Wednesday – August 31, 2022
Mortgage rates surged in the MBA’s latest survey and have been in a range the past few months. The 30-year fixed-rate mortgage rose to 5.80% from 5.65% with 0.71 points for the week ended August 19, 2022. Within the data, it showed that the Market Composite Index fell 3.7%, the Refinance Index lost 8% and the Purchase Index was down 2%. Spokesperson Joel Kan said, “Mortgage rates have been volatile over the past month, bouncing between 5.4% and 5.8%.”
Job growth in the private sector rose in August but came in below expectations. The August ADP Private Payrolls Report came in at 132,000 versus the 288,000 expected. Year-over-year change in annual pay was 7.6% in August, in line with monthly readings since Spring 2022. “Our data suggests a shift toward a more conservative pace of hiring, possibly as companies try to decipher the economy’s conflicting signals,” said Nela Richardson, chief economist, ADP. “We could be at an inflection point, from super-charged job gains to something more normal.
The U.S. economy contracted by 0.9% in the Q2 2022 (i.e., quarter-over-quarter performance expressed as an annualized result) on the heels of a 1.6% contraction in the Q1 2022. That’s the 8th time the United States has suffered two or more consecutive down quarters since 1960, meeting one often-used definition of a recession. Officially, the United States has experienced nine recessions since 1960.
Courtesy of Mortgage Market Guide
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Tuesday – August 30, 2022
In housing news, home price gains are decelerating after the big gains seen the past few years. The S&P Case-Shiller 20-City Home Price Index for June rose 18.6% annually, down from 20.5% in May. The U.S. National Home Price NSA Index, covering all nine U.S. census divisions, saw an 18.0% annual gain in June, down from 19.9% in May. Expect a further slowdown in price gains in the months ahead. A healthy and more normal housing market would see single-digit annual price gains. The 20% year-over-year gains were unsustainable.
After three of months of declines, Consumer Confidence rose to 103.2 this month versus the 97.9 expected and up from 95.3 in July. The Present Situation Index which is based on consumers’ assessment of current business and labor market conditions rose while the Expectations Index which is based on consumers’ short-term outlook for income, business, and labor market conditions jumped to 75.1 from 65.6. Looking ahead, August’s improvement in confidence may help support spending, but inflation and additional rate hikes still pose risks to economic growth in the short term.” Lynn Franco, Senior Director of Economic Indicators at The Conference Board said, “Looking ahead, August’s improvement in confidence may help support spending, but inflation and additional rate hikes still pose risks to economic growth in the short term.”
In related news, the FHFA reports that U.S. house prices rose 17.7% from Q2 2021 to Q2 2022. House prices were up 4.0% in Q2 2022 compared to Q1 2022, up 1.0% monthly from May. Over in the labor market, the Job Openings and Labor Turnover Survey (JOLTS) showed there were 11.2 million job openings at the end of July while there are about six million unemployed. The August Jobs Report will be released this Friday where it is expected that there were 300,000 new jobs created.
Courtesy of Mortgage Market Guide
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Monday – August 29, 2022
Fed Chair Powell spoke on Friday and sent a chill over the stocks markets with the Dow falling over 1,000 points. “While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” in Fed Chair Powell’s prepared remarks. “These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.” The Dow, S&P and NASDAQ are lower as the week kicks off.
There are no economic reports due for release today but it’s all about the jobs data this week with ADP on Wednesday and the Jobs Report on Friday, both for August. The July Jobs Report saw a gain of 528,000 new workers which was well above expectations. and after a two-month hiatus, ADP Private Payrolls will re-debut this week. Other reports will be the S&P Home Price Index, Weekly Claims and manufacturing.
Courtesy of Mortgage Market Guide
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