Tulips in the sun in front of house

Daily Rate Update: May 19th-23rd

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Friday – April 23, 2021

The housing sector continues to be a bright light for the U.S. economy and should continue through 2021. The Census Bureau reports that New Home Sales rose 20% in March from February to an annual rate of 1,012,000 units. That was above the 912,000 expected. February was revised higher to 846,000 from 775,000. March New Home Sales of 1,012,000 units was the highest annual rate since August 2006.

The MBA reports that purchase originations are expected to hit a record high in 2021 due to strong demand across most of the U.S. It is expected that purchase originations are expected to reach 1.67 trillion this year. Total originations to decline 14% in 2021 to $3.28 trillion from last year’s record $3.87 trillion. Spokesperson Mike Fratantoni said, “Mortgage lenders should continue to prepare for the transition to a strong purchase market and slowing refinance activity.”

Courtesy of Mortgage Market Guide 

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Thursday – April 22, 2021

Home borrowing costs fell for the third straight week and remain at historically low levels. Freddie Mac reports that the 30-year fixed-rate mortgage declined from 3.04% last week to 2.97% this week with 0.7 in points and fees. A year ago at this time, the rate was 3.33%. It is up from 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “The drop in mortgage rates is good news for homeowners who are still looking to take advantage of the very low rate environment,”

First-time unemployment claims fell to the lowest level since the shutdowns began last year. Weekly Initial Jobless Claims decreased to 547,000 for the week ended April 17, 2021, from 586,000 in the previous week. To put it into perspective, the week of March 14, 2020 claims were 282,000. The week of March 21, 2020, they skyrocketed to 3.3 million as lockdowns took hold. Continuing claims, or those receiving benefits for at least two weeks straight, fell to 3.674 million from 3.708 million. With more and more states reopening their economies, many unemployed Americans should be able to go back to work.

Continued low inventories of homes for sale on the market dragged on the sector last month. Also, higher home prices and declining affordability were a cause in the decline. The NAR reports that Existing Home Sales fell 3.7% in March from February to an annual rate of 6,010,000 versus the 6,015,000 expected. The median home price for all housing types in March was $329,100, up 17.2% from March 2020 ($280,700). Total housing inventory stood at a 2.1-month supply at the current sales pace and near-historic lows.

Courtesy of Mortgage Market Guide 

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Wednesday – April 21, 2021

Home borrowing costs fell in the latest week and remain at historically low levels. The MBA reports that the 30-year fixed-rate mortgage declined seven basis points to 3.20% with 0.36 in points for the week ended April 16, 2021. The Market Composite Index, a measure of total mortgage loan application volume, rose 8.6% while the Purchase Index increased by 5.7%. The Refinance Index fell 10.4% and is down 23% from a year ago. Spokesperson Joel Kan said, “Mortgage rates dropped to their lowest levels in around two months, prompting a small resurgence in refinance activity after six weeks of declines.”

The housing market continues to be a beacon of light for the U.S. economy across many of the five priced sectors. The luxury market is flourishing as potential borrowers are looking for more space and big backyards. Affluent buyers with easy access to work from anywhere are benefitting from low rates and purchasing high-end homes, particularly in vacation destinations. Redfin reports that luxury-home sales rose 42% year over year in Q1 2021, well above the 7% gain seen in affordable-home sales. Also, the supply problem is not as bad in the luxury market due to the number of high-end homeowners putting their properties up for sale. New listings of luxury homes rose nearly 16% annually in Q1 with listings dropped in most other price tiers. Redfin’s five pricing tiers are luxury, expensive, mid-priced, affordable and most affordable.

Courtesy of Mortgage Market Guide 

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Tuesday – April 20, 2021

Fannie Mae released its Economic & Housing Outlook for March revealing that the economic recovery kicks into high gear while the housing market faces continued tight supply. Fannie Mae is forecasting that Gross Domestic Product to rise by 6.8% in 2021 and 3% in 2022. Total annual home sales are expected to increase by 6.2% higher than 2020. Fannie Mae’s quarterly home price forecast is now at a gain of 8% in 2021 (previously 4.2%), followed by a deceleration to 2.9% in 2022 (previously 2.5%). Overall single-family mortgage market originations in 2021 and 2022 to total $4.0 trillion and $3.0 trillion, up from $3.9 trillion and $2.9 trillion, respectively.

After the big surge earlier in the year, gas prices have leveled off though they are much higher than last year this time. Due to a ramp up in refinery utilization, which is back to pre-pandemic levels, and higher gasoline stocks, prices have been mostly flat for the past 2-3 weeks. Motor Club AAA reports that the national average price for a regular gallon of gasoline is at $2.87, unchanged from a month ago but up from $1.81 a year ago. A AAA spokesperson says prices could inch higher in the coming weeks.

Courtesy of Mortgage Market Guide 

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Monday – April 19, 2021

As the week kicks off, bonds are slightly lower in the absence of any geopolitical or economic headlines so far today while yields inch higher. The uptick in yields is also putting some pressure on stocks as the are lower and hover near record highs. There will be no Fed speak this week as the quiet period begins ahead of next week’s two-day FOMC meeting. New and Existing Home Sales will be released later in the week. Earnings season will be in full bloom this week after Coca-Cola easily beat expectations this morning on both profit and revenue. Investors will be looking hard at the numbers to gauge if the economy is recovering from the COVID impact.

Due to the recent decline in mortgage rates, Black Knight reports that another two million potential borrowers could save an average of almost $300 a month on a refinance. The report showed that high-quality refinance candidates rebounded back to 13 million last week with the potential to add $3.6 billion into homeowners wallets. California was the top state for the number of candidates with 1.75 million with $672 million in savings in payments and interest.

Courtesy of Mortgage Market Guide 

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