Thursday – May 6, 2021
Home borrowing costs inched lower this week and remain at historically low levels. Freddie Mac reports that the 30-year fixed-rate mortgage fell two basis points to 2.98% with 0.6 in points and fees. A year ago at this time, the rate was 3.26%. It is up from 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “The combination of low and stable rates, coupled with an improving economy, is good for homebuyers. It’s also good for homeowners who may have missed prior opportunities to refinance and increase their monthly cash flow.”
First-time unemployment claims fell to the lowest level since the shutdowns began last year. Weekly Initial Jobless Claims decreased to 498,000 for the week ended May 1, 2021, from 590,000 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 3.69 million from 3.653 million. With more and more states reopening their economies, many unemployed Americans should be able to go back to work.
The Jobs Report for April will be released tomorrow at 8:30 a.m. ET. Expectations are calling for a sizable gain of 820,000 after the blowout 916,000 surge in March. The labor market has rebounded from the depths seen last year at the time of the shutdowns. In April 2020, there were 20.5 million jobs lost due to the shutdowns. And while there are still many Americans out of work, business owners in bars and restaurants can’t find workers to fill positions.
Courtesy of Mortgage Market Guide
-CHECK US OUT ON SOCIAL-
Wednesday – May 5, 2021
Home borrowing costs were essentially unchanged in the latest week and remain at historically low levels. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage rose to 3.18% from 3.17% with 0.34 in points for the week ended April 30, 2021. The Market Composite Index, a measure of total mortgage loan application volume, fell 0.9%, while the Purchase Index declined by 2%. The Refinance Index was unchanged and is down 17% from a year ago. Spokesperson Joel Kan said, “Both conventional and government purchase applications declined, but average loan sizes increased for each loan type. This is a sign that the competitive purchase market, driven by low housing inventory and high demand, is pushing prices higher and weighing down on activity.”
Activity in the service sector of the U.S. economy slipped in April from March but remains at expansionary levels. The ISM Service Index fell to 62.7 in April from 63.7 in March. A reading above 50 indicates the services sector economy is generally expanding; below 50 indicates the services sector is generally contracting. Economic activity had expanded for 11 straight months and expanded for all but two of the last 135 months. The April reading is one point lower from the all-time high hit in March (63.7). Within the report, it showed that the employment component increased.
The U.S. labor market continues to rebound as the financial markets received a strong report from the private sector. ADP private payrolls rose by 742,000 in April, near estimates while March was revised higher to 565,000 from 517,000. Small business growth was 235,000, medium grew by 230,000 while large businesses were up 277,000. The labor market continues an upward trend of acceleration and growth, posting the strongest reading since September2020,” said Nela Richardson, chief economist, ADP.
Courtesy of Mortgage Market Guide
-CHECK US OUT ON SOCIAL-
Tuesday – May 4, 2021
Pent-up demand, low rates and tight inventories sent home prices considerably higher in March as the sector continues to shine. CoreLogic reports that home prices, including distressed sales, rose 11.3% year over year in March and were up 2% monthly from February to March. The 11.3% increase was the largest percentage gain since March 2006. Looking ahead, CoreLogic is forecasting a 1.1% rise in prices from March 2021 to April 2021 and will increase 3.5% from March 2021 to March 2022.
Ahead this week are two key labor market reports with ADP Private Payrolls on Wednesday and the government’s Jobs report on Friday. The Jobs report includes Non-Farm Payrolls, which soared by 916,000 in March. Estimates are calling for ADP to rise by 810,000 while Non-Farm Payrolls look for a rise of 1,000,000. The labor market is rebounding as most states are now fully reopened after the shutdowns that took place in April 2020.
Gas prices increased marginally in the past week due in part to an uptick in demand while oil prices increase. Motor Club AAA reports that the national average price for a regular gallon of gasoline is at $2.91, up 3 cents from a week ago. Last year the price was $1.78. “While April saw minimal fluctuation, May is likely to see much larger increases alongside demand spikes, especially closer to Memorial Day weekend,” said Jeanette McGee, AAA spokesperson. “Compared to May 2019, U.S. gasoline demand is down only 4% and gas prices are on average just two cents more.”
Courtesy of Mortgage Market Guide
-CHECK US OUT ON SOCIAL-
Monday – May 3, 2021
Manufacturing activity slipped in April from March but still remains well into positive territory as the country is almost fully reopened now. The ISM Manufacturing Index fell to 60.5 last month, below the 65.3 expected and down from 64.7 in March. This figure indicates expansion in the overall economy for the 11th month in a row after contraction in April 2020. A company spokesperson said, “Companies and suppliers continue to struggle to meet increasing rates of demand due to coronavirus (COVID-19) impacts limiting availability of parts and materials.”
Lumber continues to soar and now sits at $1,600 per 1,000 square board feet. Last year this time the price was $342. This rise is too much too fast and will negatively impact new home sales at some point. The surge is due in part to the industry shutting down four months last year with surging demand in the current environment. The CEO of the National Association of New Home Builders, Jerry Howard, said there were “dark clouds” in the new home sales outlook when lumber was at $1,000. Mr. Howard has to be more concerned now.
Courtesy of Mortgage Market Guide
-CHECK US OUT ON SOCIAL-
