Mortgage Rates

Last week’s economic reports included NAHB Housing Market Index, Commerce Department readings on housing starts and building permits issued. The National Association of Realtors® released data on existing home sales; Freddie Mac released average mortgage rates and new jobless claims were also released.

Builder Sentiment Dips in April, but Remains Strong

The National Association of Home Builders reported that home builder sentiment dipped three points in April to an index reading of 78. Any reading over 50 indicates that more builders are positive about housing market conditions than not. Builders continued to cite concerns including shortages of labor and buildable lots and increasing materials costs.

Builder confidence in housing market conditions do not always reflect building activity. March housing starts were lower at 1.215 million starts on a year-over-year basis. February’s reading was 1.303 million starts; the expected reading for April was 1.238 million starts. Readings for housing starts include single family homes of one to four units and multifamily complexes with five or more units. Single-family housing starts were 6.20 percent lower than in February at a seasonally-adjusted annual rate of 821,000 starts.

While housing starts were lower in March, more building permits were issued in March than in February. 1,260 million permits were issued in March on a seasonally-adjusted annual basis as compared to February’s reading of 1.216 million building permits issued.

Mortgage Rates Fall, Existing Home Sales Up

Mortgage rates fell below three percent according to Freddie Mac. The average rate for a 30-year fixed rate mortgage dropped from 4.08 percent to 3.97 percent; the average rate for a 15-year fixed rate mortgage fell by nine basis point from 3.34 percent to 3.23 percent. The average rate for a 5/1 adjustable rate mortgage was eight basis points lower at 3.10 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for a 5/1 adjustable rate mortgage. Lower mortgage rates are good news for home buyers challenged by rapidly rising home prices based on high demand and low supplies of homes for sale.

Home buyers persisted in March despite higher home prices. Sales of pre-owned homes hit a 10 year high in March as 5.71 million pre-owned homes were sold on a seasonally-adjusted annual basis. As compared to February’s reading of 5.48 million pre-owned homes sold, analysts expected a reading of 5.65 million sales of pre-owned homes in March.

New Jobless Claims Rise

First-time jobless claims were higher last week with a reading of 244,000 new claims as compared to the prior week’s reading of 234,000 new jobless claims. Week-to-week readings for new jobless claims tend to be volatile, but last week’s reading remained well below the benchmark of 300,000 new claims filed.

What‘s Ahead

This week’s economic news includes readings on new and pending home sales, Case-Shiller Home Price Index reports, along with weekly reports on average mortgage rates and new jobless claims.

Last week’s economic releases included readings on inflation, core inflation, new jobless claims, and mortgage rates. Consumer sentiment for April was also released.

Inflation Rate Dips in April

Consumer Price Index readings for April indicated that inflation decreased from 0.10 percent growth in March to a negative reading of -0.30 percent reading in April. The Core Consumer Price Index, which does not include volatile food and energy readings, also dipped in April to -0.10 percent from the March reading of +0.20 percent. While negative readings for month=to-month inflation suggests sluggish economic conditions, month-to-month readings can be volatile

 It’s possible that sluggish inflation readings could cause the Fed to postpone further interest rate increases. Lenders typically raise consumer interest rates when the Fed raises its target federal funds rate.

Mortgage Rates, New Jobless Claims

Freddie Mac reported lower average mortgage rates last week. Rates for a 30-year fixed rate mortgage averaged 4.08 percent a reading two basis points lower than for the previous week. The average rate for a 15-year fixed rate mortgage was two basis points lower at 3.34 percent; rates for a 5/1 adjustable rate mortgage dropped by one basis point to an average of 3.18 percent Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages. Last week’s mortgage rates were the lowest seen so far in 2017.

Fewer new jobless claims were filed last week with 234,000 new claims filed as compared expectations of 245,000 new claims filed and the previous week’s reading of 235, new claims filed.

Consumer sentiment rose in April to an index reading of 98.0. Analysts expected a reading of 96.0 based on the March reading of 96.9. The University of Michigan said that most consumers are upbeat about current economic conditions.

What‘s Ahead

This week’s scheduled economic news includes the NAHB Housing Market Index, Existing Home Sales, Commerce Department readings on housing starts and building permits issued. Weekly readings for average mortgage rates and new jobless claims will also be released.

Last week’s economic data included releases on construction spending and labor-related reports including ADP Payrolls, Non-Farm Payrolls, national unemployment. Weekly readings on mortgage rates and new jobless claims were also released.

Construction Spending Increases in February

February construction spending grew by 0.80 percent from January’s reading of -0.50 percent. Analysts expected a reading of + 1.00 percent. Housing industry pros and analysts continue monitoring construction spending for indications of future construction projects. Construction spending was boosted by unseasonably warm weather in regions typically subject to cold winter climates.

 U.S. homes are in high demand despite rapidly rising home prices due to short supplies of available homes; industry leaders contend that building more homes is the only remedy for the imbalance between would-be home buyers and low inventories of homes for sale. Home builders repeatedly cite shortages of buildable lots and skilled labor as obstacles to building more homes.

Job Growth Dips as New Jobless Claims and Unemployment Rate Falls

ADP reported that 263,000 private-sector jobs were created in March as compared to revised readings of 245,000 jobs created in February and expectations of 170,000 jobs created in March Private-sector employers were encouraged by potential reductions in taxes, regulations, infrastructure and improvements.  

Non-farm payrolls dropped significantly in March; the Commerce Department reported only 98,000 new public and private sector jobs added in March as compared to expectations of 185,000 jobs added and 219,000 public and private-sector jobs added in February.

Economists said that rapid growth of jobs seen in the last few years was not sustainable and cited severe reductions in retail jobs as contributing to the drop in the Non-farm payrolls reading for March. The steep drop in job creation could cause the Federal Reserve to hold off on raising the federal funds rate in June, but this is far from certain depending on economic readings for April and May.

National unemployment fell to 4.50 percent in March against expectations of 4.70 percent and February’s reading of 4.70 percent

New jobless claims fell to 234,000 claims as compared to expectations of 251,000 new claims and the prior week’s reading of 259,000 claims. Lower initial jobless claims despite the steep drop in job growth suggests that workers are leaving the workforce and are ineligible to file new claims or that the drop in jobs growth was a “correction” and future jobs growth reports may not show such sharp adjustments.

Mortgage Rates Mixed

Rates for fixed-rate mortgages were lower last week. Freddie Mac reported that average rates for fixed rate mortgages fell; the average rate for a 30-year mortgage was four basis points lower at 4.20 percent. The average rate for a 15-year fixed rate mortgaged dropped three basis points to 3.36 percent. The average rate for a 5/1 adjustable rate mortgage ticked up by one basis point to an average of 3.19 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for a 5/1 adjustable rate mortgage.

What‘s Ahead

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