Daily Rate Update – September 19th-23rd

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Wednesday – September 21, 2022

Existing Home Sales fell slightly in August from July and was the seventh straight monthly decline. Sales fell 0.4% to an annual rate of 4.80 million units versus 4.70 million expected. Sales were down 19.9% from a year ago. Sales rose slightly in the Northeast and West, flat in South and fell in the Midwest. The median sales price rose 7.7% from a year ago to $389,500. Unsold inventory is at 3.2 months, below the normal 6 months. All cash sales accounted for 24% of transactions in August, matching July and up from 22% in August 2021.

The Federal Open Market Committee meeting takes place today in D.C. where it is expected the members will hike the short-term Fed Funds Rate by 75bp, lifting the Fed Funds Rate in a range of 3.00 to 3.25%. Buckle up this afternoon. At 2:00 p.m. ET, the monetary policy statement will be released and is followed by Fed Chair Powell’s press conference at 2:30. The Fed is walking a tightrope where it needs battle inflation with aggressive rate hikes but not so much as to push the U.S. into a recession.

Courtesy of Mortgage Market Guide 

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Tuesday – September 20, 2022

August Housing Starts unexpectedly jumped 12.2% from July to an annual rate of 1.575 million units versus 1.445 million expected. Total starts were nearly unchanged from a year ago. Single family starts were up 3.4% and were down 14.6% from a year ago. The big driver behind the gains was a near 29% monthly rise in multi-family dwellings. Building Permits, a sign of future construction, fell 10% monthly to an annual rate of 1.517 million units.

The recent spike in home borrowing costs in the past year that saw the 30-year fixed-rate mortgage to rise from 3% to 6% has seen many mortgage holders with rates below current levels. Redfin reports that 85% of homeowners with mortgages have a rate far below today’s level, a factor prompting many to stay put. “The plunge in new listings is hindering growth in housing supply, which is keeping home prices relatively high even though the market is slowing down,” said Redfin Deputy Chief Economist Taylor Marr. “Housing supply fell 1% in August from the month before; normally, it would rise during a downturn.”

Courtesy of Mortgage Market Guide 

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Monday – September 19, 2022

The housing market is coming down to more normal levels of price gains with demand easing after the big rush to purchase homes soon after the pandemic appeared. The NAHB Housing Market Index fell to 46 this month, the ninth straight monthly loss. The three main components with the report, current sales conditions, sales expectations in the next six months and the traffic of prospective buyers all saw declines. “Buyer traffic is weak in many markets as more consumers remain on the sidelines due to high mortgage rates and home prices that are putting a new home purchase out of financial reach for many households,” said NAHB Chairman Jerry Konter, a home builder and developer from Savannah, Ga.

The two-day Federal Open Market Committee meeting kicks off tomorrow and ends Wednesday with the release of the monetary policy statement at 2:00 p.m. ET. A 75bp rate hike is expected with a possibility of 100bp as the central bank tries to battle sustained high inflation. The Fed controls the short term Fed Funds Rate (FFR) which is the rate that financial institutions lend money to one another on an overnight basis. The current FFR is 2.50% and when adding three points, the Prime Rate is currently 5.50%.

Courtesy of Mortgage Market Guide 

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