Daily Rate Update: November 15th-19th

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Thursday – November 18, 2021

Home borrowing costs inched higher this week and remain just above historic lows. Freddie Mac reports that the 30-year fixed-rate mortgage rose three basis points to 3.01% with 0.7 in points and fees. The record low was 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “The combination of rising inflation and consumer spending is driving mortgage rates higher,” said Sam Khater, Freddie Mac’s Chief Economist. “Shoppers looking to buy a home are fueling strong demand while ongoing inventory shortages are not improving in the presence of higher home prices. This reality illustrates the challenging situation facing the housing market.”

First-time unemployment claims are near lows not seen since before the shutdowns began in late March 2020. At present, there are almost 11 million jobs available across the nation. The Labor Department reports that Weekly Initial Jobless Claims fell 1,000 to 268,000 for the week ended November 13, 2021. Continuing claims, or those receiving benefits for at least two weeks straight, fell to 2.080 million from 2.209 million. The labor market should continue to improve with holiday hiring underway.

Fannie Mae released its November 2021 Commentary revealing that it expects purchase volumes to total $1.9 trillion in 2021 followed by 6.8% growth in 2022 to $2.0 trillion. Refinance volumes of $2.5 trillion are projected in 2021 before slowing in 2022 and 2023 to $1.3 trillion and $1.1 trillion, respectively. Fannie Mae expects the 30-year fixed mortgage rate to average 3.3% in 2022 and 3.5% in 2023.

Courtesy of Mortgage Market Guide 

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Wednesday – November 17, 2021

October Housing Starts declined 0.7% in October from September to an annual rate of 1.520 million units versus the 1.576 million expected. Sales were up just 0.4% year over year. Land and labor shortages along with supply constraints have been obstacles for the sector. Single-family starts were down 4% monthly and nearly 11% annually. Multifamily construction jumped 7% monthly and surged almost 40% annually. Building Permits, a sign of future construction, rose 4% monthly and were up 3.4% year over year. Home building typically slows in the Northeast and Midwest in the winter so supply constraints may ease a bit.

Home borrowing costs inched higher in the latest week and remain just above historic lows. The MBA reports that that the 30-year fixed-rate mortgage rose four basis points to 3.20% with 0.43 in points. Within the report it showed that the Market Composite Index fell 2.8%, the Refinance Index declined 5% while the Purchase Index rose 2%. Spokesperson Joel Kan said, “Purchase applications increased for both conventional and government loan segments, as housing demand continues to show resiliency at a time – late fall – when home buying activity typically slows.”

The MBA also reports that mortgage applications for new home purchases in October declined 15.2% from October 2020 and were up 6% monthly from September. Conventional loans composed 75.7% of loan applications, FHA loans 13.5%, RHS/USDA 0.5% and VA loans 10.3%. The average loan size of new homes rose from $408,522 in September to $412,339 in October. The MBA said, “Housing demand remains strong, and buyers are making quick decisions in a still very competitive market.”

Courtesy of Mortgage Market Guide 

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Tuesday – November 16, 2021

Consumer spending remained strong in October, partly as a result of early holiday shopping. Inflation played a role in the numbers which beat expectations. If you adjust the numbers for inflation – retail sales are at pre-pandemic levels. The takeaway … the consumer remains strong and is willing to pay more, for now. October Retail Sales rose 1.7% from September’s gain of 0.8% and above the 1.2% rise expected. Sales were up 16.3% from a year ago. When excluding autos, sales were up a robust 1.8% versus the 0.9% gain expected while September was revised higher to 1.2% from 0.8%.

Homebuilder sentiment increased for the third straight month due in part to low rates and inventories along with strong demand. The NAHB Housing Market Index rose three points to 83 this month from October and above the 80 expected. Within the data, it showed that current sales conditions and gauge charting traffic of prospective buyers also saw gains.
“The solid market for home building continued in November despite ongoing supply-side challenges,” said NAHB Chairman Chuck Fowke. “Lack of resale inventory combined with strong consumer demand continues to boost single-family home building.”

The number of real estate investors purchasing homes across the U.S. continues to increase as prices rise and inventories remain low. Redfin reports that real estate investors bought a record 18% of the U.S. homes that sold in Q3 2021, up from a 16.2% gain in Q2 and well above the 11.3% rise from Q3 2020. Investors bought a record 90,215 homes in Q3. “Increasing home prices fueled by an intense housing shortage have created opportunities for investors to reap big profits,” said Redfin Senior Economist Sheharyar Bokhari. “Those same factors have pushed more Americans to rent, which also creates opportunities for investors because investors typically turn the homes they purchase into rentals and can now charge higher rents.”

Courtesy of Mortgage Market Guide 

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