Daily Rate Update: March 14th-18th

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Friday – March 18, 2022

Existing Home Sales fell in February continuing a seesaw pattern due in part to rising borrowing costs and sustained price increases. Existing Home Sales fell 7.2% from January to an annual rate of 6.02 million units versus the 6.10 million expected. Sales were down 2.4% from one year ago. Sales fell in all four major regions across the nation. The median price grew to $357,300, up 15.0% from one year ago.

The median price increase marks 120 consecutive months of year-over-year price increases, the longest-running streak on record. Homes for sale on the market (inventories) were at 1.7 months from the record low 1.6 months seen in January. “Monthly payments have risen by 28% from one year ago – which interestingly is not a part of the consumer price index – and the market remains swift with multiple offers still being recorded on most properties,” said Lawrence Yun, NAR’s chief economist.

Gas prices at the pumps eased this week from last week’s record highs as oil fell from last week’s frothy numbers. West Texas Intermediate oil hit $130 last week fueling the national average price for a regular gallon of gas to a record high $4.33. The current price has fallen to $4.27 while the price of oil hit $94 a barrel early this week before moving up to $104. A year ago the price of gas was $2.88

Courtesy of Mortgage Market Guide 

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Thursday – March 17, 2022

February Housing Starts rose 6.8% from January to an annual rate of 1.769 million units versus the 1.690 million expected and were up 22% year over year. Total starts rose in the Northeast, Midwest and South while declining in the West. Single-family starts were up 5.7% monthly and up 13.7% year over year. Starts rose in the four major regions of the U.S. Building Permits, a sign of future construction, fell 1.9% to 1.859 million versus the 1.850 million expected.

Home borrowing costs rose this week as they continue their trek higher. Freddie Mac reports that the 30-year fixed-rate mortgage rose to 4.16% from 3.85% with an average 0.8 in points and fees. The 15-year rose to 3.39% from 3.09%, also with a 0.8 point. Sam Khater, Freddie Mac’s Chief Economist said, “While home purchase demand has moderated, it remains competitive due to low existing inventory, suggesting high house price pressures will continue during the spring homebuying season.”

In economic news, the Philadelphia Fed Manufacturing Index in March came in at 27.4, above the 15 expected and up from 16 in February, the highest since November 2021. Within the report, it showed the highest employment reading ever. However, the data did show that the prices paid index rose to its highest level since 1979. The Labor Department reports that Weekly Initial Jobless Claims remain low at 214,000.

Courtesy of Mortgage Market Guide 

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Wednesday – March 16, 2022

After declining the week of March 4 for the first time in 12, mortgage rates resumed their upward bias last week, reports the MBA. The 30-year fixed-rate mortgage rose to 4.27% from 4.08% with 0.44 in points for the week ending March 11. Within the data it showed that the Market Composite Index fell 1.2%, the Refinance Index decreased 3% and the Purchase Index gained 1%. An MBA spokesperson said, “Mortgage rates continue to be volatile due to the significant uncertainty regarding Federal Reserve policy and the situation in Ukraine.”

After the frothy numbers seen in January, consumers came back down to earth and spent less at retailers but the numbers are echoing the data seen just before the shutdowns in March 2020. February Retail Sales rose 0.3% down from 4.9% in January and below the 0.4% expected. The Core rate, which excludes spending on automobiles, gasoline, building materials, and food services, was up 0.2% down from 4.4% and well below the 0.9% expected. In January of 2020, Retail Sales rose 0.3% so you say not much of a difference. However, in January 2020 inflation was extremely low while this time around inflation has exploded and the cost of goods and services are much higher now than in January 2020.

Supply constraints, rising costs along with the prospect of higher mortgage rates dented home builder sentiment this month though buyer demand remains fairly strong. The NAHB Housing Market Index, a measure of home builder sentiment, fell to 79 in March from 81 in February. Any number over 50 indicates that more builders view conditions as good than poor. NAHB Chief Economist Robert Dietz said, “While low existing inventory and favorable demographics are supporting demand, the impact of elevated inflation and expected higher interest rates suggests caution for the second half of 2022.”

Courtesy of Mortgage Market Guide 

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Tuesday – March 15, 2022

Redfin reports that demand for vacation homes in February dropped to the lowest level in nearly two years though demand was still up 35% from pre-pandemic levels, that’s significantly lower than the 87% increase the month before. In February, primary residence purchases were higher than vacation homes for the first time since the pandemic began. “Rising mortgage rates, combined with rising home prices, are hitting the second-home market much harder than the primary-home market,” said Redfin Chief Economist Daryl Fairweather. “That’s largely because vacation homes are optional. People don’t need a second home, but they do need a place to live.”

Year-over-year wholesale inflation rose to a record high in February but the monthly numbers declined. The year-over-year Producer Price Index (PPI) jumped to a record high of 10% in February, inline and matched January. The monthly PPI rose 0.8% versus the 0.9% expected and down from January’s 1.2%. Monthly Core PPI rose just 0.2% month over month, down from 1% last month and below the 0.6% anticipated. Core PPI came in at 8.4% year over year, well below the 8.7% expected. The core rate strips out volatile food and energy.

In other economic news, the Empire Manufacturing Index for March came in at -11.80 as economic growth declines. That was below 7.0 expected and down from 3.10 in February, its lowest level since May 2020. Within the report, it did show that labor market indicators pointed to a modest increase in employment and a slightly longer workweek. On the economic growth front, the Atlanta Fed attempts to provide a real-time GDP reading with their GDPNow report with the latest forecast for Q1 2022 GDP coming in at +0.5%. That is well below the 7% gain seen in Q4 2021.

Courtesy of Mortgage Market Guide 

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Monday – March 14, 2022

The New York Fed released its Survey of Consumer Expectations for February revealing that consumer spending growth expectations spiked, while inflation expectations edge back up. The findings show that median one-year-ahead inflation expectations increased to 6.0% in February from 5.8% in January. Median year-ahead home price change expectations decreased to 5.7% from 6.0%. Median expectations about year-ahead price changes for food and gas increased by 3.3 and 1.5 percentage points to 9.2% and 8.8%, respectively.

It’s Fed week! The two-day Federal Open Market Committee meeting kicks off on Tuesday and ends Wednesday with the 2:00 p.m. ET release of the monetary policy statement. It is expected that the Fed will raise the short-term Fed Funds Rate (FFR) by 0.25% while the Fed’s massive balance reduction will be discussed. The FFR is the rate at which commercial banks borrow and lend their excess reserves held at the Federal Reserve Banks to each other overnight. The current rate is 0.25% making the Prime Rate 3.25% … FFR + 3 points.

AAA reports that after hitting $130 a barrel for crude oil early last week, the price has dropped to just over $100 thus halting the surge in the price of gas at the pumps. The motor club reports that after hitting an all-time high of $4.32 last week for a regular gallon of gasoline, the price has remained at that level. Today’s national average for a gallon of gas is $4.32, which is 26 cents more than a week ago, 84 cents more than a month ago, and $1.47 more than a year ago.

Courtesy of Mortgage Market Guide 

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