Home Builders Remain Confident

MBSauthorityHousing

What’s the one thing that is keeping the housing market from growing even faster than it has been? Inventory.  It has been reported over and over that the number of available (quality) homes that buyers want are flying off of the shelves.

How do increase inventory?  You build it.  And that is where Home Builders come in.

U.S. homebuilders are feeling positive about the current housing market, and their level of confidence hasn’t moved in four months. A monthly index of sentiment by the National Association of Home Builders (NAHB) registered 58 yet again in May. Fifty is the line between positive and negative sentiment. The index stood at 54 one year ago and hit a recent high of 65 last October.

“Builder confidence has held steady at 58 for four straight months, which indicates that the single-family housing sector remains in positive territory,” said NAHB Chairman Ed Brady, a homebuilder and developer from Bloomington, Illinois. “However, builders are facing an increasing number of regulations and lot supply constraints.”

Of the three index components, both current sales conditions and buyer traffic were unchanged at 63 and 44, respectively. The index measuring sales expectations over the next six months rose three points to 65.

“The fact that future sales expectations rose slightly this month shows that builders are confident that the market will continue to strengthen,” said NAHB Chief Economist Robert Dietz. “Job creation, low mortgage interest rates and pent-up demand will also spur growth in the single-family housing sector moving forward.”

What Happened to Rates Last Week?

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Mortgage backed securities (FNMA 3.00 MBS) lost -4 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move sideways from the prior week.

We had a very light week for economic data with just a few reports that had the ability to move the bond market.  With MBS just moving -4BPS for the entire week, its clear that last week’s economic data did nothing to help rates.

The Consumer was in the spotlight and looked very good.

Retail Sales: The top of the pyramid – everything flows down from the top.  If Retails Sales are higher then you need to order more goods, they need to be produced, people need to be hired to produce and sell them…yada, yada, yada.  So, it was great news that the April Retail Sales data surprised to the upside with a very strong MOM (month over month) reading of 1.3% vs expectations of 0.8% and a big reversal from March’s -0.3% rate.  Ex-Autos, Retail Sales jumped 0.8% which was almost double the market expectations of 0.5%.

Consumer Sentiment: Surprised to the upside but makes sense given the strong Retail Sales data.  The preliminary May reading hit 95.8 vs estimates of 91.

But it wasn’t just consumers that were more upbeat….Business also improved their outlook as the April NFIB Small Business Optimism Index was better than expected (93.6 vs est of 93.2) and ended a run of declines that hit a 2 year low in March.  5 out of the 10 components increased, 4 were unchanged and 1 decreased.  Looks like they are continuing to struggle with a tight labor pool as the biggest jump was in the job openings hard to fill category.

What to Watch Out For This Week:

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The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

Brought to you by:

Taff Weinstein
Broker/Owner
Office: 832-794-2136
Cell: 832-794-2136
taff@firstimperialmortgage.com

First Imperial Mortgage
3409 Morrison St
Houston, TX 77009
NMLS 225846

www.firstimperialmortgage.com

Copyright © 2016 Powered by www.MBSauthority.com

Big 10 Rivals Enter the Top 10 of Best Housing Markets

MBSauthorityHousing

College football season is getting closer and one of the biggest rivalries in sports has moved on to the housing market as Columbus has cracked the top 10 housing market list according to Realtor.com.  Columbus, home to Ohio State, came in at number 10.

But Ann Arbor, home of the University of Michigan, came in at number 9.

Realtor.com based the list on how quickly homes sell and how frequently listings are searched in those cities. Ann Arbor and Columbus were the only Midwest cities in the Top 10, which was dominated by California markets, led by No. 1 San Francisco.

The Top 20 hottest markets included three other Midwest cities: Lafayette and Fort Wayne, Ind.; and Sioux City, Iowa.

“The Midwest region is representative of the status of the broader U.S. recovery,” said Jonathan Smoke, chief economist of Realtor.com. “When Columbus, Ohio, is the 10th hottest market in the country, you know the Midwest – and the U.S. overall – is back and doing well.”

What Happened to Rates Last Week?

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Mortgage backed securities (FNMA 3.00 MBS) gained +34 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move slightly lower from the prior week. It was our second straight week of improvement.

The two biggest event of the week was the big Jobs report on Friday.

Jobs, Jobs, Jobs: The media went bananas over the headline Non-Farm Payroll report that came in short of expectations (160K vs est of 200K).  But long bonds (specifically mortgage backed securities) did not improve on that headline, instead they sold off (which is bad for rates).

That is because long bonds focused more on the Average Hourly Wages which increased 0.3% on a month-over-month basis and is up 2.5% on a year-over-year basis. The later was much stronger than expected and shows real wage inflation.  While the Fed isn’t seeing their core PCE inflation of 2.0% yet, we are certainly seeing it in the jobs sector.

While the April NFP reading was lighter than expected (lead by a continued drop in mining and energy), it will be revised two more times and likely to revised upward.  The average for the past three months is still above 200K.

The Unemployment Rate remained unchanged at 5.00% even though the participation rate dropped a tad.

ISM Non-Manufacturing: This is most important report of the day.  The services sector showed some real strength with a reading of 55.7 which was a full point higher than market expectations.  Anything above 50 is expansionary and this reading above 55 is robust for the 80% of our economy that it covers.

The Talking Fed:
S.F. Fed President John Williams said in an interview that he would support a rate hike in June if the economic data continued to show growth.
Atlanta Fed President Dennis Lockhart said: “Two rate hikes are certainly possible. We have enough (Fed policy) meetings remaining but it depends entirely on how the economy evolves,”.

What to Watch Out For This Week:

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The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

Brought to you by:

Taff Weinstein
Broker/Owner

Office: 832-794-2136
Cell: 832-794-2136
taff@firstimperialmortgage.com

First Imperial Mortgage
3409 Morrison St
Houston, TX 77009
NMLS 225846

www.firstimperialmortgage.com

Copyright © 2016 Powered by www.MBSauthority.com

91% of Millennials Want to Purchase a Home

MBSauthorityHousing

If you think inventory levels are tight now, wait until a massive wave of new buyers enter the market.

“The mortgage industry is poised to experience a monumental shift as more millennial homebuyers begin to enter the market, as there are roughly 87 million would-be homebuyers in the millennial generation and 91 percent of them say they intend to own a home one day. Lenders must prepare today to meet their needs.”  Said Jonathan Corr, CEO of mortgage processor Ellie Mae, said in a release.

While millennials are waiting longer to get married and have children, factors that are the primary drivers of home ownership, the leading edge is now entering the housing market. Millennials are even starting to move to the suburbs, and in fact, last year marked a turning point, where urban centers reached “peak millennial,” according to a new study from Dowell Myers, a professor of urban planning and demography at USC Price School of Public Policy.

“After more than a decade of growing concentration, we see that the millennial trend of increased downtown living has peaked out and is now beginning a decline,” Myers wrote. “This is a dramatic human interest story with great implications for cities and real estate investments.”

Single-family rentals in the suburbs are more popular and more abundant than ever before, but the majority of millennials say they do want eventually want to buy. That means mortgages.

More than one-third of home loans made to millennials since 2014 were Federal Housing Administration loans insured by the federal government, according to Ellie Mae’s new Millennial Tracker. This is far higher than the 22 percent overall share that FHA commands in total mortgage volume today. FHA allows borrowers to put just a 3.5 percent down payment, which is attractive to younger buyers who are cash-strapped to begin with, but additionally burdened by a sky-high rental market.

What Happened to Rates Last Week?

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Mortgage backed securities (FNMA 3.00 MBS) gained +45 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move slightly lower from the prior week however, MBS lost a total of -25BPS for the month of April (even with last week’s run up of +45) which means that Mortgage rates at the end of April were slightly higher than at the beginning of April.

The two biggest events last week was the Fed’s inaction and several GDP releases.

The Talking Fed:  The FOMC (Federal Open Market Committee) left its key interest rate unchanged.  You can read their official policy statement here: https://www.federalreserve.gov/newsevents/press/monetary/20160427a.htm
There was one dissenting vote: Esther L. George, who preferred at this meeting to raise the target range for the federal funds rate to 1/2 to 3/4 percent, she also voted against leaving rates unchanged at the previous meeting.
They certainly left the door wide open and even increased the probability in most bond traders’ minds of a June rate hike by letting us know that they are (U.S.) data dependent moving forward.
While they pulled back from blaming international forces (China), they walked a fine line of praising our economy and warning of weakness as well.
Their overall theme to the market place was to watch domestic data for growth.

GDP:
U.S.: The estimates for our 1st QTR GDP were all over the place…just about every major economic outlet had a different “consensus” (Econcal, Briefing, Reuters, etc).  The prelim data came in at 0.5%.  That is on the lower end of the 0.5% to 0.9% estimate range but above the Atlanta Fed’s estimate of 0.3%.  So, this really wasn’t that much of a miss…if a miss at all.  This number will be revised two more times and usually revisions to GDP are upward…so after about two months this might be in the 0.7% to the 0.9% range.

EU:  We got some stronger than expected data out of the EU, as they released their 1st QTR GDP data and it hit 0.6% vs est of 0.4%.  Also,their Unemployment Rate dropped from 10.4% down to 10.2%.

Great Brittan:  Their 1st QTR GDP matched expectations with a a reading of +0.4% and their YOY GDP was a tick stronger than expected with 2.1%.

What to Watch Out For This Week:

table-firstimperial

The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

Brought to you by:

Taff Weinstein
Broker/Owner

Office: 832-794-2136
Cell: 832-794-2136
taff@firstimperialmortgage.com

First Imperial Mortgage
3409 Morrison St
Houston, TX 77009
NMLS 225846

www.firstimperialmortgage.com

Copyright © 2016 Powered by www.MBSauthority.com