Daily Rate Update: June 25th-29th

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Friday – June 29, 2018

Inflation pressures remained contained in May, which is a big topic for the members of the Federal Reserve. The annual Core Personal Consumption Expenditures (PCE), the Fed’s favorite inflation gauge, rose to 2% last month, right at the Fed’s target range of 2%. It was the first time since April 2012 that the Core PCE hit 2%. The Fed said that its inflation gauge could rise above the 2% target given the upward movement of oil prices.

Consumer Sentiment edged lower in the second half of June due in part to concerns over the potential impact of tariffs on the U.S. economy. However, the decline was minor as the index has been virtually unchanged for the past three months. The final Consumer Sentiment Index for June came in at 98.2, just above the 98.0 reading in May. Looking ahead, consumers anticipate that the economy will produce small additional declines in the unemployment rate as well as higher wage gains.

Courtesy of Mortgage Market Guide

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Thursday – June 28, 2018

Mortgage rates declined over the past week and have now decreased in four of the past five weeks. Rates hit their high water mark at the end of May due in part to an improving economy and modestly higher inflation pressures. Freddie Mac reports that the 30-year fixed-rate mortgage fell to 4.55% this week with an average 0.5 in points and fees. Freddie Mac said that the economy and housing market overall are on solid footing this summer, which should support continued strength in housing demand.

A new survey conducted by Chase Home Lending and Pulsenomics show record highs among U.S. homeowners and renters in three key areas; market conditions, aspirations for homeownership and expectations regarding home values and affordability. The Chase Housing Confidence Index (HCI) systematically measures and tracks key dimensions of consumer confidence in housing markets across the United States using data collected in the U.S. The survey revealed that both homeowners and renters agree that now is a good time to buy and sell a home. The Chase Housing Confidence Index hit 66.3 for the national average with levels above 50 being positive.

Americans filing for first time unemployment benefits continue to hover near lows seen in the early 1970s, as the labor market is now at or near full employment. Weekly Initial Jobless Claims rose 9,000 in the latest week to 227,000. The less volatile four-week moving average of claims, which irons out seasonal abnormalities, edged higher to 222,000 from 221,000. The June Jobs Report will be released Friday, July 6.

Courtesy of Mortgage Market Guide

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Wednesday – June 27, 2018

U.S. Stocks are rebounding today on news that the Trump administration will take a softer stance on foreign investments. It was reported that “rather than actively restricting Chinese investment in U.S. technology firms, the White House has decided to rely on the Committee on Foreign Investment in the United States (CFIUS). The CFIUS is a committee within the Treasury Department that’s authorized to review transactions that could result in foreign ownership of a U.S. business. This is seen as a less aggressive approach and, therefore, a bullish catalyst for the U.S. equity market.”

The Atlanta Federal Reserve Bank model for Gross Domestic Product (GDP), economic growth, in the second quarter of 2018 is expected to surge 4.5%, after the 2.2% recorded in the first quarter of this year. GDPNow is not an official forecast of the Atlanta Fed. Rather, it is best viewed as a running estimate of real GDP growth based on available data for the current measured quarter. The GDPNow forecast is constructed by aggregating statistical model forecasts of 13 subcomponents that comprise GDP.

The National Association of REALTORS® reports that Pending Homes Sales fell in May from April and have fallen on an annualized basis for the fifth straight month. The Pending Home Sales Index fell 0.5% in May from April, below the gain of 0.8% expected. Lawrence Yun, NAR chief economist, says this year’s spring buying season will go down as one of unmet expectations. “REALTORS® in most of the country continue to describe their markets as highly competitive and fast moving, but without enough new and existing inventory for sale, activity has essentially stalled.”

Courtesy of Mortgage Market Guide

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Tuesday – June 26, 2018

A recent survey conducted by RENTCafe shows that 83% of renters are kept away from their ideal locations and jobs due to rising rent costs. Nationally, the average rent charged by buildings in top-rated locations is $1,655 per month, 37% more than the national average rent of $1,211 charged in lower-rated locations. The survey showed that the “ideal location” for most renters is near their job; close to friends or family; or near attractions such as entertainment, dining, shopping or a gym.

Home prices continued their winning ways in April due in part to an improving economy, low home loan rates and a low supply of homes for sale on the market. The S&P CoreLogic Case-Shiller 20-City Home Price Index rose 6.6% from April 2017 to April 2018, slightly lower than the 6.8% expected. From March to April, the 20-City Index was up 0.2% month over month. Seattle, Las Vegas and San Francisco continue to report the highest year-over-year gains among the 20 cities.

Gas prices at the pumps have edged lower in the latest week as motorists head into next week’s 4th of July celebration. The national average price for a regular gallon of gas is $2.85, five cents cheaper than a week ago, 12-cents less than a month ago and 58-cents more than a year ago. Motor Club AAA said that prices should edge a bit lower in late summer or early fall.

Courtesy of Mortgage Market Guide

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Monday – June 25, 2018

The labor market has improved dramatically since the height of the “Great Recession” back in early 2009. The Unemployment Rate was 3.8% as of May 2018. The “unemployed and underemployed” rate, U6, was 7.6% as of May 2018, which is the combination of jobless individuals plus workers who are part-time purely for economic reasons. The U.S. unemployment rate was 10.0% as of October 2009. The U.S. “unemployed and underemployed” rate was 17.1% as of October 2009.

The Commerce Department reported that New Home Sales rose 6.7% to an annual rate of 689,000 in May from April. This was above the 666,000 expected and, the highest number since November 2017. However, April was revised lower to 646,000 from the original reading of 662,000. From May 2017 to May 2018, sales rose 14.1%. The median sales price of new houses sold in May 2018 was $313,000. There was a 5.2-month supply of new homes for sale on the market, just below 6-months that is seen as normal. New Homes Sales fell in the Northeast and West, rose in the South and were flat in the Midwest.

After declining last week, due in part to lingering trade issues between the U.S. and China, U.S. Stocks are lower to begin the last week of trading for June, the quarter and the first half of 2018. The closely watched S&P 500 is up slightly in 2018 from the last trading day in 2017, while the Dow Jones Industrial Average is down a little over 1% in the same time period. From the last day of trading in 2016 until the last day of trading in 2017, the S&P rose nearly 20%.

Courtesy of Mortgage Market Guide

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