Friday – March 4, 2022
And the survey says … 678,000 jobs were created in February while December and January were revised higher by a total of 92,000. The key inflation measure within the report showed that average hourly earnings were flat while the year-over-year number fell to 5.1% from 5.5% and below the 5.8% expected. The Unemployment Rate slipped to 3.8% from 4%, the Labor Force Participation Rate inched higher to 62.3% though still below the 63.3 seen pre-shutdown of March 2020. The U6 number or total unemployed came in at 7.2%. So overall, a solid Goldilocks report with jobs created and less threat of wage-based inflation (by way of soft hourly earnings).
The FHFA recently reported that U.S. house prices rose 17.5% percent from Q4 2020 to Q4 2021 in its House Price Index. House prices were up 3.3% compared to Q3 2021. House prices rose in all 50 states and the District of Columbia between the fourth quarters of 2020 and 2021. House prices rose in all of the top 100 largest metropolitan areas over the last four quarters. Of the nine census divisions, the Mountain division recorded the strongest four-quarter appreciation. A spokesperson said, “More expensive housing has elevated affordability to become a broader concern as available supply remains limited.”
A recent survey by the TuffMutt Foundation shows that homeowners in the U.S. say that their backyards are one of the most important parts of their homes. Almost 75% said that a spacious backyard would be one of the top priorities when purchasing a home. Also, nearly a quarter of Americans who have a yard (24%) are spending more time in their yards now than before the COVID-19 pandemic. Kris Kiser, President and CEO of the TurfMutt Foundation said, “Americans have discovered that ‘backyarding’ is a better way to live and there’s no turning back. They are also willing to hire professionals and invest money into yard improvements.”
Courtesy of Mortgage Market Guide
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Thursday – March 3, 2022
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 3.76% from 3.89% 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, “While inflationary pressures remain, the cascading impacts of the war in Ukraine have created market uncertainty. Consequently, rates are expected to stay low in the short-term but will likely increase in the coming months.”
ATTOM reports that 3.27 million mortgages secured by residential property (1 to 4 units) were originated in Q4 2021, down 11% from Q3 2021 and down 13% from Q4 2020. Overall, lenders issued $1.06 trillion worth of mortgages in Q4 2021 … that was down 9% quarterly and 7% annually. ATTOM went on to say that refinance, purchase and home-equity mortgages were all down quarterly.
The service sector of the U.S. economy declined in February from January but remains in expansion territory. The ISM Service Index fell to 56.5 in February from the January reading of 59.9. A reading above 50 indicates the services sector economy is generally expanding; below 50 percent indicates the services sector is generally contracting. Weekly Initial Jobless Claims fell to multi-decade lows in the latest survey of 215,000 from 233,000 in the previous week.
Courtesy of Mortgage Market Guide
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Wednesday – March 2, 2022
After last week’s pause, home borrowing costs rose again in the latest survey with the higher rates and lofty homes slowing demand a bit. The MBA reports that the 30-year fixed-rate mortgage rose nine basis points to 4.15% with 0.44 in points for the week ending February 25. Within the data it showed that the Market Composite Index fell 0.7%, the Refinance Index rose 0.5% and the Purchase Index declined 2%. An MBA spokesperson said, “higher rates continue to push potential refinance borrowers out of the market.”
Private payroll growth increased in February with large businesses and leisure and hospitality seeing the big gains. ADP Private Payrolls for February rose by 475,000 versus the 378,000 expected while January was revised higher to 509,000 from a loss of 301,000. Broken down by size, small businesses lost 96,000 jobs, medium businesses gained 18,000 while large businesses jumped by 552,000. Nela Richardson, chief economist, ADP said, “Small companies lost ground as they continue to struggle to keep pace with the wages and benefits needed to attract a limited pool of qualified workers.”
Fed Chair Powell was in front of the House testifying on the state of the U.S. economy on Wednesday morning for his first of two scheduled appearances. Powell’s prepared speech read that the Fed is expected to raise rates this month by 25bp, expects inflation to decline over the course of 2022 and the slowdown from Omicron appears to have been brief. Mr. Powell went on to say that rates going up will probably begin to cool off housing demand. Need to move away from highly stimulative monetary policy settings. Economy is very strong, inflation well above target. Fed will be flexible in raising interest rates in the months ahead.
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Tuesday – March 1, 2022
CoreLogic reports that home prices nationwide, including distressed sales, rose 19.1% in January 2022 compared with January 2021, the highest level in at least 45 years. Monthly, prices rose 1.4% in January 2022 from December 2021. Looking ahead, prices are expected to rise by 0.2% from January 2022 to February 2022 and on a year-over-year basis by 3.8% from January 2022 to January 2023. “In December and January, for-sale inventory continued to be the lowest we have seen in a generation. Buyers have continued to bid prices up for the limited supply on the market,” said Dr. Frank Nothaft, Chief Economist for CoreLogic.
Oil prices continue to gush higher up nearly $10 at one point to a near 8-year high of $107/bbl for West Texas Intermediate as the Ukraine/Russian conflict continues. Gas prices continue to increase at a pace of a penny a day currently at $3.62 for regular. This is an onerous tax for businesses and consumers with the price expected to be $4 soon. Today’s national average of $3.61 is 26 cents more than a month ago and 90 cents more than a year ago.
Economic activity in the manufacturing sector rose in February as the overall economy increased a 21st consecutive month of growth, reports the Institute for Supply Management. The ISM Index rose to 58.6 from the January reading of 57.6 and above 58 expected. This figure indicates expansion in the overall economy for the 21st month in a row after a contraction in April and May 2020. Spokesperson Timothy R. Fiore said, “The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment.”
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Monday – February 28, 2022
Volatility continues to impact the markets as the Ukraine/Russian tensions reverberate across the globe with the safe-haven trade back in vogue as the week kicks off. The Dow ended last week on a high note with an 800+ point gain on Friday but a good chunk of those gains are being erased to start the week. The 10-year yield hit 2.01% on Friday and has fallen to 1.87%. Mortgage Bonds are also higher after bouncing off key levels. New sanctions, a meeting between officials from both countries along with continued fighting in the region casts a cloud of uncertainty which is pushing investors from around the world into the U.S. dollar and Treasury securities.
Forbearance filings inched higher for the week ending February 27 with an increase of 17,300 in the number of plans after a rise in the previous week, reports Black Knight. The company said this follows a typical pattern of intramonth increases. COVID forbearance plans represent 1.5% of all active mortgages or 790,000 plans. A year ago this time, 2.707 million homeowners were in pandemic related forbearance plans.
Two key labor market reports are on tap this week with recent data showing frothy gains for Non-Farm Payrolls (NFP). The January reading for ADP Private Payrolls will be released on Wednesday after last month’s loss of 301. The more closely watched government’s Jobs Report will be reported on Friday where it is expected both private and federal payrolls, NFP, rose 350,000 after Decemner’s gain of 500,000. The Bureau of Labor Statistics numbers show that in March of 2020, there were 1.498 million jobs lost and 20.493 million in April. Payrolls have increased by 19.1 million since but are down nearly 3 million since pre-pandemic levels.
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