Thursday – August 19, 2021
First-time unemployment claims fell to a post-shutdown low in the latest week as the sector continues to get back to full strength. At present, there are 10.1 million jobs available across the nation, according to the Bureau of Labor Statistics. Weekly Initial Jobless Claims fell to 348,000 for the week ended August 14, 2021, from 377,000 in the previous week. To put it into perspective, the week of April 4, 2020 claims were over 6 million as the shutdowns took hold. Continuing claims, or those receiving benefits for at least two weeks straight, fell to 2.820 million from 2.899 million. Many unemployed Americans should be able to go back to work as the enhanced unemployment benefits are set to expire next month.
Home borrowing costs were unchanged this week and remain just above historic lows. Freddie Mac reports that the 30-year fixed-rate mortgage held at 2.86% with 0.7 in points and fees. The record low was 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “Housing is in a similar phase of the economic cycle as many other consumer goods. While there is strong latent demand, low supply has caused prices to rise as shortages restrict the amount of sales activity that otherwise would occur.”
Gas prices at the pumps leveled off this week after the higher prices seen in 2021. The national average price for a regular gallon of gasoline is at $3.17, the same as it was a month ago and up $1 from a year ago. Ahead of the Labor Day Weekend, prices may inch higher, says motor club AAA. AAA also said that ‘gas demand typically drops considerably after the final holiday weekend of summer, bringing much needed relief to American drivers when they fill-up this fall.’
Courtesy of Mortgage Market Guide
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Wednesday – August 18, 2021
July Housing Starts fell 7% from June to an annual rate of 1,534,000 units versus 1,610,000 million expected as builders continue to cite supply constraints and higher material costs for the pullback. But those woes may soon be loosening as production ramps up and as lumber prices have recently plunged to $456 from the record $1,700 seen in May. Building Permits rose 2.6% to 1,635,000. However, both starts and permits for single-family units declined on resistance of prospective buyers to higher prices and some hesitancy to build new homes due to the high costs for land, labor and materials.
Mortgage applications to purchase new homes plunged annually in July as well as monthly which is typical for late summer. The MBA reports that applications fell 27.4% annually from July 2020 and fell 4% monthly from June. The average loan size of new homes rose to a record-high $402,440 in July from $392,370 in June. “Mortgage applications for new home purchases declined in July – as is typical most summers when home sales start to moderate – but did come in at the second-strongest July reading since the inception of MBA’s survey in 2012,” said spokesperson Joel Kan.
Home borrowing costs inched higher in the latest week and remain just above record lows. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage rose seven basis points to 3.06% with 0.34 in points for the week ending August 13, 2021. Within the report it showed that the Market Composite Index fell 4%, the Purchase Index declined 1.0% while the Refinance Index decreased 5%. Spokesperson Joel Kan said, “Even though rates are seven basis points lower than the same week a year ago, the refinance index is around 8% lower. The eligible pool of homeowners who stand to benefit from a refinance is smaller now.”
Courtesy of Mortgage Market Guide
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Tuesday – August 17, 2021
The new Delta variant, along with restrictions, mandates and cash hoarding appears to have held back consumer spending in July. The $1,400 stimulus payments early in the year could have run out of steam as well. Retail Sales fell 1.1% in July from June and below the -0.2% expected. When excluding auto sales, the rate fell 0.4% compared to the gain of 0.2% expected. The markets will now await the Retail Sales number for August when the bulk of back-to-school sales will be made.
Home builder sentiment fell to a 13-month low this month due in part to rising material costs and supply shortages. The NAHB Housing Market Index fell five points to 75 in August from June. Any number over 50 indicates that more builders view conditions as good than poor. The rising costs and supply shortages have led to higher prices for homes and has caused sticker shock for prospective buyers.
Prices for single-family rental dwellings surged in the past 12 months due to the hot housing market. In June, rental prices were up 7.5% from June 2020 compared to the 1.4% for the 12 months ended June 2020. CoreLogic said, “In June, single-family rent growth reached its highest level since at least 2005 and continued to exceed pre-pandemic rates across all price tiers for the third consecutive month.”
Courtesy of Mortgage Market Guide
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Monday – August 16, 2021
Taper talk has escalated ahead of next week’s Jackson Hole Symposium. The Federal Reserve is currently purchasing up to $4.5 billion per day in Mortgage Backed Securities to hold rates low. Last week several Fed members expressed that taper talk, or cutting back on those purchases, should begin at September’s meeting with actual tapering to start in October. This is now gaining some steam but Fed Chair Powell has been rather dovish but we will see if that changes in the coming weeks.
China reports that several key economic data points fell more than expected on lingering worries surrounding the Delta variant. The new strain of virus has already disrupted pockets of the U.S. economy which has seen fresh mandates and restrictions. The Fed continues to say “the path of the economy will depend on the course of the virus.” If the Fed is true to their statement and there has been some disruption in economic activity, there is pressure on the Fed to do nothing as it relates to tapering.
Economic data is limited to Empire Manufacturing Index this morning with the number falling to 18.3 in August from 43 in July and below the 26 expected. There are no Treasury Note or Bond auctions this week. Retail Sales for July will be released on Tuesday to gauge the strength or weakness of consumer spending. Housing Starts and Building Permits for July will also be delivered along with the NAHB Housing Market Index.
Courtesy of Mortgage Market Guide
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