as a whole, we saw sales perform at their highest levels since 2006, despite the pandemic,” said Lawrence Yun, NAR’s chief economist. “What’s even better is that this momentum is likely to carry into the new year, with more buyers expected to enter the market.”

The U.S. financial markets are ending the holiday-shortened week on a quiet note with stock and bond prices unchanged to lower. This week, the closely watched S&P 500 stock index hit a record high close on Thursday of 3,853.07 due in part to positive corporate earnings and hopes of fresh stimulus. Over in the Mortgage-Backed and Treasury security markets, prices recovered from their recent decline while the yield on the 10-year note has fallen from 1.19% to 1.08% in the past seven trading days. Looking ahead to next week, the economic calendar features a broad array of data while the two-day Federal Open Market Committee meeting begins on Tuesday. The Fed’s monetary policy statement will be released at 2:00 p.m. ET followed by Fed Chair Powell’s press conference at 2:30 p.m. ET.

Courtesy of Mortgage Market Guide 

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Thursday – January 21, 2021

Home borrowing costs were unchanged this week and remain at historically low levels. Freddie Mac reports that the 30-year fixed-rate mortgage is at 2.77% with 0.7 in points and fees. A year ago at this time, the rate averaged 3.60%. Sam Khater, Freddie Mac’s Chief Economist said, We forecast rates to remain relatively low this year as the Federal Reserve keeps interest rates anchored near zero for a longer period of time, if needed until the economy rebounds.”

Americans filing for first-time unemployment benefits fell slightly in the latest week to 900,000 from 926,0000. Continuing claims, or those receiving benefits for at least two weeks straight, fell to 5,054,000 from 5,181,000. The lockdowns in several states have increased and are contributing to the uptick in new benefits. The rise in claims comes as there were job losses seen in monthly payrolls in December.

The U.S. Census Bureau reports that U.S. privately-owned housing units jumped nearly 6% in December from November to an annual rate of 1.7 million units. It was the best pace since late 2006. Total sales were up 5.2% annually. Single-family construction saw a 12% surge from November and up a whopping 28% from a year ago. Multi-family dwelling construction fell monthly and annually. The Northeast saw losses while the West, Midwest and South produced gains.

Courtesy of Mortgage Market Guide 

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Wednesday – January 20, 2021

Mortgage rates remained at record lows in the latest survey but have inched higher in the latest survey. The MBA reports that the 30-year fixed-rate mortgage rose four basis points to 2.92% with 0.37 in points for the week ended January 15, 2021. The Market Composite Index, a measure of total mortgage loan application volume, fell 1.9%, the Purchase Index was up 3% while the Refinance Index declined by 5%. The 30-yr fixed-rate mortgage increased to 2.92% from 2.88% with 0.33 in points. Spokesperson Joe Khan said, “Purchase applications remained strong based on current housing demand, rising over the week and up a noteworthy 15% from last year.”

Home builder confidence slipped in January from December due in part to rising prices for materials. The National Association of Home Builders reports that its Housing Market Index for newly-built single-family homes fell three points to 83 in January from December. The index remains at historically high levels. Lumber prices have risen from $264 in March to the current price of $662. NAHB Chairman Chuck Fowke said, “Builders are grappling with supply-side constraints related to lumber and other material costs, a lack of affordable lots and labor shortages that delay delivery times and put upward pressure on home prices.”

Fannie Mae recently released its Economic and Housing Outlook forecasting that due to the COVID-19 vaccinations, stimulus and warmer weather ahead, the economic outlook has taken on a brighter picture. Fannie predicts that Gross Domestic Product will rise to 5.3% for 2021 and a more normal level of a 3.6% increase in 2022. Total home sales are expected to rise by 3.8% in 2021 than in 2020, while single-family housing starts are expected to increase 12.5%. Total originations in 2021 and 2022 originations are expected to decelerate to $3.9 trillion and $3.2 trillion, respectively.

Courtesy of Mortgage Market Guide 

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Tuesday – January 19, 2021

Due to the ongoing effects from COVID-19, the Federal Housing Finance Agency (FHFA) has extended single-family foreclosures and real estate owned (REO) evictions until February 28, 2021, from January 31. The foreclosure moratorium applies to Enterprise-backed (Fannie/Freddie), single-family mortgages only. “To keep our communities safe, and families in their homes during the COVID-19 pandemic, FHFA is extending Fannie Mae and Freddie Mac’s foreclosure and eviction moratorium,” said Director Mark Calabria.

U.S. stock prices are higher as the holiday-shortened weeks kicks off. Talk of bigger stimulus ahead is boosting stocks while weighing on the bond markets. The specter of increased deficit spending, expectations for strong economic growth coupled with increased inflation pressures in the months ahead are a few events that are impacting the markets. There are no economic reports due for release today with the rest of the week concentrated on housing data.

The recent uptick in the demand for oil along with the price increase has made it a bit more expensive to fill up when visiting your local gas station. The national average price for a regular gallon of gasoline has risen to $2.38, up from $2.33 a week ago and from $2.22 a month ago. A year ago, the price was $2.55. The highest recorded price was $4.11 back on July 17, 2008. “The higher price of crude is outweighing sustained low gasoline demand and a build in gasoline supply,” said Jeanette Casselano McGee, AAA spokesperson. “Motorists can expect gas prices to continue to climb through at least the end of the month.”

Courtesy of Mortgage Market Guide 

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