Thursday – August 26, 2021
First-time unemployment claims were essentially unchanged 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 rose by 6,000 to 355,000 for the week ended August 21, 2021. 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 2.862 million from 2.865 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 2.87% with 0.6 in points and fees. The record low was 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “Overall, rates continue to be low, with a window of opportunity for those who did not refinance under three percent. From a homebuyer perspective, purchase application demand is improving, but the major obstacle to higher home sales remains very low inventory for consumers to purchase.”
The Bureau of Economic Analysis reports that economic activity increased in April, May and June. Gross Domestic Product (GDP) increased at an annual rate of 6.6% in the second quarter of 2021, reflecting the continued economic recovery, reopening of establishments and continued government response related to the COVID-19 pandemic. Within the report, it showed that consumer spending surged by nearly 12% in the quarter.
Courtesy of Mortgage Market Guide
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Wednesday – August 25, 2021
Home borrowing costs declined modestly in the latest week and remain just above record lows. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage fell three basis points to 3.03% with 0.29 in points for the week ending August 20, 2021. Within the report it showed that the Market Composite Index rose 1.6%, the Purchase Index increased 3.0% while the Refinance Index was up1%. Spokesperson Joel Kan said, “First-time buyers looking for lower-priced homes are being helped by the recent uptick in for-sale inventory for both newly built homes and existing homes.”
The Fed-sponsored Jackson Hole Symposium at the end of the week has gone virtual due to the spread of the Delta variant. Fed Chair Powell’s speech on the Friday ZOOM call from the Jackson Hole Symposium looms, but there is not much of a chance for the Chair to impact the financial markets but rather trying to keep the markets calm amidst all of this uncertainty. No one knows exactly how mortgage bonds will react if and when the Fed tapers – but seeing they are the buyer of last resort and another several trillion in bills are being debated – how does the Fed pull the plug and potentially allow rates to move meaningfully higher?
Courtesy of Mortgage Market Guide
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Tuesday – August 24, 2021
Sales of new single-family homes were up in July from June which was revised higher. New Home Sales rose by 708,000 in July from the 701,000 recorded in June and just above the 700,000 expected. Sales were down nearly 28% from the July 2020 reading of 972,000. The median sales price of new houses sold in July 2021 was $390,500. The average sales price was $446,000. Inventories stood at a normal pace of 6.2 months at the current sales rate. Sales were down 24% in the Northeast, and down 20% in the Midwest, up 1.3% in the South and up 14% in the West.
The latest number of homes in forbearance were unchanged in the latest data with exits at their slowest pace in a year. The MBA reports that its Forbearance and Call Volume Survey saw the total number of loans now in forbearance at 3.26% from 3.25% as of August 15, 2021. The MBA estimates that 1.6 million homeowners are in forbearance plans. The share of Fannie Mae and Freddie Mac loans in forbearance fell 3 basis points to 1.66%. “The share of loans in forbearance was little changed, as both new requests and exits were at a slower pace compared to the prior week. In fact, exits were at their slowest pace in over a year,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist.
Goldman Sachs announced this morning that the investment bank has raised its odds on the Federal Reserve beginning to taper its QE asset purchase program in November from 25% to 45%. The Fed would scale back purchases by $15B per month, $10B in Treasuries and $5B in Mortgage Bonds, and that taper amount would occur at each subsequent FOMC meeting. Unless there is a dramatic improvement in Afghanistan, along with material improvement in the labor market in the face of rising COVID cases and an extension of unemployment benefits – the chance of a taper in November is slimmer.
Courtesy of Mortgage Market Guide
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Monday – August 23, 2021
Sales of existing homes rose for the second straight month due in part to a modest uptick in inventories. July Existing Home Sales rose 2% from June to an annual rate of 5.99 million units versus the 5.85 million expected. There is currently a 2.6-month supply of homes, up slightly from the 2.5-month figure recorded in June but well below the normal pace of six months.
The median existing-home price rose to $359,900, up 17.8% from July 2020 ($305,600). “We see inventory beginning to tick up, which will lessen the intensity of multiple offers,” said Lawrence Yun, NAR’s chief economist. “Much of the home sales growth is still occurring in the upper-end markets, while the mid-to lower-tier areas aren’t seeing as much growth because there are still too few starter homes available.”
The Fed’s favorite inflation gauge, the Core PCE, will be delivered on Friday and is yet another hurdle for the markets. The year-over-year rate is expected to be 3.6% but the markets will be closely watching the month-over-month data. The recent July Consumer Price Index saw a monthly decline in consumer inflation. With the 10-year yield at 1.26% – inflation doesn’t appear to be the driver here.
Courtesy of Mortgage Market Guide
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