Friday – July 26, 2019

Economic growth edged lower in the second quarter of 2019. The Bureau of Economic Analysis reported that Gross Domestic Product (GDP) in the second quarter of 2019 rose 2.1%, down from 3.1% in Q1. However, a surge in consumer and business spending pushed the Personal Consumption Expenditures index higher by 4.5%, the best since Q4 2017, offseting some of the negatives within the report. Recent tariffs and a global economic slowdown stunted growth somewhat in Q2 though a GDP with a 2% handle is still solid.

After a slow week in the markets with little economic data or glaring headlines, next week is shaping up to be volatile given the three risk-filled events in the Core PCE, the Fed meeting, and the jobs report. In addition, the US/China trade talks will be ongoing and the above events could fuel an uptick in volatility and could fuel a disruption in the markets given the outcomes.

The two-day Fed meeting will kick off on Tuesday and ends Wednesday at 2:00 p.m. ET with the release of the monetary policy statement. It is widely expected that the Fed will cut the benchmark short-term Feds Fund Rate by 25 basis points. Fed Chair Jerome Powell will hold a press conference immediately following the statement release at 2:30 p.m. ET. The Fed Funds Rate is currently at 2.50% and is the interest rate in which banks and other depository institutions lend money to each other, usually on an overnight basis.

Courtesy of Mortgage Market Guide

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Thursday – July 25, 2019

Despite slowing economies across the globe, here in the states, economic data remains impressive. This morning, June Durable Orders came in better-then-expected rising 2% versus the 1% expected and up from the -1.3% reported in May. Weekly Initial Jobless Claims remain near 50-year lows falling 10,000 to 206,000 in the latest week.

Mortgage rates edged lower in the latest survey after a slight increase in the previous week. Freddie Mac reports that the 30-year fixed-rate mortgage fell six basis points to 3.75% and is hovering near three-year lows. “While the improvement has yet to impact home sales, there’s a clear firming of purchase demand that should translate into higher home sales in the second half of this year,” said Sam Khater, Freddie Mac’s chief economist.

The US Census Bureau reports that the homeownership rate in Q2 2019 slightly declined to 64.1% from 64.2% in Q1 2019. Across the nation, the rate was the highest in the Midwest at 68%, followed by the South at 66Z%, the Northeast at 61.2% while the West saw a 59.3% homeownership rate. The rate has been declining in the past year due in part to rising prices and low inventories of homes for sale on the market.

Courtesy of Mortgage Market Guide

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Wednesday – July 24, 2019

The US Census Bureau reports that new home sales in June jumped 7% from May to an annual rate of 646,000 units. Sales for new single-family homes in three past three months were revised lower. On an annual basis, sales rose 4.5%. Across the nation, New Home Sales surged in the West, were flat in the South with declines seen in the Northeast and Midwest. The median new home price was unchanged at $310,400 from a year ago.

Despite mortgage rates inching lower and at multi-year lows, mortgage application volume declined in the latest week. The Mortgage Bankers Association (MBA) reports that the Market Composite Index, a measure of total mortgage application volume, fell 1.9% in the week ended July 19, 2019. In addition, the Refinance Index decreased 2% while the Purchase Index fell 1.6%. On the rate front, the 30-year fixed-rate mortgage fell four basis points to 4.08% with points at 0.33. The jumbo rate declined to 4.04% from 4.07% with 0.25 points while the FHA fell to 3.98% from 4.01% with 0.31 points. The MBA says the survey covers 75% of all US residential mortgage applications.

Courtesy of Mortgage Market Guide

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Tuesday – July 23, 2019

The National Association of REALTORS® reports that existing home sales in June fell 1.7% from May to an annual rate of 5.27M units versus the 5.30M expected. The decline is due in part to the continued shortage of homes for sale on the market. Sales fell 2.2% from June 2018. Modest gains were seen in the Northeast and Midwest with declines in the South and West. The median existing home-price for all housing types hit an all-time high of $285,700, up 4.3% from June 2018. Inventories are running below the normal 6-month level, currently at 4.4-months.

Due in part to solid US economy, a strong job market and modestly rising wages, the nation’s median home price increased for the third consecutive month, up 3.4% in June from a year earlier, according to Redfin. U.S. home prices hit a median price of $321,200 last month. In addition, only 6 of the 85 largest metro areas saw an annual decline in their median sale price. Redfin chief economist Daryl Fairweather said, “Economic growth is a double-edged sword for the housing market. The increase in demand for low- and moderately priced starter homes is pushing up prices for the most affordable segment of the market.”

Strong earnings are lifting US stocks today while weighing on bond with both prices and yields near unchanged. Dow components Coca-Cola and United technologies along with Lockheed Martin, Hasbro and Pulte Homes are pushing stocks higher and capping any price gains for bonds. In the US debt ceiling news, it looks like a two-year deal has been reached in Congress. This morning, the International Monetary Fund cut its global growth forecast but upped the numbers for the US as the economy here in the states continues to be a bright light among world economies.

Courtesy of Mortgage Market Guide

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Monday – July 22, 2019

A lack of affordability has become commonplace for first-time homebuyers in the past few years but builders vow that it is about to change. Builders are now looking to build homes that are smaller with lower square footage to cut costs. In addition, builders are also looking to increase production of townhouses to meet the demand for more affordable housing. The National Association of REALTORS® reports that KB Home says its first-time buyer segment of homes is growing rapidly. Jeff Mezger, CEO of KB Home, told Forbes.com that 55% of KB’s new home deliveries in the second quarter of this year were to first-time home buyers—its highest percentage in a decade.

The closely watched S&P 500 Stock Index is modestly higher to begin the week as the major averages hover near all-time highs. Earnings season is in full bloom this week as S&P 500 company profits are now expected to rise 1%, a reversal from a small decline that was previously forecasted. The US/China trade talks look like they will continue to try and reach a deal, which is also good news for stocks. The S&P hit an all-time closing high of 3,014.30 on July 15.

Courtesy of Mortgage Market Guide

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