Thursday – May 26, 2022
Home borrowing costs fell again this week after the significant rise seen since a year ago. Freddie Mac reports that the 30-year fixed-rate mortgage slipped to 5.10% from 5.25% last week with an average of 0.9 in points and fees. A year ago the rate was 2.95%. The 15-year fell to 4.31% from 4.43% with a 0.8 point. A year ago that 15-year was 2.27%. Sam Khater, Freddie Mac’s Chief Economist said, “Despite the recent moderation in rates, the housing market has clearly slowed, and the deceleration is spreading to other segments of the economy, such as consumer spending on durable goods.”
In economic news, the second read on Q2 2022 Gross Domestic Product came in at -1.5% versus -1.3% expected and down from the first read of -1.4%. Within the GDP data, it showed that consumer prices (inflation) increased from the initial reading. Tomorrow, the Fed’s favorite inflation gauge, the Core PCE, will be released. Weekly Initial Jobless Claims fell to 210,000 from 218,000. April Pending Home Sales fell 3.9% from the decline of 1.6% in March.
Redfin reports nearly 1 in 5 sellers is dropping their price, the highest rate since October 2019 during the four week period ending May 22. The technolgy powered real estate brokerage went on to say that its seasonally-adjusted Redfin Homebuyer Demand Index, a measure of requests for home tours and other home-buying services from Redfin agents, fell 12% year over year during the week ending May 22. This was the largest decrease since April 2020 when the shutdowns halted most homebuying activity.
Courtesy of Mortgage Market Guide
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Wednesday – May 25, 2022
Mortgage rates inched lower in the latest week after pushing higher since the beginning of the year. The 30-year fixed-rate mortgage fell to 5.46% from 5.49% with 0.60 points for the week ended May 20, 2022, reports the MBA. Within the data it showed that the Market Composite Index, a measure of total mortgage application volume, declined 1.2%, the Refinance Index fell 4% and the Purchase Index was unchanged. Spokesperson Joel Kan said, “Currently, higher rates, low inventory, and high prices are keeping prospective buyers out of the market.”
With the Memorial Day weekend upon us and the unofficial start to summer, motor club AAA predicts 39.2 million people will travel 50 miles or more from home this extended weekend. This is an increase of 8.3% from 2021, almost in line with those in 2017. “Memorial Day is always a good predictor of what’s to come for summer travel,” said Paula Twidale, senior vice president, AAA Travel. “Based on our projections, summer travel isn’t just heating up, it will be on fire. People are overdue for a vacation and they are looking to catch up on some much-needed R&R in the coming months.”
The Fed Minutes from the May Fed Meeting are due out at 2:00 p.m. ET. This news could shake the markets and will be closely watched. From the tidbit file: Durable Orders rose 0.4% versus 0.6% expected. Bankrate reports that the 30-year fixed-rate mortgage fell to 5.28% today from 5.40% last week. The current prime rate is 4%. The highest average price for a regular gallon of gasoline is seen in California at $6.06.
Courtesy of Mortgage Market Guide
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Tuesday – May 24, 2022
Surging mortgage rates coupled with record-high prices weighed on sales of new single-family homes in April as purchases fell to a two-year low. New Home Sales dropped 16.6% from March to April to an annual rate of 591,000 units versus the 750,000 expected and were down nearly 17% from April 2021. Sales fell across the four major U.S. regions. The median sales price of new houses sold in April 2022 rose to a record high of $450,600, up almost 20% from a year ago. The average sales price was $570,300, up 23% from April 2021. Inventories were healthy at an 8.3-month supply.
The national average price for a regular gallon of gasoline hit another record high today of $4.59 while WTI oil hovers near $111. Such high gas prices are an enormous cost for the average consumer. Diesel prices around $6 a gallon are also at record highs. Today’s national average for a gallon of gas is $4.59, which is 47 cents more than a month ago, and $1.56 more than a year ago. AAA sees the average gas price at $5 … soon.
The number of home borrowers still in forbearance has declined to the lowest level since June 2020, reports the MBA. The number dropped in April to 0.94%, with 470,000 borrowers remaining with an active plan. The total number of loans in forbearance fell by 11 basis points, to 0.94% in April from 1.05% in March. “With the number of borrowers in forbearance decreasing to less than half a million, the pace of monthly forbearance exits reached its lowest level since MBA started tracking exits in June 2020,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis.
Courtesy of Mortgage Market Guide
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Monday – May 23, 2022
Home sales showed signs of slowing last month due in part to the surge in borrowing costs since the beginning of the year. The MBA reports that mortgage applications for new home purchases in April fell 10.6% compared to April 2021 and were down 14% monthly from March. The average loan size of new homes increased from $436,151 in March to $436,576 in April. “New home purchase activity declined on a monthly and annual basis in April, as the spike in mortgage rates cooled demand, and homebuilders continued to grapple with rising costs, supply-chain issues, and extended completion timelines,” said spokesperson Joel Kan.
Redfin reports that in April, the housing shortage showed signs of easing up as sales fell across the nation. The number of homes for sale declined at its slowest pace in April since the start of the pandemic. The technology-powered real estate company said that the 9% year-over-year drop in homes for sale was the smallest since March 2020 and the first single-digit decline since the start of the pandemic-related shutdowns. Spokesperson Taylor Marr said, “As demand continues to soften, more sellers will likely be forced to drop their prices in order to get offers. The good news is that this should finally bring more balance to the market.
In its latest survey, Fannie Mae reports that rapidly rising rates and persistent inflation further soften the economic outlook. Housing activity is expected to slow further as affordability worsens. Gross Domestic Product will grow at the reduced rate of 1.3% for full-year 2022, 0.8 percentage points less than previously predicted. Also, with mortgage rates having risen faster in the last 5 months than in any period since 1981, expect both purchase and refinance originations to decline meaningfully. With only 1.4% of mortgages now predicted to have a 50-plus-basis point incentive to refinance, it’s expected that, going forward, a majority share of refinance activity will be of the cash-out variety.
Courtesy of Mortgage Market Guide
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