Daily Rate Update: July 23rd-27th

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Friday – July 27, 2018

Economic growth surged in the second quarter of 2018 due in part to a big rise in consumer spending. The Bureau of Economic Analysis reported that Gross Domestic Product rose 4.1% from the 2.2% recorded in the first quarter, which was revised up from 2%. The 4.1% was in line with expectations. Within the report, it showed that consumer spending jumped 4 percent in the second quarter from the dismal 0.5% from the first quarter. Overall, it was a solid report. Gross Domestic Product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period. It is considered the broadest measure of economic activity.

The investing community will have all eyes and ears glued to economic data next week as well as the Fed’s monetary policy statement being released on Wednesday. The week’s economic data includes reports on housing, manufacturing, consumer confidence, inflation and the granddaddy of all reports … the Jobs Report for July. The Jobs Report includes Non-Farm Payrolls and the Unemployment Rate. The two-day Federal Open Market Committee meeting kicks off on Tuesday and ends Wednesday with the 2:00 p.m. ET release of the Fed statement.

Gas prices at the pumps remained unchanged from last week as we are now well into the summer driving season. The national average price for a regular gallon of gasoline is at $2.85 today, unchanged from last week and up from $2.28 a year ago. Prices should begin to ease a bit sometime in September when Americans get back from vacations, school begins and when motorists tend to drive less.

Courtesy of Mortgage Market Guide

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Thursday – July 26, 2018

Mortgage rates edged a bit higher this week and are at their highest level since late June, though from an historic perspective, they remain at the low end of the spectrum. Freddie Mac reports that the 30-year fixed-rate mortgage rose two basis points to 4.54% with an average 0.5 in points and fees. Freddie Mac says, “Home affordability pressures are increasingly a concern in many markets, as the combination of continuous price gains and higher mortgage rates appear to be giving more prospective buyers a pause.”

A recent survey by Bankrate shows Americans shifting attitudes when it comes to their investments. The survey revealed that 32% of Americans prefer to invest in Stocks, followed by 24% who say cash investments are best and 22% in real estate. Real estate was the No. 1 choice in 2016. In addition, 9% of Americans also like to invest in gold and precious metals, 8% prefer Bonds while only 2% would invest in bitcoin and cryptocurrency.

Shares of social media giant Facebook are plunging today making it Facebook’s largest decline ever, 19% in one day. Facebook reported that profit margins would plunge for several years due to the costs of improving safeguards and slowing usage in its biggest advertising markets, reports Reuters. In addition, today’s losses would be the largest Stock market loss for a U.S. company ever with a $120 billion loss in market capitalization. CEO Mark Zuckerberg personally lost nearly $17 billion today. But with a net worth of $77 billion, he will probably be able to pay his bills going forward.

Courtesy of Mortgage Market Guide

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Wednesday – July 25, 2018

Sales of new single-family homes fell to an eight-month low in June. The ongoing hurdles of rising lumber costs and shortages of labor and land are partly to blame. June New Home Sales fell 5.3% from May to an annual rate of 631,000 units, below the 670,000 expected. However, from June 2017 to June 2018, sales rose 2.4%. New Home Sales surged in the Northeast, but were weighed down by declines in the West, Midwest and South.

Black Knight Financial Services reports that foreclosure starts fell in June to their lowest level in 17 years. Foreclosure starts declined 3% from May to June while active foreclosures continued to drop, falling below 300,000 for the first time in nearly 12 years. Mortgage delinquencies pushed higher in June, but remain 1.6% below 2017 levels.

The ongoing trade issues continue today after Reuters reported that the European Commission is drawing up a list of $20 billion worth of U.S. goods to hit with duties if Washington imposes tariffs on imported cars. However, President Trump will be meeting with Cecilia Malmstrom today, the head of EU trade policy. There is hope this matter could be worked out and if so, the good news could help Stocks and hurt Bonds. Currently, U.S. Stocks are mixed with the Dow Jones Industrial Average lower, being weighed down by disappointing earnings results from GM and Boeing.

Courtesy of Mortgage Market Guide

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Tuesday – July 24, 2018

A shortage of homes for sale on the market continued to drive home prices higher in May, reports the Federal Housing Finance Agency (FHFA). The FHFA’s House Price Index (HPI) rose 0.2% in May from April, +6.4% from May 2017 to May 2018. The FHFA monthly HPI is calculated using home sales price information from mortgages sold to or guaranteed by Fannie Mae and Freddie Mac.

RE/MAX reports that home prices surged in June to a fresh record high, while inventories shrank. The national median home sale price in June was $258,500, a new record for the nine years that RE/MAX has tracked the housing market. As far as the amount of homes for sale on the market, 42 of the 54 metro areas reported a decline to a 2.7-month supply, an 8.8% drop from a year earlier and the lowest inventory number ever recorded for June. “Lack of inventory has become a theme for the year,” said RE/MAX CEO Adam Contos. “Having fewer homes to choose from poses a challenge for buyers, who need to be ready to act decisively and quickly.”

U.S. Stocks are rallying in response to a strong corporate earnings season. Google reported better-than-expected earnings yesterday, which is lifting all Stocks and FAANG (Facebook, Apple, Amazon, Netflix, Google) shares this morning. Of the 90 companies in the S&P 500 that have reported earnings so far, 82% have exceeded expectations. The U.S. economy is humming. In addition, Consumer Confidence is near all-time highs while small business optimism is at peak levels.

Courtesy of Mortgage Market Guide

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Monday – July 23, 2018

Sales of existing homes fell for the third straight month in a row due in part to high home prices and a low inventory of homes for sale on the market. The National Association of REALTORS® (NAR) reports that June Existing Home Sales fell 0.6 percent from May to an annual rate of 5.38 million annualized units, below the 5.45 million expected. From June 2017 to June 2018, sales fell 2.2 percent. Sales were up in the Northeast, flat in the Midwest, while declines were seen in the South and West.

Within the report it showed that the median existing home price was $276,900 in June, a new all-time high. Inventory of homes for sale on the market was at a 4.3-month supply, below the 6-month supply seen as normal. Lawrence Yun, NAR chief economist says, “The root cause is without a doubt the severe housing shortage that is not releasing its grip on the nation’s housing market. What is for sale in most areas is going under contract very fast and in many cases, has multiple offers.”

Freddie Mac released its July forecast reporting that home sales could increase if inventory levels improve. Freddie says that exceptionally low housing supply and weaker affordability slowed the housing market in the first half of 2018, but total sales in 2018 should still slightly top 2017 levels. Total home sales are likely to increase 2.5% for the year while home prices are expected to rise 6.7%.

Courtesy of Mortgage Market Guide

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