02
Jun
By First Rate Financial Group
Financial Reports

Case Shiller: Home Prices Rise at Fastest Pace Since 2005

Case Shiller: Home Prices Rise at Fastest Pace Since 2005March readings for S&P CoreLogic Case-Shiller Home Price Indices rose to their highest level since 2005 in March. National home prices rose by 13.20 percent year-over-year as compared to February’s reading of 12.00 percent growth. The Case-Shiller 20-City Home Price Index reported average year-over-year home price gains of 13.30 percent in March. Phoenix, Arizona continued to lead the 20-City Index with a year-over-year home price growth of 20 percent. San Diego, California followed with home price growth of 19.10 percent; Seattle, Washington reported year-over-year home price growth of 18.30 percent.

How the Covid Pandemic Impacted  Home Prices

Real estate pros said that the Covid epidemic continued to impact housing markets as homeowners were more willing to list their homes as Covid cases decreased. Demand for single-family homes increased as homebuyers shopped for larger homes in less-congested metro areas. The pandemic opened more opportunities for working from home, which increased buyer interest in larger homes with amenities including home offices.

According to the Federal Housing Finance Agency, home prices for single-family homes owned or financed by Fannie Mae and Freddie Mac rose by 12.60 percent from the first quarter of 2020 through the first quarter of 2021.

As Covid cases fall more Americans will either return to their workplaces or re-evaluate their employment and housing situations. Demand for homes will exceed the supply of available homes for the foreseeable future, but the current high demand for homes may soften as families return to work and school and covid-related fears ease.

Home Price Growth May Slow, but Prices Unlikely to Drop

Rapid home price growth is likely to slow as more home sellers and buyers enter the market in the aftermath of the pandemic. Analysts don’t see major dips in home prices as demand continues to exceed supplies of new and previously-owned homes. Homebuilders face ongoing obstacles including labor shortages and rapidly rising materials prices that impact their ability to provide enough homes to meet demand.

Affordable homes are in short supply as pre-owned homes are often subject to bidding wars and cash sales due to buyer competition for fewer available homes. First-time and moderate-income buyers are joined on the sidelines by buyers who depend on mortgages to buy homes; they typically can’t compete with cash sales. As real estate markets return to pre-pandemic conditions, home prices may gradually plateau, but there isn’t much relief in sight for homebuyers needing to finance their home purchases.

24
May
By First Rate Financial Group
Financial Reports

What’s Ahead For Mortgage Rates This Week – May 24, 2021

What's Ahead For Mortgage Rates This Week - May 24, 2021Last week’s economic reporting included readings from the National Association of Home Builders, data on sales of existing homes, and reports on housing starts and building permits issued. Weekly readings on mortgage rates and jobless claims were also released.

NAHB: Home Builder Confidence Unchanged in May

The National Association of Home Builders Housing Market Index reading for May was unchanged from April’s reading of 83. Readings higher than 50 indicate that most home builders were positive about housing market conditions.

Component readings for builder confidence in housing market conditions in May were mixed; builder confidence in current market conditions was unchanged with an index reading of 83; builder confidence in market conditions in the next six months rose one point to 81 and builder confidence in buyer traffic in new single-family housing developments dropped one point to 73. Readings for buyer traffic rarely exceeded 50 before the pandemic.

Robert Dietz, NAHB’s chief economist said that costs of land, labor, and building materials were expected to rise throughout 2021 and would drive home prices higher. Lower interest rates, shortages of pre-owned homes for sale, and interest in relocating to less congested suburban and rural areas continued to increase demand for single-family homes against severe shortages of homes for sale. Rapidly rising home prices squeezed first-time and moderate-income home buyers out of the market and caused some sales to fall through.

Sales of previously-owned homes fell in April and supported concerns about shortages of available homes. 5.85 million homes were sold on a seasonally adjusted annual basis, which was lower than the expected reading of 6.02 million sales and the March reading of 6.01 million sales of previously-owned homes. Rising home prices and short supplies of homes for sale continued to create high demand for homes.

Housing Starts Fall in April; Building Permits Issued Rise

The Commerce Department reported a sharp decrease in housing starts in April with 1.57 million starts on a seasonally-adjusted annual basis. March housing starts were revised downward to 1.73 million starts, but this did not affect April’s reading being the highest pace of housing starts since 2006. Housing starts fell in the Midwest and South and rose in the Northeast and West.

Building permits held steady in April at a seasonally-adjusted annual pace of 1.76 million permits issued. Analysts expected 1.77 million building permits issued.

Mortgage Rates Rise; Jobless Claims Mixed

Mortgage rates rose last week as rates for 30-year fixed-rate mortgages rose by six basis points to 3.00 percent on average. Rates for 15-year fixed-rate mortgages averaged 2.79 percent and were three basis points higher. Rates for 5/1 adjustable rate mortgages were unchanged at an average rate of 2.59 percent. Discount points averaged 0.60 percent for 30-year fixed-rate mortgages, 0.70 percent for 15-year fixed-rate mortgages, and 0.30 percent for 5/1 adjustable rate mortgages.

New jobless claims fell to 444,000 initial claims filed last week from the previous week’s reading of 478,000 new claims filed. Continuing jobless claims rose to 3.75 million claims filed as compared to the prior week’s reading of  3.64 million ongoing jobless claims filed.

What’s Ahead

This week’s economic reporting includes readings from Case-Shiller Home Price Indices, data on new and pending home sales, and the University of Michigan’s Consumer Sentiment Index. Weekly reports on mortgage rates and jobless claims will also be released.

05
Apr
By First Rate Financial Group
Financial Reports

What’s Ahead For Mortgage Rates This Week – April 5, 2021

What's Ahead For Mortgage Rates This Week - April 5, 2021Last week’s economic reports included readings on home prices, pending home sales, and construction spending. Data on public and private-sector employment and the national unemployment rate were published along with weekly readings on mortgage rates and jobless claims. 

vLast week’s economic reports included readings on home prices, pending home sales, and construction spending. Data on public and private-sector employment and the national unemployment rate were published along with weekly readings on mortgage rates and jobless claims. Last week’s economic reports included readings on home prices, pending home sales, and construction spending. Data on public and private-sector employment and the national unemployment rate were published along with weekly readings on mortgage rates and jobless claims.

Case-Shiller: Record Home Price Growth in Phoenix, but Will it Last?

Case-Shiller Home Price Indices indicated fast growth in home prices as the national home price growth rate for January grew to 11.20 percent from December’s reading of 10.40 percent national home price growth. Case-Shiller’s 20-City Home Price Index reported 19 of 20 cities reported rising home prices in January, but Cleveland, Ohio home prices were lower. Detroit, Michigan resumed reporting to the 20-City Home Price Index after nearly a year’s absence.

Phoenix, Arizona led the January 20-City Home Price Index with a seasonally-adjusted annual pace of 15.80 percent; Seattle, Washington, and San Diego, California followed with home price growth of 14.30 percent and 14.20 percent.

 Analysts expressed concerns that rapidly rising home prices are not sustainable in the long term and cited rising mortgage rates and skyrocketing home prices as obstacles to homebuying. As demand for homes eases, home price growth will slow.

The Commerce Department reported fewer pending home sales in February as pending home sales fell by 10.60 percent. Analysts expected pending home sales to fall to -3.10 percent; pending home sales dropped by -2.40 percent in January. Construction spending fell by -0.80 percent in February; it was expected to fall by one percent as compared to January’s positive reading of 1.25 percent growth in construction spending. Rising lumber prices and severe winter weather influenced construction spending in February.

Mortgage Rates Hold Steady, Jobless Claims Mixed

Freddie Mac reported little change in mortgage rates last week. The average rate for 30-year fixed-rate mortgages rose one basis point to 3.18 percent; Rates for 15-year fixed-rate mortgages averaged 2.45 percent and were unchanged. The average rate for 5/1 adjustable rate mortgages was also unchanged at 2.84 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages, 0.60 percent for 15-year fixed-rate mortgages, and 0.30 percent for 5/1 adjustable rate mortgages.

The Census Bureau reported 719,000 new jobless claims last week; this surpassed the prior week’s reading of 658,000 initial claims. Ongoing jobless claims fell to 3.79 claims filed as compared to the prior week’s reading of 3.80 million continuing jobless claims filed.

Private-sector jobs grew by 525,000 jobs in March but fell short of the expected 525,000 private-sector jobs added. Public and private-sector jobs also ramped up with 916,000 jobs added in March. Analysts expected 675,000 jobs added to the Non-Farm Payrolls report; 468,000 public and private-sector jobs were added in February. The national unemployment rate decreased to 6.00 percent from February’s reading of 6.20 percent.

What’s Ahead

This week’s scheduled economic releases include job openings and minutes of the recent Federal Open Market Committee meeting. Weekly readings on mortgage rates and jobless claims will also be reported.