Mortgage Rates

Last week’s economic news was slim, with few scheduled reports released. Job openings for April, along with weekly readings on mortgage rates and weekly jobless claims were released. Job openings rose in April, while weekly jobless claims were lower. The headline event last week was a further decrease in fixed-rate mortgage interest rates.

Mortgage Rates Lowest in Almost 7 Months

Freddie Mac reported that average rates for fixed rate home loans fell again last week. Mortgage rates typically follow 10-year Treasury yields, which also fell last week. The average rate for a 30-year fixed rate mortgage dropped five basis points to 3.89 percent; the average rate for a 15-year fixed rate mortgage was three basis points lower at 3.16 percent. The average rate for a 5/1 adjustable rate mortgage was unchanged at 3.11 percent; discount points for all three mortgage types were also unchanged at an average of 0.50 percent.

Analysts cited mixed economic reports and uncertainty as factors contributing to lower mortgage rates. After months of short supplies of homes and high demand coupled with rapidly increasing home prices, first-time and moderate- income home buyers may gain a foothold in some housing markets that were previously inaccessible.

New Jobless Claims Fall, Job Openings Increase

First-time jobless claims were lower last week with 245,000 new claims filed as compared to an expected reading of 245,000 new claims and the prior week’s reading of 255,000 new jobless claims. In related news, job openings were higher in April with a reading of 6.0 million job openings as compared to 5.80 million job openings in March. Fewer new jobless claims coupled with more job openings suggests that layoffs are not driving new jobless claims.

What‘s Ahead

Next week’s scheduled economic reports include readings on Inflation, core inflation, and the Federal Open Market Committee of the Federal Reserve will release its post-meeting statement. Fed Chair Janet Yellen is set to give a press conference after the FOMC statement. The FOMC statement will indicate if the Fed will raise its target federal funds rate. The National Association of Home Builders will release its Housing Market Index for June. Weekly readings on mortgage rates and new jobless claims will also be released.

Last week’s economic releases included readings on inflation, core inflation pending home sales and multiple reports from the labor sector. Weekly readings on mortgage rates and new jobless claims were also released. Pending home sales were lower and weekly jobless claims rose, which illustrates continued volatility in the economic sector.

Inflation rose 0.40 percent in April, which matched projections and exceeded April’s reading of 0.30 percent. Core inflation, which excludes volatile food and energy sectors, grew by 0.20 percent and exceeded expectations of 0.10 percent growth based on a negative reading of -0.20 percent in March. The Federal Reserve has set an annual inflation rate of 0.20 percent as a benchmark for economic recovery.

Housing Data Mixed

Case-Shiller released its 20-City Housing Market Index for March; Home price appreciation held steady at 5.90 percent on a seasonally-adjusted basis year-over-year. Month-to-month, home prices rose by 0.90 percent. Seattle, Washington had the highest pace of home price growth in March, with 12.30 percent. Portland, Oregon followed with 9.20 percent home price growth and Dallas, Texas had the third highest level of year-over-year home price growth at 8.60 percent. Month-to-month home prices grew at a pace of 0.90 percent.

Despite indications of high builder confidence in current and future housing market conditions, construction spending decreased by -1.40 percent in April. Analysts expected an increase of 0.50 percent in construction spending based on construction spending growth of 1.10 percent in March.

Builders have consistently cited concerns over affordable lots and skilled labor, but industry professionals are not sure why high builder confidence in housing markets doesn’t correspond to lagging construction spending rates. Building more homes is viewed as the only path to easing high demand for homes caused by a shortage of homes for sale.

The Commerce Department reported fewer pending home sales in April with a reading of -1.30 percent; the March reading was -0.90 percent. Pending home sales typically indicate further closed sales and trends in mortgage loans.

Mortgage Rates Mixed, New Jobless Claims Rise

Freddie Mac reported slight change in mortgage rates last week; the average rate for a 30-year fixed rate mortgage was one basis point lower 3.94 percent. Rates for a 15-year fixed-rate mortgage averaged 3.19 percent and was unchanged from the prior week. The average rate for a 5/1 variable rate mortgage rose four basis points to 3.11 percent. Discount points averaged 0.50 percent for all three types of mortgages.

New Jobless Claims Hit 5–Week High

First-time claims rose from the prior week’s reading of 235,000 new claims to 248,000 new claims filed. Analysts had expected 239,000 new claims filed. Analysts said that higher claims were connected to the Memorial Day holiday and characterized last week’s higher number of claims as a “blip.”

In other labor-sector news, ADP reported 253,000 new private-sector jobs in May; the Commerce Department reported 138,000 new government and private sector jobs. This reading may be revised based on an expected 185,000 public and private-sectors jobs for May and April’s reading of 174,000 public and private-sector jobs.

National unemployment ticked down in May to 4.30 percent. Analysts had expected no change in April’s reading of 4.40 percent.

What‘s Ahead

This week’s scheduled economic news includes readings on job openings, consumer credit along with weekly reports on mortgage rates and new jobless claims.

Sales of new and previously owned homes were lower in April after reaching near-record levels in March. Mortgage rates were lower last week and new jobless claims were little changed.

New Home Sales Fall in April; March Reading Revised

New home sales were lower in April after moving higher in March. The Commerce Department revised March figures for new home sales to 642,000 sales on a seasonally-adjusted annual basis. April sales of new homes fell by 11.40 percent to 569,000 new home sales, which fell shy of 605,000 expected sales in April. Sales of new homes reported by the government are based on small samples and are frequently revised, so a month-to-month readings are subject to change. New home sales were 11 percent higher for the first four months of 2017 than for the same period in 2016.

Home prices are showing signs of cooling; the median price for a new home fell to $309,000 in April as compared to $318,700 in March. Lower prices increase affordability and may encourage more buyers into the market. In March, there was a 4.9 percent supply of available homes as compared to April’s 5.70 months inventory. Real estate pros typically consider a 6- month supply of available homes a good balance between homes available and prospective buyers.

The National Association of Realtors® reported fewer sales of pre-owned homes in April than for March. 5.57 million pre-owned homes were sold in April as compared to an expected reading of 5.60 million sales. Projected sales were based on 5.70 million sales of previously owned homes in March. Low inventories of homes for sale has stifled demand as would-be buyers wait for a larger choice of homes.

Mortgage Rates Lower

Freddie Mac reported lower mortgage rates across the board for the three types of mortgages reported. The average rate for a 30-year fixed rate dropped seven basis points to 3.95 percent; the rate for a 15-year fixed rate mortgage was eight basis points lower at 3.19 percent and the average rate for a 5/1 adjustable rate mortgage fell six basis points to 3.07 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

New jobless claims rose from the prior week’s reading of 233,000 new claims to 234,000 new claims filed last week.

What‘s Ahead

This week’s scheduled economic news includes readings on inflation, core inflation, Case-Shiller Home Price Indices, and construction spending. Pending home sale and multiple labor-related reports will be released along with weekly readings on mortgage rates and new jobless claims.