Thursday – April 28, 2022
Home borrowing costs took a breather from their torrid pace higher inching lower this week. Freddie Mac reports that the 30-year fixed-rate mortgage slipped to 5.10% this week from 5.11% last week with an average 0.8 in points and fees. A year ago the rate was 2.98%. The 15-year rose to 4.38% from 4.17%, also with a 0.8 point. A year ago the 15-year was 2.31%. Sam Khater, Freddie Mac’s Chief Economist said, “The combination of swift home price growth and the fastest mortgage rate increase in over forty years is finally affecting purchase demand.”
The first quarter read of 2022 Gross Domestic Product (GDP) paints an uncertain picture with lower growth and higher inflation. GDP fell 1.4% versus the gain of 1.1% expected and down from the 6.9% in Q4 2021. The quarterly PCE inflation data rose to 7% from 6.4% while the Core PCE rose to 5.20% from 5%. Also, the inflation reading Price Index rose to 8% from 7.1%. Tomorrow, we will receive the monthly and annual Core PCE, the Fed’s favorite inflation gauge. Consumer Sentiment and the inflation reading Employment Cost Index will also be reported tomorrow.
ATTOM Data Solutions reports that home sales and seller profits decline throughout the U.S. in Q1 2022 as price increases ease. In the Q1 2022 U.S. Home Sales Report, profit margins on median-priced single-family home sales across the country fell to 47.2%, the first quarterly drop since the end of 2019 and the largest in a decade. “Home prices simply can’t continue to go up as rapidly as they have for the past few years,” said Rick Sharga, executive vice president of market intelligence for ATTOM. “The combination of higher prices, rising mortgage rates, and the highest rates of inflation in 40 years may be pricing some prospective buyers out of the market, which means we may begin to see lower sales numbers.”
Courtesy of Mortgage Market Guide
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Wednesday – April 27, 2022
Redfin reports that homebuyer competition declined in March for first time in six months amid the rise in mortgage rates and higher home prices. The technology powered real estate brokerage said that 65% of home offers faced competition last month, down from 67% in February. It was the first monthly decline since September. “Most homebuyers are still encountering bidding wars, but competition is beginning to cool because surging mortgage rates and home prices are prompting some Americans to back out or put their buying plans on hold,” said Redfin Chief Economist Daryl Fairweather.
Mortgage rates continued to increase last week to their highest level in 13 years for the week ending April 22, 2022, reports the MBA. The 30-year fixed-rate mortgage rose to 5.37% with 0.67 points. Within the data it showed that the Market Composite Index, a measure of total mortgage application volume, fell 8.3%, the Refinance Index decreased 9% and the Purchase Index saw a loss of 8%. Spokesperson Joel Kan said, “Prospective homebuyers have pulled back this spring, as they continue to face limited options of homes for sale along with higher costs from increasing mortgage rates and prices.”
The Atlanta Fed’s GDPNow model shows a 0.4% rise in Gross Domestic Product (GDP) for Q1 2022, down from the 1.3% forecast on April 19. In Q4 2021, GDP was running at a 7% pace. Mortgage Market Guide’s estimate is 1.1% when Q1 2022 GDP is released tomorrow. GDP is the value of the goods and services produced in the United States.
Courtesy of Mortgage Market Guide
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Tuesday – April 26, 2022
Sales of new single-family homes fell by 8.2% in March from February to an annual rate of 763,000 units versus the 765,000 expected. February was revised higher to 835,000 from 772,000. Sales were down 12.6% from March 2021 (873,000). Sales decreased 5.4% in the Northeast, declined 8.7% in the Midwest, lost 10.2% in the South and dropped 6% in the West. The median price of a new home increased to $436,700 in March from $421,600 in April. There was a supply of 6.4 months at the current sales rate.
Home prices continue to set new record highs but rising mortgage rates may soon begin to see a downward impact on home prices. The February S&P CoreLogic Case-Shiller 20-City Composite rose 20.2% year-over-year gain, up from 18.9% in January, a record high. The U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 19.8% annual gain in February, up from 19.1% in the previous month. Monthly, the National Index was up 1.9% and the 20-City Composite increased 2.4%.
In economic news, March Durable Orders slightly beat expectations and had little impact on trading. April Consumer Confidence came in at 107.3 from 107.6 in March. Lower shares of Boeing and 3M are weighing on the stock markets after mixed earnings from the Dow 30 components. There have been warnings of slowing global growth from the IMF as it sees the world’s economy expanding 3.6% this year, down from 6.1% last year due in part to the conflict in Eastern Europe and the shutdowns in China.
Courtesy of Mortgage Market Guide
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Monday – April 25, 2022
Growing fears of a worldwide economic slowdown spurred on the zero-COVID policy in China has fueled waves of buying in bond markets around the globe. The headlines are pushing U.S. stocks lower as the April sell off continues. The closely watched S&P 500 Stock Index has fallen nearly 7% this month due in part to the China headlines along with anxieties surrounding the rising rate environment.
Oil prices are plunging on the fears of slowing demand as China is now targeting another large city for lockdown, Beijing, with many districts beginning massive testing measures. WTI oil is down nearly $7 to $95/bbl and has seen $94 to $110 in just the past few weeks. The lower price is taking some of the inflation pressures off the economy. The national average price for a regular gallon of gasoline is at $4.12 from $4.24 a month ago and down from the all-time high of $4.33 hit on March 11, 2022.
The week’s risk events are on the high side with the Core PCE, for April, the Fed’s favorite inflation gauge as it hit a multi-year high of 5.4% annually in Mach. Treasury auctions, housing, consumer sentiment and confidence, Q1 2022 Gross Domestic Product, employment cost data and manufacturing numbers. The Treasury will sell a boatload of securities beginning on Tuesday. There is no Fed speak this week with the Federal Open Market Committee meeting taking place next week on May 3-4.
Courtesy of Mortgage Market Guide
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