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Daily Rate Update: May 24th-28th

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Thursday – May 27, 2021

First-time unemployment claims fell to the lowest level since the shutdowns began last year. Weekly Initial Jobless Claims decreased to 406,000 for the week ended May 22, 2021, from 444,000 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 3.642 million from 3.738 million. With all U.S. having reopened their economies, many unemployed Americans should be able to go back to work.

Home borrowing costs slipped this week and remain at historically low levels. Freddie Mac reports that the 30-year fixed-rate mortgage fell five basis points to 2.95% with 0.7 in points and fees. A year ago at this time, the rate was 3.15%. It is up from 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “Substantial opportunity continues to exist today, as nearly $2 trillion in conforming mortgages have the ability to refinance and reduce their interest rate by at least half a percentage point.”

Low inventories of homes for sale on the market continue to be a thorn in the side of the housing market. The NAR reports that April Pending Homes Sales fell 4.4% from March versus the gain of 1.5% expected. On an annual basis, sales surged 51.7% as last year’s shutdowns severely hindered the market as a whole. “Contract signings are approaching pre-pandemic levels after the big surge due to the lack of sufficient supply of affordable homes,” said Lawrence Yun, NAR’s chief economist. “The upper-end market is still moving sharply as inventory is more plentiful there.”

Courtesy of Mortgage Market Guide 

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Wednesday – May 26, 2021

Home borrowing costs inched higher last week and remain at historically low levels. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage rose to 3.18% from 3.15% with 0.35 in points for the week ending May 21, 2021. The Market Composite Index, a measure of total mortgage loan application volume, fell 4.2%, while the Purchase Index rose by 2%. The Refinance Index declined by 7.2% and is down 9% from a year ago. Spokesperson Joel Kan said, “Demand is robust throughout the country, but homebuyers continue to be held back by the lack of homes for sale and rapidly increasing home prices.”

Motor club AAA reports that gas prices this Memorial Day Weekend are expected to be at the highest in seven years due to a spike in demand. Also, oil supply is on the low side as production has not yet come back to pre-pandemic levels. The national average price for a regular gallon of gasoline is $3.04 and is expected to move higher this summer. That is up from $2.88 a month ago and $1.96 a year ago. AAA says that 37 million are expected to travel this weekend, mostly by car and plane, up 60% from last year’s holiday weekend. Jeanette McGee, AAA spokesperson said, “With the increase in travel demand, gas prices are going to be expensive no matter where you fill up, so plan ahead. The AAA app can help to find the best price.”

Courtesy of Mortgage Market Guide 

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Tuesday – May 25, 2021

Sales of new single‐family houses in April 2021 were at a seasonally adjusted annual rate of 863,000, according to estimates released today by the U.S. Census Bureau. That was down nearly 6% monthly and below the 980,000 expected. Due to the lock downs last year and with little activity seen in April 2020, sales are up a whopping 48.3% year over year. The four major regions across the country saw losses on a monthly basis with big gains seen annually. The median sales price of new houses sold in April 2021 was $372,400. The average sales price was $435,400. Supply of homes for sale on the market is at 4.4 months at the current sales rate.

After the big rebound seen over the past four months, the Consumer Confidence Index was unchanged in May at 117.2 from 117.5 in April. Consumers’ appraisal of current conditions improved in May while optimism regarding the short-term outlook edged lower in May. Consumers were also less upbeat about the job market as the proportion expecting more jobs in the months ahead fell. On the income front, some consumers expect their incomes to increase in the next six months. Lynn Franco, Senior Director of Economic Indicators at The Conference Board said, “Overall, consumers remain optimistic, and confidence should remain resilient in the short term, as vaccination rates climb, COVID-19 cases decline further, and the economy fully reopens.”

The sort of backward looking Case-Shiller 20-City Home Price Index for March saw prices surge 13.3% from March 2020, the largest annual increase since December 2013. The National Home Price Index, covering all nine U.S. census divisions, jumped 13.2% annually, up from 12.0% in the previous month. The same ongoing problems continue to hit the housing industry … the lack of supply along with rising material costs and constrained supply chains.

Courtesy of Mortgage Market Guide 

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Monday – May 24, 2021

Fannie Mae released its market commentary for May revealing that the economy is expected to heat up through the summer as inflation risks mount. In addition, a lack of listings and increasing supply constraints continue to limit existing and new home sales. Fannie Mae sees home sales in 2021 rising by 6.3% as the industry deals with strong demand and limited supply. Fannie’s mortgage origination forecast remains largely unchanged at a total of $4.1 trillion in 2021. On the economic front, Gross Domestic Product is expected to increase 7% in 2021.

This week’s economic calendar has a few key reports that could impact the markets. The Fed’s favorite inflation gauge, the annual Core PCE, will be released at the end of the week as traders and investors watch for additional signs of inflation. The Fed has said that any higher inflation pressures will be transitory. New and Pending Home Sales will also be released this week as the sector’s lack of housing supply somewhat constrains sales.

Courtesy of Mortgage Market Guide 

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