Thursday – August 18, 2022
The National Association of REALTORS reports that Existing Home Sales fell 5.9% in July from June to an annual rate of 4.81 million units versus the 4.89 million expected. It was the sixth straight monthly decline and sales were down a whopping 20.2% from July 2021. Sales fell in all four major regions across the U.S. The median price rose 10.8% from a year ago to $403,800. Unsold inventory was at 3.3 months, below 6 months, which is seen as normal. All cash sales accounted for 24% of transactions in July, up from 23% in June.
Mortgage rates inched lower this week and seem to be stabilizing after the surge in borrowing costs in the past 12 months. Freddie Mac reports that the 30-year fixed-rate mortgage increased to 5.22% from 4.99% last week with an average of 0.7 in points and fees. A year ago the rate was 2.87%. The 15-year jumped to 4.59% from 4.26% last week with a 0.7 point. A year ago that 15-year was 2.15%. Sam Khater, Freddie Mac’s Chief Economist said, “The market continues to absorb the cumulative impact of the large price and rate increases that led to a plunge in affordability. As a result, over the rest of the year purchase demand likely will continue to drag, supply will modestly increase, and home price growth will decelerate.”
Americans filing for first-time unemployment benefits fell in the latest week after the increases seen in the past few months. Weekly Initial Jobless Claims fell to 250,000 from 252,000 and below the 265,000 expected. In the manufacturing sector, the Philly Fed unexpectedly rose to 6.2 in August from -12.3 in July and above the -5.0 expected.
Courtesy of Mortgage Market Guide
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Wednesday – August 17, 2022
The Fed minutes from the July meeting will be released at 2:00 p.m. ET this afternoon. There is speculation and fear the Fed discussed outright sales of Mortgage Backed Securities as they do not want them on their balance sheet. The Fed is set to shrink the balance sheet by $95B a month come September along with a 0.50% rate hike or more. Investors will see if the economy can support it and yields have topped out. We shall find out soon enough.
Mortgage rates were essentially unchanged in the MBA’s latest survey and borrowing costs seem to be topping out near current levels. The 30-year fixed-rate mortgage fell to 5.45% from 5.47% with 0.57 points for the week ended August 12, 2022. Within the data, it showed that the Market Composite Index fell 2.3%, the Refinance Index lost 5% and the Purchase Index was down 1%. Spokesperson Joel Kan said, “If home price growth slows more significantly and mortgage rates move lower, we might see some purchase activity return later in the year.”
July Retail Sales were unchanged from June as falling gas prices were offset by high prices for goods and services. Sales were up 10.1% from last year. Gasoline stations were up 39.9% from July 2021, while nonstore retailers were up 20.2% from a year ago. Retail and services together represent what’s commonly referred to as consumer spending.Two-thirds of all spending in the economy is by consumers.
Courtesy of Mortgage Market Guide
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Tuesday – August 16, 2022
Construction on privately owned residential homes fell hard in July to the lowest reading since February 2021. July Housing Starts fell nearly 10% from July to an annual rate of 1.446 million units versus 1.540 million expected. Sales were down 18.4% from July 2021. Single-family starts fell 10.1% monthly and 18.5% annually. Building Permits, a sign of future construction, fell 1.3% to 1.674 million versus 1.650 million expected.
Could the U.S. economy be worse off than what most of the Wall Street community is feeling? JPMorgan Chase CEO Jamie Dimon warned that ‘Something Worse’ than a recession could be coming. Mr. Dimon cited the winding down of the Fed’s balance sheet, higher rates, oil prices, geopolitical issues and inflation. Mr. Dimon said, “If I had to put odds: soft landing 10%. Harder landing, mild recession, 20%, 30%. Harder recession, 20%, 30%. And maybe something worse at 20% to 30%.”
The slumping housing sector has begun to slightly move into a buyer’s market as the market cools off a bit from torrid home price gains seen over the past two years. Redfin reports that more and more homebuyers are backing out of deals as the slowing market puts the buyer in the driver’s seat after an intense seller’s market. The report went on to read that nearly 63,000 home-purchase agreements were canceled in July, equal to 16% of homes that went under contract, the highest rate in more than two years.
Courtesy of Mortgage Market Guide
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Monday – August 15, 2022
Business activity in the New York State region plunged in August as new orders and shipments saw big losses while unfilled orders declined. The Empire State Manufacturing Index fell to -31.30 from the 11.10 registered in July and was the second largest monthly loss on record. The index for future business conditions came in at 2.1, suggesting that firms were not optimistic about the six-month outlook.
Optimism among home builders fell to levels not seen since May 2020 and has fallen into poor condition territory. Higher borrowing costs, ongoing supply chain problems and elevated home prices are a few obstacles that builders have been dealing with. The NAHB Housing Market Index fell to 49 this month from 55 in July. Any number over 50 indicates that more builders view conditions as good than poor. Current sales conditions, sales expectations and the traffic of prospective buyers, saw declines in August and each fell to its lowest level since May 2020.
In the news this week will be Housing Starts, Building Permits, Existing Home Sales, Retail Sales and the Philly Fed. The Fed minutes from the July meeting will be released on Wednesday at 2:00 p.m. ET. And speaking of the Fed, the Federal Reserve Bank of Kansas City’s Economic Policy Symposium in Jackson Hole, Wyoming will take place this month on the 25, 26 and 27. It is one of the longest-standing central banking conferences in the world. The event brings together economists, financial market participants, academics, U.S. government representatives and news media to discuss long-term policy issues of mutual concern.
Courtesy of Mortgage Market Guide
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