Friday – February 25, 2022
Inflation pressures continue to haunt consumers across the nation as prices for goods and services continue to increase. The Fed’s favorite inflation gauge, the Core PCE, rose by 5.2% year-over-year in January, inline with estimates but was the highest number since April 1983. The monthly figure rose 0.5%, also matching expectations. In other news, Durable Orders, or goods meant to last at least three years like a washing machine, beat expectations while personal spending rose and incomes were flat in January.
Consumer sentiment continues to hover near-decade lows, according to the University of Michigan Survey of Consumers. The Index fell to 62.8 in the final reading in February from 67.2 in January. Richard Curtin, director of the surveys said, “The descent resulted from inflationary declines in personal finances, a near-universal awareness of rising interest rates, falling confidence in the government’s economic policies, and the most negative long-term prospects for the economy in the past decade.”
Just the facts: Released earlier this month by the U.S. Census Bureau, the homeownership rate in Q4 2021 was 65.5% from 65.4% in Q3 2021 and was 65.8% in Q4 2020. National vacancy rates in Q4 2021 were 5.6% for rental housing and 0.9% for homeowner housing. The rental vacancy rate was 0.9 percentage points lower than the rate in Q4 2020 (6.5%) and not statistically different from the rate Q3 2021 (5.8%).
Courtesy of Mortgage Market Guide
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Thursday – February 24, 2022
Sales of new single‐family houses in January 2022 were at a seasonally adjusted annual rate of 801,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.5% below the revised December rate of 839,000 from 811,000 and is 19.3% below the January 2021 estimate of 993,000. The median sales price of new houses sold in January 2022 was $423,300. The average sales price was $496,900. There was a supply of 6.1 months of homes for sale on the market at the current sales rate.
Home borrowing costs inched lower this week with some respite seen because of the Russian/Ukraine tensions. Freddie Mac reports that the 30-year fixed-rate mortgage slipped to 3.89% from 3.92% last week with 0.8 in points and fees. The record low was 2.65% on January 7, 2021. The 15-year rate averaged 3.14% with a 0.7 average point. Sam Khater, Freddie Mac’s Chief Economist said, “As we enter the spring homebuying season with higher mortgage rates and continued low inventory, we expect home price growth to remain firm before cooling off later this year.”
Redfin reports that 70% of home offers faced bidding wars in January from 67.7% in December and 61% in January 2021. That’s the highest since April 2020, when Redfin began recording this data. The jump in home loan rates in January caused fence dwellers to jump into the purchase market before rates increased even further. The 30-year fixed-rate mortgage was near 3% at the end of 2021 and shot up to 4% in the recent numbers. “Rising mortgage rates are intensifying an already-severe shortage of homes for sale because buyers are feeling more urgency to buy while homeowners are feeling less urgency to sell, an imbalance that’s fueling an increase in competition,” said Redfin Chief Economist Daryl Fairweather.
Courtesy of Mortgage Market Guide
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Wednesday – February 23, 2022
Home borrowing costs were essentially unchanged in the latest week and the higher rates coupled with lofty homes prices are slowing demand a bit. The MBA reports that the 30-year fixed-rate mortgage was 4.06% with 0.48 in points for the week ending February 18. Within the data it showed that the Market Composite Index fell 13.1%, the Refinance Index dropped 15.6% and the Purchase Index declined 10.1%. An MBA spokesperson said, “Purchase applications, already constrained by elevated sales prices and tight inventory, have been impacted by these higher rates and declined for the third straight week.”
Oil prices are pulling back after the recent seven-year highs though prices are expected to rise further. Gas prices are forecasted to rise to a national average price of $5 for regular this summer, currently at $3.53. The price for a barrel of West Texas Intermediate is now $93.27/bbl … in April of 2020, the price fell to -$43. If oil continues at current and higher levels, it will continue to be a tax on consumers and could put pressure on the Fed to back off on rate hikes. If consumers are paying more for energy, it will come at the expense of other goods and services and negatively impact economic growth or Gross Domestic Product.
A day after the closely watched S&P 500 fell into correction territory, stocks opened higher but have quickly fallen into negative territory as headlines emerge from Eastern Europe. The S&P 500 closed at a record high of 4,796.56 on January 3 and ended at 4,304.76 yesterday, a 10% correction. This is the 33rd correction or bear market since 1980. However, the return 1-year later is nearly 25% and higher 90% of the time.
Courtesy of Mortgage Market Guide
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Tuesday – February 22, 2022
Home prices rose in December to frothy levels. The S&P Case-Shiller 20-City Home Price Index for December 2021 rose 18.6% year over year from 18.3% in November. The National Index was up 18.8%, unchanged. The FHFA reports that U.S. house prices rose 17.5% from Q4 2020 to Q4 2021. Prices were up 3.3% in Q4 2021 compared to Q3 2021. Monthly, December was up 1.2% from November. The sector has seen rising rates in the past two months so it will be seen if the big gains can be sustained.
Good news, bad news and continued uncertainty surrounding the Ukraine/Russian conflict send oil prices higher, yields on a roller-coaster ride and stocks lower. The 10-year yield hit 1.84% overnight on the flight-to-safety trade but Germany hitting the pause button on Nord Stream 2 and word President Biden is going to introduce new Russia sanctions is giving fresh hope of a political resolution rather than a military one. The good news hurts bonds and the idea this will drag on is causing a spike in oil prices. The VIX, or the fear index for stocks, has risen … higher readings mean there is more fear in the equity markets as traders buy put options, a bearish trade, to hedge against long positions. This is typically a contrarian indicator.
Realtor.com reports that in January 2022, the national median rent had reached $1,789, up 19.8% year-over-year, increasing over five times as fast as the 3.4% increase seen before the shutdowns in March 2020. Higher prices can also be seen at the pumps. The national average price for a regular gallon of gasoline has risen to $3.53 from $3.49 a week ago, from $3.32 a month ago and from $2.63 a year ago. Prices for goods and services have jumped over the past year as inflation surges.
Courtesy of Mortgage Market Guide
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