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Daily Rate Update: September 20th-24th

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Thursday – September 23, 2021

Home borrowing costs were essentially unchanged this week and remain just above historic lows. Freddie Mac reports that the 30-year fixed-rate mortgage inched higher to 2.88% 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, “On the housing front, homebuyers continue to snap up available inventory, which has improved modestly, and home price growth is moderating. However, the next few months will be choppy as several home builders are signaling that they are going to deliver less supply amid labor and materials shortages.”

First-time unemployment claims rose the latest week as the sector continues to get back to full strength. At present, there are 11 million jobs available across the nation. The Bureau of Labor Statistics reports that Weekly Initial Jobless Claims were up 16,000 to 351,000 for the week ended September 18, 2021. 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, rose to 2.845 million. Many unemployed Americans should be able to go back to work as the enhanced unemployment benefits have expired in most states.

Courtesy of Mortgage Market Guide 

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Wednesday – September 22, 2021

Low inventories continue to be a problem in the housing market along with the continued rise in prices. Existing Home Sales fell 2% in August from July to an annual rate of 5.88 million units, which was inline with estimates. Sales dropped 1.5% from a year ago. The median price rose to $356,700, up nearly 15% annually. This marks 114 straight months of year-over-year gains. Inventories sit at a 2.6-month supply at the current sales pace where six months is seen as normal.

Home borrowing costs were unchanged in the latest week and remain just above record lows. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage held steady at 3.03% with 0.30 in points for the week ending September 17, 2021. Within the report it showed that the Market Composite Index rose 4.9%, the Refinance Index jumped 6.5% while the Purchase Index was up 2.2%. A spokesperson said, “Housing demand is strong heading into the fall, despite fast-rising home prices and low inventory.”

Fannie Mae released its Economic and Housing Outlook saying continued supply constraints are inhibiting economic growth and housing. The GSE says it expects these constraints to lessen over time but are likely to drag significantly on economic activity well into 2022 and exert additional upward pressure on prices (inflation). Fannie Mae sees GDP at 5.4% this year and 3.8% in 2022. Home sales are expected to rise 3.3% in 2021 from 2020. Total mortgage origination volume for 2021 should come in at $4.33 trillion from $4.36 trillion it projected in August. For 2022, mortgage origination volume is forecasted to rise to $3.25 trillion.

Courtesy of Mortgage Market Guide 

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Tuesday – September 21, 2021

The housing market received solid numbers in August. Housing Starts rose 4% in August from July to an annual rate of 1,615,000 units versus 1,560,000 expected. Housing Starts were up 17.4% year over year. However, single-family starts were down 2.8% monthly. Building Permits, a sign of future construction, rose 6% to 1,728,000 versus the 1,600,000 expected. Lumber prices have fallen dramatically from near $1,700 in May to $593 today but land and labor shortages, as well as higher supply costs, persist.

The number of loans in forbearance continues to decline, now down to 3%. The MBA says there are 1.5 million homeowners in forbearance plans. The share of Fannie Mae and Freddie Mac loans in forbearance decreased 5 basis points to 1.47%. Spokesperson Mike Fratantoni said, “20% of loans in forbearance are either new forbearance requests or re-entries. At this point, borrowers in forbearance extensions are exiting at a faster rate as they near – or reach – the expiration of their maximum forbearance term.”

The MBA reports that mortgage applications for new home purchases in August fell 17% from a year ago. Monthly, applications were up 9% from July. Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said, “While the new home construction market is a much smaller segment of the overall housing market, prospective buyers are increasingly turning to new homes because of the very low levels of existing homes for sale.

Courtesy of Mortgage Market Guide 

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Monday – September 20, 2021

Home builder confidence steadied in September but material and labor challenges persist. The NAHB Housing Market Index rose to 76 this month from 74 in August after a three-month decline. Within the report it showed that current sales conditions increased one point to 82, measuring traffic of prospective buyers rose two points to 61 and the charting sales expectations component in the next six months held steady at 81. NAHB Chairman Chuck Fowke said, “The September data show stability as some building material cost challenges ease, particularly for softwood lumber. “However, delivery times remain extended and the chronic construction labor shortage is expected to persist as the overall labor market recovers.”

The Federal Open Market Committee meeting takes place this week on Tuesday and ends Wednesday at 2:00 p.m. ET with the release of the monetary policy statement. There is a zero percent chance of a hike to the short-term Fed Funds Rate, currently at .125%. The big question will be whether the Fed lays out a plan to begin tapering its current massive asset purchase program where it buys Treasury and Mortgage Backed Securities daily.

With the fall season upon us retailers are beginning to ramp up personnel for the holiday shopping season. Some of the big names have already been announced with more to come in the next few weeks. UPS is looking to hire 100,000 seasonal holiday employees, USPS 40,000, Kohl’s 90,000 and Amazon is looking to bring in 120,000. Deloitte is forecasting total holiday sales of $1.3 trillion this season from November to January. That’s up from $1.2 trillion in 2020.

Courtesy of Mortgage Market Guide 

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