Daily Rate Update: January 21st-25th

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Friday – January 25, 2019

Zillow reports that median home prices rose 7.6% year-over-year in December 2018, to $223,900, just above the 7.4% recorded in December 2017. Rents increased at an annual pace of 1.4%, the largest increase since June 2018. When looking more closely at local conditions in the country’s biggest markets, they revealed a sometimes-notable slowdown in a majority of them. In addition, housing inventories fell 0.4% since December 2017.

U.S. stocks are on the rise today as the week comes to an end. Strong corporate earnings and optimism that the government shutdown will soon come to an end are boosting equities. The Dow Jones Industrial Average was up 300 points at the time of this writing and is up nearly 14% since the lows seen at the close on Christmas Eve, 2018. Next week the markets will have to cope with two key labor market reports and the two-day Fed meeting.

Gas prices rose this week though they remain below levels seen a year ago. Demand for gasoline has risen in the last few weeks, prompting slightly higher prices. The national average for a regular gallon of gasoline at the pump is at $2.27, up a few cents on the week but below last month’s prices. The highest price ever recorded was $4.11 back on July 17, 2008.

Courtesy of Mortgage Market Guide

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Thursday – January 24, 2019

Fannie Mae released its January 2019 Economic and Housing Outlook showing that slower economic growth is expected in 2019, but a patient Fed could put housing on a firmer footing. The report went on to say that with the forecast of a slower pace of housing price gains this year, stable rates should support affordability and buyer confidence. Fannie Mae predicts that economic growth, or Gross Domestic Product, will grow at a 2.2% pace in 2019, down from last year’s estimated pace of 3.1%.

Americans filing for first time unemployment benefits have fallen to lows seen in November of 1969 in the latest survey. Weekly Initial Jobless Claims fell 13,000 in the latest week to 199,000 and below the 217,000 expected. The labor market remains strong while the U.S. economy is on solid footing. The four-week moving average of claims, which irons out seasonal abnormalities, rose 1,250 to 1.73 million.

Next week is shaping up to be a big week for economic data along with a key meeting by the Federal Reserve. The big reports will be Wednesday’s ADP Private Payrolls Report and Friday’s Non-Farm Payrolls Report, both for January. The two-day Federal Open Market Committee meeting will kick off 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 benchmark Fed Funds Rate at this meeting but what the Fed says could be market moving.

Courtesy of Mortgage Market Guide

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Wednesday – January 23, 2019

This morning, JPMorgan Chase CEO Jamie Dimon said the U.S. economy should continue growing steadily but mentioned the big hurdles in Brexit, China and the government shutdown. He said if the Fed gets it right and if Congress can straighten out the shutdown, GDP could grow at a consistent 3% rate. This week is a bit quiet as far as economic data, but looking ahead, next week is huge with a Fed meeting and the January Jobs Report.

Home prices continued steady gains in November, reported the Federal Housing Finance Agency (FHFA). The FHFA’s House Price Index rose 0.4% from October 2017 to November 2017 and was up 5.8% from November 2017 to November 2018. The FHFA monthly HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac.

Mortgage rates were essentially unchanged in the latest week, reports the Mortgage Bankers Association (MBA). The 30-year fixed-rate mortgage was unchanged in the week ended January 18 with 0.44 in points. The refinance index fell 5% while the purchase index declined 2% from one week earlier. The Market Composite Index, a measure of total mortgage loan application volume, fell 2.7% after the 40% gain seen in the previous two weeks. The survey covers over 75% of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.

Courtesy of Mortgage Market Guide

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Tuesday – January 22, 2019

The National Association of REALTORS® reports that Existing Home Sales fell 6.4% in December from November to an annual rate of 4.99 million annualized units versus the 5.25 million expected. Lower sales in December were due in part to higher mortgage rates in early December along with an ease in buyers due to the holiday season. Sales were down 10.3% from December 2017. Monthly inventories are at a 3.7-month supply, below 6 months that is seen as normal. “With mortgage rates lower, some revival in home sales is expected going into spring,” said Lawrence Yun, NAR’s chief economist.

The International Monetary Fund (IMF) cut its global economic growth forecast to 3.5% from 3.7%, not a big move lower and cites weakness in Europe. However, the U.S. economy remains strong in the global economy and continues humming along with solid growth, as also said by the Federal Reserve. The IMF cited the U.S.-China trade war, Brexit and China’s slowing economy for the downgrade.

Earnings season continues with Dow components Travelers missing on earnings, beats on revenues while J&J exceeded expectations on both the top and bottom lines. With about 11% of the S&P 500 companies having reported, three-quarters have beaten on profits, while half have beaten on revenues, reports CNBC.

Courtesy of Mortgage Market Guide

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