Daily Rate Update: August 6th-10th

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Friday – August 10, 2018

Rising home prices and mortgage rates pushed housing affordability to lows not seen in a decade in the second quarter of 2018, reports the National Association of Home Builders. From the beginning of April to the end of June, 57.1% of all new and existing home were affordable, down from 61.6% in the first quarter. The national median home price rose from $252,000 in the first quarter of 2018 to $265,000 in the second quarter, the highest quarterly median price in the history of the Housing Opportunity Index. At the same time, average mortgage rates surged by more than 30 basis points in the second quarter to 4.67% from 4.34% in the first quarter.

Consumer inflation remained tame in July from June but year-over-year core consumer inflation rose the most in 10 years. The Consumer Price Index (CPI) rose 0.2% in July from June in line with estimates as rising shelter costs offset a drop in energy prices. Over the past 12 months, CPI rose 2.9%, unchanged. However, the Core CPI, which strips out food and energy, rose 2.4%, the highest rate since September 2008. But inflation remains on the tame side with no evidence of a spike higher in the coming months.

Gas prices at the pumps remained unchanged today from last week, despite lower oil prices. Motorists are still paying the highest August prices since 2014. The national average price for a regular gallon of gas is $2.87, the same from a month ago but up $0.50 from last year this time. Motorists should see lower prices by mid-September as the summer driving season winds down in a few weeks.

Courtesy of Mortgage Market Guide

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Thursday – August 9, 2018

Home price gains continued their winning ways in the second quarter of 2018 hitting record highs. The National Association of REALTORS® (NAR) reports that amidst extremely low inventory levels across much of the nation, existing homes sales waned while home price gains maintained their upward trajectory. The median price for a single-family home rose 5.3% from the second quarter of 2017 to the second quarter of 2018 to $269,900. Lawrence Yun, NAR chief economist says, “With not enough homes for sale, multiple bids caused prices to rise briskly and further out of the reach of some prospective buyers.”

Americans filing for first-time unemployment benefits continue to hover near lows seen in the early 1970s as the labor markets are near full employment. The Labor Department reports that Weekly Initial Jobless Claims fell 6,000 in the latest week to 213,000, just above the 208,000 reported for the week of July 14, which was the lowest reading since December 1969. The four-week moving average of initial claims, which irons out seasonal abnormalities, declined 500 to 214,250 last week, the lowest reading since mid-May.

Wholesale inflation from the Producer Price Index (PPI) was unchanged in July from June versus the 0.3% gain expected while year-over-year edged lower to 3.3% from 3.4%. The Core PPI, which strips out volatile food and energy, rose 0.1%, below the 0.2% expected, and up 2.7% annually from 2.8% in June. The tame wholesale inflation data was due in part to a modest increase in the cost of goods and a decline is services. The more closely watched inflation-reading Consumer Price Index will be released tomorrow.

Courtesy of Mortgage Market Guide

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Wednesday – August 8, 2018

Fannie Mae released its July Home Purchase Sentiment Index (HPSI) showing that home purchase sentiment hit its plateau as high home prices stymie trade-up confidence. The HPSI fell in July for the second consecutive month, declining 4.2 points to 86.5, after hitting survey highs in April and May. The report went on to reveal that the net share of Americans who say it is a good time to buy a home fell 4 percentage points from last month to 24%. The net share of those who say it is a good time to sell fell 6 percentage points from last month’s survey high to 41%.

U.S. Stocks are near unchanged as trade issues somewhat outweigh the strong earnings season. Last night, the White House completed plans to impose $16 billion in tariffs on imported Chinese goods while China countered with similar measures. The S&P 500 Stock Index closed at 2,858 yesterday, just shy of its all-time closing high of 2,872 hit back on January 26. Since January 26, China’s Shanghai Stock Exchange has lost 22% due to the trade issues.

As the summer winds down, parents across the country begin to stock up on supplies as they usher off kids to the beginning of the new school year. Retailers are expecting a strong shopping season given the low unemployment rate, strong economic growth and high consumer confidence. Deloitte forecasts that back-to-school spending will rise 2.2% to $27.6 billion this year, with the average spending per household up slightly to $510 from $501 last year. That includes $112 on school supplies, up from $104 in 2017.

Courtesy of Mortgage Market Guide

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Tuesday – August 7, 2018

Home price gains remained strong in June. CoreLogic reports that home prices, including distressed sales, rose 6.8% from June 2017 to June 2018 and increased 0.7% month over month from May to June. Over the next year, gains are expected to slow as further increases in home prices and home loan rates could erode affordability and dampen sales and home-price growth. CoreLogic forecasts a 5.1% increase from June 2018 to June 2019 while month-over-month home prices are expected to be unchanged from June to July of this year.

Mortgage credit availability continued to increase in July for the third month in a row fueled by an increase in conventional credit supply. The Mortgage Bankers Association’s Mortgage Credit Availability Index rose 1.7% in July after gains in both May and June. From a year ago, the index has increased 2.8%. The MCAI is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.).

A recent survey revealed that buying a home can be exhausting, confusing and complicated. Homes.com reports that in a survey of 2,000 Americans, 40% say that purchasing a home can be the most stressful event in modern life while another 44% said they felt nervous throughout the whole home buying process. In addition, about 33% of those surveyed admitted to shedding tears at some point during the process. “At the end of the day, buying a home is often the largest purchase the average American will experience in their lives,” said David Hoegerman, Homes.com senior manager of content.

Courtesy of Mortgage Market Guide

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Monday – August 6, 2018

The American dream of owning a home was alive and well in the past 12 months as the economy and labor markets continued to grow. The Census Bureau reports that twice as many American homeowners were created in the last year as had been created in the previous 10 years. The number of US homeowners grew by +1.8 million (to 77.9 million) over the 12 months ending 6/30/18, double the +0.9 million new homeowners that were added over the decade ending 6/30/17.

U.S. Stocks are near unchanged to begin the week as strong earnings are offset by the lingering trade woes between the U.S. and China. The closely watched S&P 500 Stock Index finished higher last week closing a five-week run of gains, its first such streak in 2018. Strong earnings have pushed the equity markets higher as Reuters reports that over 400 S&P 500 companies have reported so far, and nearly 79% have topped earnings estimates.

JPMorgan Chase CEO Jamie Dimon was speaking at the Aspen Institute’s 25th Annual Summer Celebration Gala over the weekend saying that the yield on the 10-year T Note could rise to 5%, which would boost borrowing costs for consumers. A stronger U.S. economy would be the reason for the rise in the 10-year yield. “Business sentiment is almost at the highest level it’s ever been, consumer sentiment is at its highest levels, markets are wide open, housing’s in short supply and my guess is mortgage credit will expand a little bit,” Dimon said. “If you look at how the table’s set, consumers are in very good shape.”

Courtesy of Mortgage Market Guide

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