Friday – April 9, 2021
The March Producer Price Index (PPI) or wholesale inflation heated up, coming in up 1% versus the gain of 0.5% expected. The Core rate jumped 0.7%, above the rise of 0.2% estimated. Annually, PPI is up 4.2% up from 2.8% in February. The Core rate rose 3.1% year over year, the largest advance since climbing 3.1% for the 12 months ended September 2018. This week, Fed Chair Powell said that prices may rise temporarily but it would not constitute inflation.
Recent research by Zillow finds that due to the pandemic with Americans buying and selling their homes, 2.5 million households could enter a home purchase market that has already seen big demand. Within the report, it shows that the Sun Belt saw the biggest influx of net inbound moves in the first 11 months of 2020. The increase in working from home remotely was one of the reasons for mobility. The biggest inbound moves from the Sun Belt were Phoenix, Charlotte, N.C. and Austin, Texas. The largest outbound moves were New York, Los Angeles, San Francisco and Chicago.
Courtesy of Mortgage Market Guide
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Thursday – April 8, 2021
Home borrowing costs fell for the first time in seven weeks and remain at historically low levels. Freddie Mac reports that the 30-year fixed-rate mortgage declined to 3.13% from 3.18% with 0.7 in points and fees. A year ago at this time, the rate was not much higher at 3.33%. It is up from 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “The drop in rates creates yet another opportunity for those who have not refinanced to take a look at the possibility.”
First-time unemployment claims increased in the latest week but the numbers have been on a downward slope. Weekly Initial Jobless Claims rose to 744,000 from 728,000 for the week ended April 3, 2021. To put it into perspective, the week of March 14, 2020 claims were 282,000. The week of March 21, 2020, they skyrocketed to 3.3 million as lockdowns took hold. Continuing claims, or those receiving benefits for at least two weeks straight, fell to 3.73 million from 3.75 million. With more and more states reopening their economies, many unemployed Americans should be able to go back to work.
The Fed minutes from the March Federal Open Market Committee meeting revealed what Fed Chair Powell has been saying for quite some time … rates will remain low through at least 2022 and maybe even into 2023. The Fed minutes also signaled that it is still wary of the labor market and the ongoing risks from COVID. The Fed will continue to purchase Mortgage-Backed and Treasury securities until such time that it sees significant improvement in the economy and labor markets. The short-term Fed Funds Rate, currently near zero percent, was left unchanged. Bottom line … the Fed continues its dovish tone.
Courtesy of Mortgage Market Guide
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Wednesday – April 7, 2021
Home borrowing costs inched higher in the latest week and remain at historically low levels. The MBA reports that the 30-year fixed-rate mortgage rose three basis points to 3.36% with 0.43 in points for the week ended April 2, 2021. The Market Composite Index, a measure of total mortgage loan application volume fell 5.1% while the Purchase Index declined by 4.6%. The Refinance Index fell 5.3% and is down 20% from a year ago. Spokesperson Joel Kan said, “The rapidly recovering economy and improving job market is generating sizeable home buying demand, but activity in recent weeks is constrained by quicker home-price growth and extremely low inventory.”
Freddie Mac recently reported that the 30-yr fixed-rate mortgage has risen to 3.18% in the latest survey from 2.65% in early January. Due to the increase in rates, Black Knight reports that there are 11.1 million “high quality” refinance candidates, the smallest number in a year. Black Knight also reports that home prices were up 11.6% annually in February, the highest annual rate in more than 15 years. New listing volumes fell 16% and 21% year-over-year in January and February, respectively.
Courtesy of Mortgage Market Guide
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Tuesday – April 6, 2021
Due to severe shortages, home prices across the country jumped annually as the spring buying season is now underway. CoreLogic reports that home prices nationwide, including distressed sales, rose 10.4% in February 2021 compared with February 2020, the biggest gain since February 2006. Prices were up 1.2% monthly in February 2021 compared with January 2021. CoreLogic is forecasting a 3.2% gain from February 2021 to February 2022. “As affordability challenges persist, we may see more potential homebuyers priced out of the market and a possible slowing of price growth on the horizon,” said Frank Martell, President and CEO of CoreLogic.
Job openings rose in February as many states have now fully reopened while some remaining states are partially open. The Bureau of Labor Statistics reports that there were 7.4 million job openings on the last day in February, up from 7.09 million at the end of January. Job openings increased in health care and social assistance, accommodation and food services, arts, entertainment., and recreation. The data is collected for the Bureau’s JOLTS (Job Openings and Labor Turnover Summary) report.
Slightly higher stock levels coupled with easing oil prices from recent highs have steadied gas prices at the pumps after increases seen since January. Jeanette McGee, AAA spokesperson said, “These are positive signs that less expensive gas prices could be around the corner, but not enough to indicate a steady trend just yet.” The motor club reports that the national average price for a regular gallon of gasoline was essentially unchanged this week at $2.87. A year ago the price was $1.92 with the highest ever seen back in July 2008 at $4.11.
Courtesy of Mortgage Market Guide
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Monday – April 5, 2021
Shrinking housing inventories continues to be an obstacle for the sector, especially with the spring buying season underway. Redfin reports that 59% of homes put up for sale went under contract within the first two weeks on the market … the fastest pace since at least 2012. During the 7 days ending March 28, 61% of homes sold in two weeks or less. In addition, asking prices of newly listed homes rose 14% year over year to $353,500, an all-time high, reports Redfin. “Some homebuyers have reached their limit on bidding wars and soaring prices,” said Redfin Chief Economist Daryl Fairweather.
The service sector of the U.S. economy continues to rebound after getting hit at the start of the shutdowns in March 2020. The service sector makes up about 2/3s of the U.S. economy and employs about 100 million workers. The ISM Service Index for March surged to 63.7 from 55.3 in February and above the 58.5 expected and was the highest level ever recorded. The previous high was in October 2018, when the index hit 60.9. The employment component was the best since May 2019. Many companies are now seeing pent-up demand as the country moves to fully reopening.
Accelerated vaccines, solid economic data along with stimulus hitting the U.S. economy have pushed the closely watched S&P 500 (4,074.72) to a fresh record intraday high in today’s session. Today’s record high ISM Service Index is positive news for the economic growth as many Americans get back to work. However, there are still many Americans unemployed.
Courtesy of Mortgage Market Guide
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