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Daily Rate Update: December 16th-20th

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Friday – December 20, 2019

The U.S. economy continued to generate growth in the final reading on Gross Domestic Product (GDP) for 2019. Final Q3 GDP remained unchanged at a solid 2.1%. Within the numbers, it showed that consumer spending, which accounts for two-thirds of U.S. economic activity, was revised higher to 3.2% from 2.9%. The consumer continues to be a key factor driving the economic expansion here in the U.S.GDP measures the market value of all the final goods and services produced in a specific time period, often annually.

Consumer Sentiment remained at very favorable levels in the second of two reading in December at 99.3. Inflation expectations declined in the December survey, with both the year-ahead and five-year expected inflation rates falling and backs up the federal reserves assertion that it will remain low for the foreseeable future. In addition, the impeachment hearing had a barely noticeable impact on economic expectations, as it was mentioned by just 2% of all consumers in the December survey.

U.S. stocks are at fresh record highs on this last full week of trading in 2019. The closely watched S&P 500 is up nearly 30% this year due to an expanding economy, low unemployment, strong consumer spending and confidence along with tame inflation and low-interest rates. The Goldilocks economy continues with chances of a recession extremely low or zero for the foreseeable future.

Courtesy of Mortgage Market Guide

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Thursday – December 19, 2019

The National Association of REALTORS® reports that Existing Home Sales fell by 1.7% in November to October to an annual rate of 5,350,000 versus the 5,450,000 expected. On an annual basis, sales rose 2.7%. Gains were seen in the Northeast and Midwest, with declines in the South and West. Inventories are extremely low with just a 3.7 month supply where 6 months is seen as normal.

The median existing-home price housing types in November was $271,300, up 5.4% from November 2018, as prices rose in all regions. November’s price increase marks 93 straight months of year-over-year gains. Lawrence Yun, NAR’s chief economist, said the decline in sales for November is not a cause for worry. “Sales will be choppy when inventory levels are low, but the economy is otherwise performing very well with more than 2 million job gains in the past year,” said Yun.

Courtesy of Mortgage Market Guide

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Wednesday – December 18, 2019

Fannie Mae released its December 2019 Housing and Economic Housing Outlook today revealing that the outlook for housing has been significantly upgraded as the economic forecast strengthens. Economic growth in 2020 is expected to increase by 2.1%. Fannie Mae expects no moves in interest rates by the Federal Reserve next year. In addition, Fannie Mae went on to say that Housing construction is once again poised to become an engine of overall economic growth. Homebuilders are expected to expand production in reaction to continued labor market strength and consumer spending, as well as supportive interest rates and waning risks of a significant near-term economic slowdown.

Mortgage rates were unchanged in the latest week while mortgage application volume declined as the holiday season pushed potential buyers and those looking to refinance to the sidelines. The 30-year fixed-rate mortgage was unchanged at 3.98% with points remaining unchanged at 0.33. The Market Composite Index, a measure of total mortgage loan application volume, fell by 5%, the Purchase Index decreased 2% while the Refinance Index lost 7%. Mike Fratantoni, MBA Senior Vice President and Chief Economist said, “As we move into the slowest time of the year for home sales, purchase application volume is declining but continues to outperform year-ago levels when rates were much higher. Purchase activity was 10 percent higher than a year ago.”

If you thought that Black Friday was the busiest shopping day of the year … think again. “Super Saturday” will take place this weekend ahead of the Christmas holiday next week as shoppers finish up their purchases. Analysts forecast that consumers will spend $34 billion this year on Super Saturday, which will eclipse the $31.5 billion generated on Black Friday. The U.S. consumer continues to show strength and is benefiting from low unemployment, solid wage growth and ultra-low unemployment.

Courtesy of Mortgage Market Guide

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Tuesday – December 17, 2019

The U.S. Census Bureau reports that privately-owned Housing Starts rose by 3.2% in November from October to an annual rate of 1.365 million units, above the 1.34 million expected. On an annual basis, total starts rose almost 14%. The all-important single‐family sector saw starts rise by 2.4% monthly and jumped nearly 17% year over year. Multi-family units were up 2.3% monthly and rose 4.4% annually. Building Permits, a sign of future construction, rose 1.4% monthly to an annual rate of 1.482 million units, the highest level since May 2007. Overall, a solid report for the sector.

The New York Fed reported this week that its Credit Access Survey shows increases in housing loan applications and approval rates. The latest Survey shows that households’ credit experiences and expectations remained fairly stable in 2019 compared to 2018. Among the most notable changes in 2019 was a slight increase in application rates combined with a decrease in rejection rates. This pattern was driven in part by households’ experiences with mortgage loans. Looking ahead, households also generally expect to be more likely to apply for and receive credit over the coming year.

U.S. stocks continue to reach new heights seemingly every other day due in part to solid economic growth, ultra-low unemployment, strong consumer spending and in a low-interest rate environment. The Dow Jones Industrial Average (28,235), S&P (3,191) and NASDAQ (8,814) all closed at record highs on Monday. The closely watched S&P 500 is up nearly 27% this year and it is its best run through December 16 since 1997! Many market analysts see the run extending into 2020.

Courtesy of Mortgage Market Guide

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Monday – December 16, 2019

The housing sector received good news today due in part to low mortgage rates coupled with strong employment in the U.S. The NAHB Housing Market rose to 76 this month, a 20-year high, up five points from November. Last year, the index stood at 56. Any number over 50 indicates that more builders view conditions as good than poor. “Builders are continuing to see the housing rebound that began in the spring, supported by a low supply of existing homes, low mortgage rates and a strong labor market,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Connecticut.

Manufacturing activity in the New York State region edged higher in December, a good sign for the troubled sector. The Empire Manufacturing Index rose to 3.5 this month, up from 2.9 in November. Within the data, it showed that employment continued to expand while optimism about the six-month outlook picked up, and capital spending plans were notably stronger. Manufacturing has slowed in the past six months due to the trade issues between the U.S. and China but with the Phase One trade deal being confirmed, the sector may begin to pick up some strength.

House flipping in the third-quarter of 2019 pushed lower by 12.9% from the second-quarter and is down nearly 7% from a year ago, reports ATTOM Data Solutions. The U.S. Home Flipping Report showed that 56,566 U.S. single-family homes and condos were flipped in the third quarter of 2019 after an unusually lively flipping market in the spring of this year. “After a springtime selling binge earlier this year, the home-flipping business settled way down over the summer amid a continuing scenario of languishing profits,” said Todd Teta, chief product officer at ATTOM Data Solutions.

Courtesy of Mortgage Market Guide

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