Friday – May 17, 2019

Americans grew more upbeat on the US economy in early May after solid growth was recorded in the first quarter of 2019 along with a strong labor market. The Consumer Sentiment Index in early rose to 102.4 this month, the highest level in 15 years though the survey was conducted before the recent negative headlines from the US – China trade wars. The survey went on to say that consumers viewed prospects for the overall economy much more favorably, with the economic outlook for the near and longer term reaching their highest level since 2004.

Due to the low mortgage rate environment, Freddie Mac says the refinance share of the market will increase from 30% of all originations in 2018 to 33% by the end of the year. Freddie also says that it sees house price growth at 3.6% in 2019 moderating to 2.6% in 2020. On the origination front, Freddie Mac sees total originations at 1.7 trillion in 2019, up from 1.6 trillion in 2018. In conclusion, the combined positive impact of low mortgage rates, a strong labor market, low unemployment, and modest wage growth supports Freddie Mac’s forecast for a steadily growing housing market in 2019.

Courtesy of Mortgage Market Guide

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Thursday – May 16, 2019

New residential home building increased in April as the low mortgage rate environment is helping to fuel a rebound in the housing market. The Census Bureau reports that housing starts rose 5.7% in April from March to an annual rate of 1.235 million units, above the 1.2 million expected, while March was revised higher to 1.168 million from 1.1239 million. However, starts declined 2.5% from a year ago. Single-family starts jumped 6.2% monthly from March, though down 4.3% annually. Multi-dwellings, or five or more units, saw a 2.3% increase month-over-month, up 1.4% year-over-year.

Uncertainty surrounding the US/China trade issues along with low inflation have pushed mortgage rates to lows seen in January 2018 this week, reports Freddie Mac. The 30-yr fixed-rate mortgage declined to 4.07% this week from 4.10% last week with an average 0.5 in points and fees. Freddie Mac said, “While signals from the financial markets are flashing caution signs, the real economy remains on solid ground with steady job growth and five-decade low unemployment rates, which will drive up home sales this summer.”

Americans filing for first-time unemployment benefits continue to hover near 50-year lows in the latest week as the labor market runs on all cylinders. Weekly Initial Jobless Claims fell by 16,000 in the latest week to 212,000 and show no sign of increasing in the foreseeable future. The four-week moving average of claims, which strips out seasonal abnormalities, rose by 4,750 to 225,000. Those who are already collecting benefits fell by 28,000 to 1.66 million.

Courtesy of Mortgage Market Guide

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Wednesday – May 15, 2019

Home builder confidence jumped in May from April fueled by improved demand and ongoing low overall supply, reports the National Association of Home Builders (NAHB). The NAHB’s Housing Market Index rose to 66 in May, above the 63 posted in April and to the best level since October 2018. However, the NAHB says affordability challenges still persist. The NAHB went on to say that the low mortgage interest rate environment, strong labor market along with rising wages is contributing to a gradual improvement in the marketplace. Any number over 50 indicates that more builders view conditions as good than poor.

American consumers pulled back on spending in April as sales of autos decreased along with spending on clothes appliances. US retail sales disappointed last month, declining 0.2% in April versus the +0.2% expected and well below the gain of 1.7% seen in March, which was the strongest rise since 2017. When stripping out autos, sales rose a scant 0.1%, well below the +0.6% expected. Retail sales are closely scrutinized as consumer spending drives a large portion of US economic activity.

Mortgage rates held steady in the latest survey and remain at 12-month lows due in part to slowing global growth along with low inflation levels here in the US. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage was essentially unchanged in the latest week at 4.40% with an average 0.40 point. The MBA went on to say that its Market Composite Index, a measure of total mortgage loan application volume, fell 0.6%, while the Refinance and Purchase Index fell by just about 1%.

Courtesy of Mortgage Market Guide

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Tuesday – May 14, 2019

The NFIB reports that its April Small Business Optimism Index remains at a historically very strong level, consistent with solid growth, keeping the economy at full employment and says there is recession in sight this year. NFIB President and CEO Juanita D. Duggan said, “The continued economic boom is thanks, in a major way, to strong growth in the small business half of the economy.” The index rose to 103.5 in April, up 1.7 points.

Delinquency and foreclosure rates in February fell to lows not seen in nearly two decades due in part to strong economic expansion along with unemployment at a 50-year low. Those two factors continue to drive down housing market distress, reports CoreLogic. CoreLogic reports that the 30 days or more delinquency rate for February was 4%, down from 4.8% in February of 2018. In addition, as of February 2019, the foreclosure inventory rate was 0.4%, down 0.2% from February 2018.

The National Association of REALTORS® reports that metro home prices saw a 3.9% increase in Q1 2019 from Q1 2018. The median price for existing single-family home was $254,800 in Q1 2019. At the end of Q1 2019, there were 1.68 million existing homes for sale on the market, up 2.4% from Q1 2018. Lawrence Yun, NAR chief economist, says the first quarter has been beneficial to U.S. homeowners. “Homeowners in the majority of markets are continuing to enjoy price gains, albeit at a slower rate of growth. A typical homeowner accumulated $9,500 in wealth over the past year.”

Courtesy of Mortgage Market Guide

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Monday – May 13, 2019

Credit availability for mortgages rose in April with a big rise seen in the jumbo arena, reports the Mortgage Bankers Association (MBA). The MBAs Mortgage Credit Availability Index rose 2.1% in April to 186.0. A decline in the index indicates that lending standards are tightening while increases in the index are indicative of loosening credit. “Credit supply increased 2 percent in April and was driven by a 7 percent gain in the jumbo index, which reached its highest level since the beginning of the MCAI in 2011,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.

A recent report by Trulia found that for the first time in more than two years, housing inventories did not decrease annually in the first quarter of 2019. In the first quarter, inventories did not decline from the previous year for the first time since the third quarter of 2016. Inventory grew year-over-year in exactly half of the nation’s 100 largest metro areas, up from just 19 one year ago. The report concluded by saying that nationally, more starter and trade-up homes is positive news for potential homebuyers, especially for first-time homebuyers, who tend to be more budget conscious.

The breakdown of trade talks between US/China have pushed stocks around the globe lower. The headlines are also pushing bond yields lower. The White House is said to readying tariffs of 25% for practically all imports from China into the US while China is also set to raise tariffs on $60 billion of US imports into China. There are no talks planned for the near future. The uncertainty is likely to be positive for mortgage rates though headlines from the trade front could turn positive at any time.

Courtesy of Mortgage Market Guide

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