Mortgage Rates

Last week’s economic news included readings on housing starts, building permits issued and sales of pre-owned homes. The Fed’s Federal Open Market Committee issued its customary post-meeting statement and Fed Chair Janet Yellen gave a press conference. Weekly readings on mortgage rates and new jobless claims were also released.

Housing Starts Lower, but Building Permits Increase

August saw fewer housing starts with 1.18 million starts on a seasonally-adjusted annual basis. July’s reading was upwardly adjusted to 1.19 million starts; analysts expected 1.175 million starts annually in August. Building permits rose in August, which suggested builder confidence was strong regardless of fewer starts.

Recent hurricanes had little effect on August building permits, but building permits will likely increase as rebuilding gets under way in affected areas. 1.30 million building permits were issued on an annual basis as compared to July’s reading of 1.23 million permits issued. August’s reading for permits issued was the second highest since 2007.

Analysts noted that more permits were issued for single-family residences than for multi-family complexes. This is likely a response to high demand for single-family homes caused by persistent shortages of homes for sale. Multi-family permits issued fell by 5.80 percent in August with 323,000 permits reported. August’s reading for multi-family housing permits was 23 percent lower year-over-year.

Pre–Owned Home Sales Dip, Fed Holds Steady on Federal Funds Rate

Sales of previously-owned homes fell to a seasonally-adjusted annual rate of 5.35 million sales in August. Analysts expected a reading of 5.44 million sales, which matched July’s seasonally-adjusted annual reading of 5.44 million sales of previously-owned homes. High demand and very low inventories of homes for sale has caused sales to fall although very low unemployment rates and relatively low mortgage rates were positive indicators for would-be home buyers.

The Federal Reserve’s Federal Open Market Committee announced it did not raise the current federal funds rate of 1.00 to 1,25 percent. Fed Chair Janet Yellen remarked that “the basic message here is U.S. economic performance has been good.” The Fed was puzzled by sluggish inflation and revised its long-term inflation goal from 3.00 percent to 2.80 percent. The Fed is expected to raise its target federal funds rate one more time in 2017 and twice in 2018; this prediction may change if economic forecasts and world events change significantly.

Mortgage Rates Rise, New Jobless Claims Fall

Mortgage rates rose last week in response to the 10-year Treasury rate rising by seven basis points. The average rate for a 30-year mortgage rate rose five basis points to 3.83 percent; the average rate for a 15-year fixed rate mortgage rose five basis points to 3.13 percent. The average rate for a 5/1 adjustable rate mortgage rose four basis points to 3.17 percent. Discount points averaged 0.50 percent for fixed-rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

New jobless claims were lower with 259,000 new claims filed. Analysts expected a reading of 302,000 new jobless claims based on the prior week’s reading of 282,000 new jobless claims filed.

What‘s Ahead

This week’s scheduled economic reports include readings on new and pending home sales, personal income, and inflation. Weekly readings on mortgage rates and new jobless claims are scheduled along with a monthly reading on consumer sentiment.

Last week’s economic readings release included reports on inflation, core inflation retail sales and retail sales excluding autos. Consumer sentiment, along with weekly readings on mortgage rates and new jobless claims were also reported.

Inflation Exceeds Expectations, Retail Sales Lag

Consumer prices rose 0.40 percent in August, which surpassed expectations of 0.30 percent growth and July’s reading of 0.10 percent. Core consumer prices, which exclude volatile food and energy sectors, matched expectations with a reading of 0.20 percent growth and exceeded July’s growth of 0.10 percent.

August retail sales fell to -0.20 percent against expectations of no change from July’s reading of 0.30 percent.

Retail sales excluding auto sales grew by 0.20 percent, which was lower than expected growth of 0.40 percent, which was based on July’s growth rate of 0.40 percent.  

Mortgage Rates Hold Steady, Weekly Jobless Claims Dip

Freddie Mac reported no change for averaged fixed mortgage rates; the rate for a 30-year fixed rate mortgage was unchanged at 3.78 percent. Rates for a 15-year fixed rate mortgage averaged 3.08 percent and was also unchanged from last week’s reading. The average rate for a 5/1 adjustable rate mortgage dropped by two basis points to 3.13 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages. The readings for fixed rate mortgages were the lowest in 2017, and provided an ongoing incentive for home shoppers who continued to face high home prices and slim inventories of homes for sale.

New jobless claims were lower at 284,000 new claims filed than last week and were also lower than the expected reading of 300,000 first-time jobless claims The prior week’s reading reported 297,000 first-time jobless claims.

What‘s Ahead

This week’s scheduled economic reports include readings on home builder sentiment, existing home sales, housing starts and building permits issued. The Fed’s Federal Open Market Committee will issue its post-meeting statement and Fed Chair Janet Yellen will give a press conference. Weekly readings for mortgage rates and new jobless claims will also be released. 

Last week’s economic news was slim due to the Labor Day Holiday. Scheduled releases included the Fed’s Beige Book Report and weekly readings on mortgage rates and new jobless claims. 

Beige Book Cites Concerns Over U.S. Auto Industry

Federal Reserve Board members shared anecdotes from their respective regions; of note were concerns about U.S. automakers. Auto production was more than 16 percent lower year-over-year in Cleveland, Ohio. Fed business contacts said that automakers are no longer seeking buildings for expanding production. Analysts said that slowing auto production and sales could indicate slowing economic trends. Auto industry slow-downs could also result in layoffs in auto production and sales/

Economic conditions, in general, continue to improve at a “modest to moderate” rate. August’s Beige Book did not include responses to damage caused by Hurricane Harvey, but damage to Houston and surrounding areas were expected to impact negatively impact the economy.

Mortgage Rates Mixed, New Jobless Claims Rise

Freddie Mac reported lower fixed rate mortgage rates last week; this was the second consecutive week of record low rates. The average rate for a 30-year fixed rate mortgage dropped by four basis points to 3.78 percent. The average rate for a 15-year fixed rate mortgage was also four basis points lower at 3.08 percent and rates for 5/1 adjustable rate mortgages averaged 3.15 percent. Discount points for fixed rate mortgages averaged 0.50 percent and points for 5/1 adjustable rate mortgages averaged 0.40 percent.

New jobless claims rose sharply to 298,000 new claims filed as compared to expectations of 242,000 new claims and the prior week’s reading of 236,000 new jobless claims filed. Hurricane Harvey was blamed for the surge in new jobless claims. Further impacts on jobless claims were expected as two hurricanes, Irma and Jose, approached Florida on Friday. Severe damage was predicted; the total economic impact will be assessed in the aftermath of the hurricanes.

What‘s Ahead

This week’s economic reports include readings on job openings, inflation, retail sales and consumer sentiment. Weekly readings on mortgage rates and new jobless claims will also be released.