Family and housing in 2020

Daily Rate Update: June 15th-19th

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Friday – June 19, 2020

Signs that the U.S. economy is recovering as states reopen continued today with many reports streaming in positive since May. McDonald’s, the world’s largest fast-food chain, announced this week it will be hiring 260,000 workers this summer as its dining rooms begin to reopen across the country. The fast-food chain is said to have put in more than 50 new safety precautions that include temperature checks for workers as well as social distancing guidelines. McDonald’s has more than 37,000 locations in about 120 countries and is also one of the largest private employers and serves almost 70 million people worldwide.

Oil prices continue to gush higher today as demand for crude ramps up as world economies continue to reopen from the pandemic induced shutdown. West Texas Intermediate oil has risen to $40/barrel after falling into negative territory in mid-April. The uptick in oil has pushed the price of gasoline at the pumps hire over the past month. The national average price for a regular gallon of gasoline has risen to $2.11 from $1.88 a month ago and with state economies opening up and the summer driving season upon us, gas prices will increase marginally. Jeanette Casselano, AAA spokesperson said, “Higher demand will contribute to increasing gas prices in the coming weeks, but they aren’t going to spike to typical summer prices. That’s because demand won’t be sufficient enough to drive down supply levels.”

Courtesy of Mortgage Market Guide

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Thursday – June 18, 2020

Mortgage rates hit fresh record lows this week due in part to the uneven economy, according to Freddie Mac. The 30-year fixed-rate mortgage fell to 3.13% with 0.8 in points and fees. It was the lowest rate since Freddie Mac began keeping records in 1971. Last year this time the rate was 3.84%. Freddie Mac said that one segment that is exhibiting strength is the housing market though it will be difficult to sustain the momentum in demand as unsold inventory was at near-record lows coming into the pandemic and it has only dropped since then.

Americans filing for first-time unemployment benefits continue to push lower though still at historically high levels. Weekly Initial Jobless Claims came in at 1,508,000 for the week ended June 13 from 1,566,000 million in the previous week and above the 1,350,000 million expected. Continuing Claims fell to 20,544,000 million from 20,606,000 in the previous week. The fallout from the pandemic induced shutdown of the U.S. economy continues to reverberate throughout the labor market.

Manufacturing activity in the Philadelphia region rebounded in June from May as indicators for general activity, new orders, and shipments returned to positive territory. The Philadelphia Fed Index jumped to 27.5 this month from the negative 43.1 reading in May which was pandemic related. In addition, the employment index increased 11 points while the majority of responding firms (72%) reported steady employment levels.

Courtesy of Mortgage Market Guide

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Wednesday – June 17, 2020

In housing news, May Housing Starts rose 4.3% from April to an annual rate of 974,000 though well below the 1.170 million expected, which seemed like a lofty estimate. From May 2019 to May 2020, starts were down 23%. Single-family starts were near unchanged at 675,000 annual units while multi-family dwellings jumped 17%. Building Permits, a sign of future construction, jumped 14.4% from April to an annual rate of 1.220 million.

Mortgage rates fell to record lows in the latest week, according to the MBA. The 30-year fixed-rate mortgage fell eight basis points to 3.30% with 0.29 in points. It was the lowest rate in survey history. The MBA went on to report that the Market Composite Index, a measure of total mortgage loan application volume, rose 8%, the Refinance Index rose 10% while the Purchase Index was up 4%. “Purchase applications increased to the highest level in over 11 years and for the ninth consecutive week. The housing market continues to experience the release of unrealized pent-up demand from earlier this spring, as well as a gradual improvement in consumer confidence,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.

Mortgage applications to purchase new homes jumped in May from April as would-be homebuyers have come out for the spring/summer buying season. The MBA reports that mortgage applications for new home purchases in May increased by nearly 11% compared from a year ago and were up a whopping 26% month over month in May from April. Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said, “Homebuyer traffic is rising, and homebuilders are continuing to ramp up production following the COVID-19 pandemic-related restrictions. We expect to see additional near-term strength in the coming months from the resumption of delayed sales activity caused by the social distancing and stay-at-home orders during March and April.”

Courtesy of Mortgage Market Guide

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Tuesday – June 16, 2020

Economic data continues to stream in on the positive side as more states reopen their respective economies. May Retail Sales had its largest monthly jump ever, rising by 17.7% after the -14.7% seen in April and above the 9% expected. Core Retail Sales surged 12.4% versus the 5.2% anticipated. Demand for clothing and accessories soared by 188% in May while sporting goods, hobby, musical instruments and book stores shot higher by 88%. Consumer spending makes up 2/3s of U.S. economic activity and it looks like the consumer is back in the game.

Home builder confidence skyrocketed in June after several months of negative readings. The NAHB Housing Market Index surged 21 points in June from May, to 58 versus the 45 expected. Any reading above 50 indicates a positive market. Within the numbers it showed that current sales conditions rose 21 points to 63, sales expectations in the next six months soared 22 points to 68 while the gauge for charting traffic of prospective buyers jumped 22 points to 43. “Housing clearly shows signs of momentum as challenges and opportunities exist in the single-family market,” said NAHB Chief Economist Robert Dietz.

Courtesy of Mortgage Market Guide

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Monday – June 15, 2020

The pandemic induced shutdown of many businesses and subsequent loss of millions of jobs across the nation has severely hit the ability to keep mortgage payments on time. Since March, millions of Americans have entered into some type of forbearance with their lenders. This past week Black Knight said that the numbers fell for the second straight week to 4.66 million for the week ended June 12 from 4.73 million the previous week. “After rising sharply in April and then leveling off toward the end of May, the number of American homeowners in forbearance plans has now decreased for the first time since the crisis began,” Black Knight CEO Anthony Jabbour.

Realtor.com’s Housing Markets Recovery Index showed positive signs in the latest numbers rising to 88.8 in June, up a point from the prior week and 11 points below the January trend baseline. The report went on to tread that buyer interest and home prices now growing faster than pre-COVID19 levels; growth in new supply and the pace of sales still lagging but on the path to recovery. In addition, the overall index was set to 100 for the last week of January based on average year-over-year trends that month, and updated every week relative to that baseline

Courtesy of Mortgage Market Guide

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