Thursday – May 19, 2022
Existing Home Sales fell 2.4% in April from March to an annual rate of 5.61 million units versus 5.65 million expected and fell three months in a row. Sales were down 5.9% from April 2021. Sales fell in the South and West and rose modestly in the Northeast and Midwest. The median home sale price was $391,200, up 14.8% from April 2021 ($340,700) marking 122 consecutive months of year-over-year increases, the longest-running streak on record. Supply continues to run low with 2.2 months of homes for sale on the market, below the normal pace of six months.
Home borrowing costs paused and inched lower this week after the significant rise seen from a year ago. Freddie Mac reports that the 30-year fixed-rate mortgage slipped to 5.25% from 5.30% last week with an average of 0.9 in points and fees. A year ago the rate was 3%. The 15-year fell to 4.43% from 4.52%, also with a 0.9 point. A year ago that 15-year was 2.29%. Sam Khater, Freddie Mac’s Chief Economist said, “Economic uncertainty is causing mortgage rate volatility,” said Sam Khater, Freddie Mac’s Chief Economist, “As a result, purchase demand is waning, and homebuilder sentiment has dropped to the lowest level in nearly two years. Builders are also dealing with rising costs, meaning this posture is likely to continue.”
Redfin reports growth in median asking rents slowed for the first time in a year in April, up 15% from the 17% increase seen annually in March. However, in Austin, Portland and South Florida rents surged more than 30%. Of the the 50 most-populous regions in the country, only three saw rents decline in April from a year ago. “The fact that rents are growing at a slower pace may be a very early sign that the Fed’s tactic of raising interest rates to quell inflation is working,” said Redfin Chief Economist Daryl Fairweather. “However, rents are still growing at nearly double the rate of overall inflation.”
Courtesy of Mortgage Market Guide
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Wednesday – May 18, 2022
April Housing Starts fell 0.2% from March to an annual rate of 1.724 million units versus 1.765 million expected. Starts were up 14.6% from a year ago. Building Permits dropped 3.2% to 1.819 million versus 1.812 million. Single-family starts rose 3.7% annually and were down 7.3% monthly. Multi-family dwellings soared nearly 43% annually up 17% monthly. Sales fell across the four major regions of the country.
Mortgage rates fell in the latest week after pushing higher since the beginning of the year. The 30-year fixed-rate mortgage fell 5.49% from 5.53% with 0.74 points for the week ended May 13, 2022, reports the MBA. Within the data it showed that the Market Composite Index, a measure of total mortgage application volume, declined 11%, the Refinance Index fell 10% and the Purchase Index saw a 12% drop. Spokesperson Joel Kan said, “General uncertainty about the near-term economic outlook, as well as recent stock market volatility, may be causing some households to delay their home search.”
Homebuyer competition falls for the second-straight month, hitting lowest level in over a year, reports Redfin. The technology-powered real estate brokerage reported that 61% of home offers faced bidding wars in April, down from 63% a month earlier and down from 67% a year earlier as higher borrowing costs pushed buyers to drop out. “The meteoric rise in mortgage rates is prompting more house hunters to back out of the market, causing competition to cool,” said Redfin Chief Economist Daryl Fairweather.
Courtesy of Mortgage Market Guide
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Tuesday – May 17, 2022
April Retail Sales rose a strong 0.9%, which was inline with estimates while March was revised higher to 1.4% from 0.7%. Core Retail Sales were up 0.6% versus 0.4% while March was revised higher to 2.1% from 1.4%. However, Retail sales aren’t adjusted for inflation. That means that while consumers have continued to spend more, they are likely getting less due to surging prices for goods and services.
Home builder sentiment saw a steep decline this month due in part to rising borrowing costs and growing affordability woes. The NAHB Housing Market Index fell to 69 in May from 77 in April and below the 75 expected. It was the fifth straight month of declines and the lowest reading since June 2020. “The housing market is facing growing challenges,” said NAHB Chief Economist Robert Dietz. “Building material costs are up 19% from a year ago, in less than three months mortgage rates have surged to a 12-year high and based on current affordability conditions, less than 50% of new and existing home sales are affordable for a typical family. Entry-level and first-time home buyers are especially bearing the brunt of this rapid rise in mortgage rates.”
Inflation at the gas pump continues with prices hitting record highs again today with nearly 50 states above the $4 mark. The national average price for a regular gallon of gasoline hit a record high of $4.52 today while diesel prices hit a record high of $5.57. “The high cost of oil, the key ingredient in gasoline, is driving these high pump prices for consumers,” said Andrew Gross, AAA spokesperson. “Even the annual seasonal demand dip for gasoline during the lull between spring break and Memorial Day, which would normally help lower prices, is having no effect this year.”
Courtesy of Mortgage Market Guide
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Monday – May 16, 2022
A key manufacturing index fell well below recent levels while Goldman Sachs cuts its economic growth forecasts for 2022. The New York State Manufacturing Index fell to 11.6 this month from 24.60 in April and below the 17 expected. New orders declined, and shipments fell at the fastest pace since early in the pandemic. Looking ahead, those surveyed showed subdued optimism about the six-month outlook.
Economic growth across the U.S. is slowing down from the post-shutdown activity. The Atlanta Fed’s GDNow (Gross Domestic Product) forecast sees a 1.8% increase for Q2 2022 down from 2.6% in its last release. If the 2nd quarter comes in at just above 1% and you couple that with the -1.4% 1st quarter GDP – there is essentially zero growth in the first half of 2022. GDP
measures price changes in goods and services purchased by consumers, businesses, government, and foreigners, but not importers.
Here are a few highlights from the recent New York Federal Reserve’s U.S. Economy in a Snapshot. Hourly wage growth moderated, real disposable income continued to trend down, and the saving rate fell. Consumer purchases grew at a solid pace, business spending on equipment picked up. Real consumer spending was near its trend path. Payroll employment continued to grow at a solid pace in April, the unemployment rate was unchanged, and the employment-to-population ratio fell slightly. Monthly core PCE inflation slowed over the course of Q1, although CPI data suggest a pickup in April. The 10-year Treasury yield rose with a higher expected path of short-term interest rates.
Courtesy of Mortgage Market Guide
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