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Daily Rate Update: May 17th-21st

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Thursday – May 20, 2021

First-time unemployment claims fell to the lowest level since the shutdowns began last year. Weekly Initial Jobless Claims decreased to 444,000 for the week ended May 15, 2021, from 478,000 in the previous week. To put it into perspective, the week of April 4, 2020 claims were over 6 million as the shutdowns took hold. Continuing claims, or those receiving benefits for at least two weeks straight, were at 3.751 million from 3.640 million. With more and more states reopening their economies, many unemployed Americans should be able to go back to work.

Home borrowing costs inched higher this week and remain at historically low levels. Freddie Mac reports that the 30-year fixed-rate mortgage rose six basis points to 3.0% with 0.6 in points and fees. A year ago at this time, the rate was 3.24%. It is up from 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “Despite this favorable rate climate, there remains a shortage of homes for sale. The lack of housing supply has been compounded by labor disruptions and expensive building materials that are driving up the cost of new housing, making it difficult for homebuyers to find homes to purchase.”

Courtesy of Mortgage Market Guide 

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Tuesday – May 18, 2021

April Housing Starts fell nearly 10% from March to an annual rate of 1,569,000 units and below the 1,715,000 expected. Single-family starts, where the market desperately needs more units, fell 13% from March. Lumber costs have skyrocketed over the past year while the supply chain was disrupted by the shutdowns across the country. Multi-family units were up 4% monthly. The annual gains were up huge given the shutdowns that took place last year and subsequent liftoff. Total Housing Starts were up 67% annually, single-family starts were up 58% while multi-family dwellings were up 98%.

Oil prices continue to gush higher to $65.95/barrel, up from $48.52 on December 31, 2020, as the nation is now almost fully reopened and as demand picks up. The national average price for a regular gallon of gasoline across the country is at $3.04, up from $2.87 a month ago as prices try to stabilize after the recent disruptions. The pipeline disruption, increasing demand and the U.S. dollar erosion are causing the increased pain at the pump. A year ago the price for a gallon of gas was $1.87.

The largest retailer in the U.S., Walmart, reports that stimulus checks, as well as an opening economy, lifted sales at stores across the nation in its quarterly earnings report. Revenues in the first quarter were $138.31 billion versus $131.97 billion expected while earnings per share came in at $1.69, well above the $1.22. “Our optimism is higher than it was at the beginning of the year,” Walmart CEO Doug McMillon said in the earnings announcement Tuesday morning. “In the U.S., customers clearly want to get out and shop.”

Courtesy of Mortgage Market Guide 

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Monday – May 17, 2021

The home building market continues to experience pains as rising costs continue to plague the market. Despite rising costs, the NAHB Housing Market Index remained at 83 this month and near record highs for newly built single-family homes. Any number over 50 indicates that more builders view conditions as good than poor. The component measuring traffic of prospective buyers fell one point to 73. “Low interest rates are supporting housing affordability in a market where the cost of most materials is rising,” said NAHB Chief Economist Robert Dietz. “In recent months, aggregate residential construction material costs were up 12 percent year-over-year, and our surveys suggest those costs are rising further.

Lumber prices are retreating from record highs which is a positive sign for home builders who have been dealing with soaring prices over the past year. Prices have fallen to near $1,300 from the record high $1,700 seen in the past two weeks as production continues to ramp up and as commodity traders book some profits. “Rising materials prices are significantly driving up prices for single-family homes and apartments,” wrote NAHB Chief Economist Robert Dietz. “Combined with expectations of rising interest rates, these higher prices place additional pressure on housing affordability, which continued to decline in the first quarter.”

Courtesy of Mortgage Market Guide 

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