Mortgage in America

Daily Rate Update: July 20th-24th

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Friday – July 24, 2020

The Census Bureau reports that New Home Sales rose nearly 14% in June from May to an annual rate of 776,000, the highest level since 2007. Sales increased by almost 7% from June 2019. The median sales price of new houses sold in June 2020 was $329,200. The average sales price was $384,700. Inventories are running low at 4.7 months. Sales skyrocketed by nearly 90% in the Northeast with gains seen in the Midwest, South and West.

Profits on home sales spiked in the second quarter of 2020 despite the fallout from the pandemic. ATTOM Data Solutions reports that U.S. home seller profits rose to 36% in Q2 2020. In Q2 2020, home sellers saw a gain of $75,971 from a sale, above $66,500 in Q1 2020 and from $65,250 in Q2 2019. The $75,971 represents a 36% return compared to the original purchase price. “Profit margins hit new records as prices kept climbing, with few indications that the impact of the virus would topple the market,” said Todd Teta, chief product officer at ATTOM Data Solutions.

Courtesy of Mortgage Market Guide 

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Thursday – July 23, 2020

Americans filing for first-time unemployment benefits remain elevated and rose for the first time since late March as the fallout from the pandemic induced shutdown continues to reverberate throughout the labor market. Weekly Initial Jobless Claims rose by 109,000 for the week ended July 18 to 1.416 million versus the 1.285 million expected. It was the first increase in claims since the 6.867 million claims recorded for the week ended March 28 when the U.S. economy was shut down. It also marks the 16th straight week of over 1,000,000 weekly claims.

Mortgage rates were unchanged in the latest week and remain at record lows while housing demand continues to recover. Freddie Mac reports that the 30-year fixed-rate mortgage inched higher to 3.01% this week with 0.8 in points and fees. A year ago the rate was 3.75%. Freddie Mac says that in the short-term, demand will continue on the back of near record-low mortgage rates.

Next week is shaping up to be a big week for economic data that will cover a broad spectrum of the U.S. economy. The calendar is full of data coming from durable orders, housing, consumer confidence and sentiment, the inflation reading Core PCE and consumer spending. All eyes will be glued to the first reading Q2 2020 Gross Domestic Product where it is expected to plunge by at least 30% due to the pandemic induced shutdown. In addition, the FOMC monetary policy statement and press conference from Fed Chair Powell will take place on Wednesday.

Courtesy of Mortgage Market Guide 

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Wednesday – July 22, 2020

The National Association of REALTORS® reports that Existing Home Sales soared by 20.7% in June from May to an annual rate of 4,720,000 as the sector continues to shine post-pandemic shutdown. The monthly gain was the largest on record. However, sales are down 11.3% year-over-year due in part to the declines seen in late March, April and May. Gains were seen across all four major regions of the country.“The sales recovery is strong, as buyers were eager to purchase homes and properties that they had been eying during the shutdown,” said Lawrence Yun, NAR’s chief economist. “This revitalization looks to be sustainable for many months ahead as long as mortgage rates remain low and job gains continue.”

Home borrowing costs continue to run at record lows which spurred on mortgage application activity in the latest week. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage held at 3.20% with 0.35 in points for the week ending July 17, 2020. The MBA reports that the Market Composite Index, a measure of total home loan application volume, rose 4.1%, the Purchase Index increased 2% while the Refinance Index was up 5%. Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said, “There continues to be strong homebuyer demand this summer, as home shoppers have returned to the market in many states.”

Courtesy of Mortgage Market Guide 

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Tuesday – July 21, 2020

Fresh EU stimulus, hopes of Congress stimulus and strong earnings from Big Blue are weighing on bonds while stocks are surging. The EU agreed on fresh stimulus of 750B euros to battle COVID inflicted regions while Congress gets started on some type of coronavirus stimulus here in the states. Democrats and Republicans are $2.5 trillion apart and will have to act fast as the enhanced unemployment benefit of $600 is set to expire at month’s end. IBM reported strong quarterly earnings which is also giving stocks a boost while Coca-Cola expressed optimism as the country reopens.

Retail giant WalMart is rolling out some perks for workers to thank employees for the work during the height of the pandemic. Walmart will spend $428 million in bonuses for workers with full-time hourly employees receiving $300 and part-time and temporary workers $150. The company will pay the bonuses on August 20. In addition, WalMart said it will close its stores on Thanksgiving Day.

Courtesy of Mortgage Market Guide 

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Monday – July 20, 2020

The housing market continues to shine in an otherwise down economy due to the pandemic induced shutdown that took place at the end of March through early May across the nation. Housing prices continue to rise as low rates and supply crunch lift prices. The Radian Home Price Index shows that home prices rose 6.3% in the first half of 2020, up 8.1% from July 2019 to June 2020. Steve Gaenzler, SVP of Data and Analytics said, “After gains across the U.S. slowed in May, the first half of the year ended on an impressive note, especially given the significant headwinds real estate transactions have faced.”

With a positive housing market unfolding in the past few months, the foreseeable future could also be rosy for the sector. And with such low rates, many Americans are buying houses or looking to refinance their existing homes. Fannie Mae’s Doug Duncan recently said that much of the nationwide loss of jobs were workers who were not planning on buying a home, typically hourly wage-earners and renters. Fannie Mae is forecasting $1.9 trillion in home loan refinancing in 2020 with $1.2 trillion in 2021. Fannie Mae is forecasting $1.24 trillion in home purchase loans in 2020. Fannie Mae forecasts the 30-year fixed-rate falling to 2.75% this year.

The U.S. financial markets begin the week on a quiet note with stocks mixed while bonds trading near unchanged. The markets are on hold today as Congress gets back from recess and begins to work on a new coronavirus stimulus package. Democratic and Republican leaders agree that some type of coronavirus stimulus needed though they are $2.5T apart. There are no economic reports due for release today and the rest of the week is light with Existing and New Home Sales for June later in the week. Earnings season will kick into high gear with some big names reporting this week and the numbers could impact the markets.

Courtesy of Mortgage Market Guide 

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