Daily Rate Update: December 3rd-7th

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Friday – December 7th, 2018:

The Bureau of Labor Statistics reported on Friday that U.S. employers added 155,000 new workers in November, below the 189,000 expected. Revisions for September and October were revised lower by a total of a modest 12,000. The Unemployment Rate was unchanged at 3.7%, a 50-year low. Average hourly earnings rose 0.2%, just below the 0.3% expected while year over year was unchanged at 3.1%. Overall it was a Goldilocks report, not too hot, not too cold.

A recent study conducted by Freddie Mac on housing construction across the U.S. showed that the major challenge is inadequate supply. Since the Great recession ended in mid-2009, the economy has grown sharply, but the housing market has not fully recovered. Freddie Mac says, ” Since 2011, residential housing construction has increased, but only gradually – and not enough to meet demand.” Freddie Mac went on to report that from 1968 to 2008, a span of 40 years, there was only one year in which fewer new housing units were built than in 2017, and this despite rising demand in a growing economy. In addition, until construction ramps up, housing costs will likely continue rising above income, constricting household formation and preventing homeownership for millions of potential households.

Courtesy of Mortgage Market Guide

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Thursday – December 6th, 2018:

Mortgage rates continued to edge lower this week due in part over fears of a slowing global economy along with a big decline in the U.S. Stock markets, which boosted Bond prices. Freddie Mac reports that the 30-year fixed-rate mortgage fell six basis points this week to 4.75% with an average 0.50 in points and fees added on top of that rate. Freddie Mac said that this week’s decline in rates is a welcome relief to prospective homebuyers who have recently experienced rising rates and rising home prices.

Mortgage credit availability rose for the second straight month in November, reports the MBA. The MBA’s Mortgage Credit Availability Index (MCAI) gained 1.1% to 188.8 in November after the 2.5% gain in October. A decline in the MCAI indicates that lending standards are tightening, while an increase signals they are loosening. The November number of 188.8 was the highest since early 2008, and was up 3.5% from a year ago.

The service sector of the U.S. economy produced positive gains in November and is the largest portion of the U.S. economy’s business activity. The Institute for Supply Management (ISM) reported today that its ISM Service Index rose for the 106th consecutive month in November to 60.7 versus the 59 expected. Within the report, the two closely watched components, new orders and employment, both rose during the month. A reading above 50 indicates the non-manufacturing sector economy is generally expanding; below 50 indicates the non-manufacturing sector is generally contracting.

Courtesy of Mortgage Market Guide

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Tuesday – December 4th, 2018:

CoreLogic reports that home prices, including distressed sales, rose 5.4% from October 2017 to October 2018. That is down from the 7% gain seen year over year in March of this year. On a month over month basis, prices rose 0.5% from September 2018 to October 2018. Looking ahead, CoreLogic sees a 4.8% increase from October 2018 to October 2019. Frank Nothaft, Chief Economist at CoreLogic says, “Rising prices and interest rates have reduced home buyer activity and led to a gradual slowing in appreciation (in prices).”

Gas prices at the pumps continue to decline as the price of oil has fallen to its lowest level since September 2017. A strong dollar coupled slowing demand for oil are a few reasons behind the decline in prices. The national average price for a regular gallon of gas is at $2.44, down from $2.76 a month ago and below the $2.47 seen a year ago. The highest recorded price was hit back on July 17, 2008, of $4.11.

All U.S. financial markets will be closed tomorrow in honor of former President George HW Bush, who passed away last Friday at the age of 94. That has shifted the ADP Private Payroll Report release to Thursday morning from Wednesday morning. The USPS will not be delivering mail on Wednesday. Federal offices will be closed on Wednesday as well as some banks and courts.

Courtesy of Mortgage Market Guide

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Monday – December 3rd, 2018:

The G-20 Summit Meeting took place over the weekend with the big event taking place Saturday night between President Trump and China’s President Xi. The two leaders discussed trade issues and agreed to suspend any tariffs for 90 days and will enter into negotiations to try and settle the trade dispute between the world’s two largest economies. The headlines are lifting U.S. Stocks this morning.

Manufacturing activity across the nation grew in November for the 115th consecutive month, reports the Institute of Supply Management (ISM). The ISM Index came in at 59.3 last month, above the 57.2 expected and up from 57.7 in October. Within the report it showed that both the new orders index as well as the employment component produced positive gains during the month.

Two key labor market reports will be released this week and will be closely watched by the members of the Federal Reserve as well as traders. The ADP Private Payrolls Report will be released on Wednesday followed by the government’s Jobs Report on Friday. The strength in the labor markets has been well publicized this year and the question will be whether or not the solid numbers will continue. With the U.S. economy at above average growth, the jobs market should continue to prosper into 2019.

Courtesy of Mortgage Market Guide

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