27
Feb
By support
Market Outlook

FHFA House Price Index Rises for 14th Consecutive Quarter

FHFA House Price Index Rises for 14th Consecutive QuarterAccording to the Federal Housing Finance Agency (FHFA), U.S. home prices rose by 1.40 percent for the fourth quarter of 2014 and were up by 0.80 percent month-to-month from November. The seasonally adjusted FHFA House Price Index measures purchase transactions for homes connected with mortgages owned by Fannie Mae and Freddie Mac.

FHFA also reported that home prices rose 4.9 percent year-over –year from the fourth quarter of 2013 to the fourth quarter of 2014. FHFA Chief Economist Andrew Leventis described the report for the last quarter of 2014 as “relatively strong” and also cited low inventories of available homes and improving labor markets as contributing to home price growth.

FHFA House Price Index Identifies Significant Trends

FHFA’s expanded house price data, which adds data from county records and the Federal Housing Administration, to the FHFA House Price Index, indicated that home prices grew by 1.30 percent in the fourth quarter; year-over-year home prices grew by 6.0 percent according to FHFA’s expanded house price data report.

According to purchase-only indexes for the 100 most populated metro areas, the San Francisco-Redwood City-south San Francisco, California metro area posted the highest rate of year-over-year home price gains at six percent for the fourth quarter of 2015. The lowest reading was for the El Paso, Texas, which posted a loss of 6.60 percent in the fourth quarter.

The mountain division of the nine U.S. Census divisions posted the highest annual home price growth at 5.50 percent and 1.40 percent in the fourth quarter. House price appreciation was weakest in the New England Division, where home prices fell by0.03 percent.

FHFA also reported that its “distress free” home price indexes which the agency publishes for 12 metro areas have shown less price appreciation than the FHFA purchase only Home Price Index. Distress-free means that foreclosed homes and short sales were not included in these index readings.

FHFA has expanded its home price reports with a set of reports based on three-digit zip codes. Sorting house price data by the first three digits of a zip code provides more specific data for regional home price trends; mortgage and real estate pros can find house price data for specific neighborhoods and communities. FHFA described its three-digit zip code reports as “experimental” at present.

 

19
Feb
By support
Market Outlook

Fed Not in a Hurry to Raise Rates: FOMC Meeting Minutes

Fed Not in a Hurry to Raise Rates FOMC Meeting Minutes

Minutes of the Federal Open Market Committee (FOMC) meeting held January 27 and 28 were released on Wednesday. According to the minute’s transcript, it appears that Fed policymakers are in no hurry to raise the target federal funds rate. Members said that raising rates too soon could swamp the strengthening economy and expressed concerns that changing the committee’s current “patient” stance on rising rates could cause more harm than good to current economic conditions.

FOMC members discussed the Fed’s use of the word “patient” in its guidance, and said that dropping the word could incorrectly suggest that the Fed is planning to act sooner than later on raising the Fed’s target interest rates, and could result in “undesirably tight” financial conditions. While a majority of members agreed on protecting current economic conditions by raising rates too soon, member viewpoints varied on which conditions would support the first rate hike.

Target Inflation Rate of Two Percent “Most Consistent” with Fed’s Statutory Mandate

According to the Federal Reserve’s statutory mandate supplied by Congress, the Fed seeks to provide maximum employment, price stability and moderate long-term interest rates. The Fed established a target inflation rate of 2.00percent as a benchmark for economic health, but inflation has remained consistently below the target rate according to the annualized index reading for personal consumption expenditures.

FOMC members did not set a target rate for annual unemployment; FOMC members cited unpredictable “non-monetary factors that affect the structure and dynamics of the labor market” as reasons why it’s impossible establish an accurate target percentage rate for national unemployment. The minutes caution that these factors are sufficiently unpredictable that they may cause the Fed to revise or reverse its policies concerning national unemployment readings.

Committee members noted that short-term fluctuations in the federal funds rate could be expected. The minutes indicated that in general, day-to-day fluctuations outside of the Fed’s target range were not surprising as historical data indicated that such changes had “few if any implications for overall financial conditions or the aggregate economy.”

FOMC members agreed that the economy had expanded at a solid pace, but noted that inflation had fallen due to rapid decreases in fuel prices.

Fed/FOMC Chair Janet Yellen did not hold a post-meeting press conference at the conclusion of January’s FOMC meeting; she is scheduled to hold a press conference at the conclusion of the next FOMC meeting on March 18, 2015.

17
Feb
By support
Market Outlook

What’s Ahead For Mortgage Rates This Week – February 16, 2015

What's Ahead For Mortgage Rates This Week Feburary 16 2015

Last week’s economic news included an index of labor market conditions provided by the Federal Reserve, a report on small business sentiment, and a report from the Labor Department on job openings. Weekly jobless claims, Freddie Mac’s mortgage rates report and a report on Consumer Sentiment rounded out the week. The details:

Labor Market Conditions, Small Business Index Reports Fall

According to the January reading for a labor index report released by the Federal Reserve, labor market conditions declined from December’s reading of 7.3 to January’s reading of 4.9. This index is based on 19 economic indicators and January’s reading was the lowest since September. The National Foundation for Independent Business (NFIB) reported that its index of small business sentiment fell to 97.9 in January as compared to December’s reading of 100.4. Analysts said that this report reflected less optimism about business conditions and sales growth rather than concerns over spending and hiring plans.

In other labor–related news, the Labor Department reported that job openings rose to 5.03 million in December; this was 3.70 percent higher than November’s reading and represented a year-over-year increase in job openings of 28.50 percent. In contrast, all hiring for 2014 increased by 12.50 percent, which suggested that employers may be having trouble finding employees with needed job skills.

Jobless Claims Rise, but Four Week Average Shows Drop in New Claims

According to the Labor Department’s weekly Jobless Claims report, 304,000 new unemployment claims were filed, which once again positioned new jobless claims over the key benchmark of 300,000 new jobless claims filed. Analysts expected a reading of 296,000 new jobless claims based on the prior week’s reading of 279,000 new claims. To put this in perspective, new jobless claims have fallen by 3250 claims over the past four weeks to a reading of 289,750 new claims. Economists say that the four-week average is a more accurate measure of developing trends, as week-to-week readings can be volatile.

Mortgage Rates Rise

Last week’s only scheduled mortgage-related news was Freddie Mac’s weekly survey of average U.S. mortgage rates. Rates were higher with the average rate for a 30 year fixed rate mortgage higher by 10 basis points at 3.60 percent. The average rate for a 15-year fixed rate mortgage rose by eight basis points to 2.99 percent. The average rate for a 5/1 adjustable rate mortgage jumped to 2.97 percent from the previous week’s average of 2.82 percent. Average discount points were 0.60 percent for 30 and 15-year fixed rate mortgages and averaged 0.50percent for a 5/1 adjustable rate mortgage.

February’s Consumer Sentiment Index dipped as fears of rising inflation caused consumer sentiment to dip from January’s reading of 98.1 and expectations of February’s reading at 98.5; unfortunately, February’s actual reading fell short at 93.6. February’s reading was a three-month low after January’s reading hit an 11-year high. Fears of growing inflation were noted as an influence on the drop in consumer sentiment; fuel prices are rising, which will contribute to rising inflation.

What’s Ahead

No economic reports were scheduled Monday due to the President’s Day holiday. The National Association of Home Builders (NAHB) releases its housing market index report on Tuesday, Housing Starts will be released Wednesday along with the minutes of the most recent FOMC meeting. Weekly jobless claims, Freddie Mac’s mortgage rates survey and Leading Economic Indicators round out this week’s scheduled reports.