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By Taff Weinstein at

New Housing Starts Jump in December

Up 16.9% from November and up 40% from December 2018.

According to the newly released report by the U.S.Census Bureau and the U.S.Department of Housing and Urban Development jointly, U.S. home building surged to a 13-year high in December as activity increased across the board, suggesting the housing market recovery continues amid low mortgage rates, and could help support the longest economic expansion on record.

Housing starts jumped 16.9% to a seasonally adjusted annual rate of 1.608 million units last month, the highest level since December 2006. The percentage gain was the largest since October 2016. Data for November was revised higher to show home building rising to a pace of 1.375 million units, instead of advancing to a rate of 1.365 million units as previously reported.

Housing starts soared 40.8% on a year-on-year basis in December. An estimated 1.290 million housing units were started in 2019, up 3.2% compared to 2018.

Single-family home building, which accounts for the largest share of the housing market, jumped 11.2% to a rate of 1.055 units in December, the highest level since June 2007. Single-family housing starts rose in the Midwest and the populous South. They, however, fell in the Northeast and West.

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.000 MBS) lost just -5 basis point (BPS) from last Friday's close which caused fixed mortgage rates to remain at the same levels compared to the prior week.

Overview: Two big trade deals were resolved (China and Mexico/Canada) that locks down deals with our three largest trading partners.  We had very tame inflationary data and solid housing data.  We also had a few bright spots in some regional manufacturing reports as well as a benign Fed Beige Book.

Taking it to the House: The January NAHB Housing Market Index matched market expectations of 75 which is very strong considering any reading above 50.0 is positive. matched market expectations of 75 which is very strong considering any reading above 50.0 is positive.The December New Housing Starts was fantastic, rising 16.9% to an annualized basis of 1.608M units vs est of 1.375M.  Building Permits were 1.416M vs est of 1.468M.

Trade War: The USMCA trade deal (U.S./Mexico/Canada) passed the Senate and is now finally put to rest. trade deal (U.S./Mexico/Canada) passed the Senate and is now finally put to rest. The U.S./China Phase One Trade deal was signed on Wednesday. You can read the official full text here.

Retail Nation: Retail Sales were much stronger than expected with the key Ex-Autos figure showing a MOM gain of 0.7% vs est of 0.5%.  The headline Retail Sales data matched market expectations with a gain of 0.3%, but its really a small beat due to the upward revision in November.

Inflation Nation: The December Consumer Price Index (CPI) YOY headline reading matched market expectations with a gain of 2.3%, which was an increase over November's YOY pace of 2.1%. The Core (Ex food and Energy) YOY reading also matched expectations of 2.3%.

Manufacturing: The January Philly Fed Manufacturing Index blew the doors off of estimates with a 17.0 reading vs. an expected 3.8.

Jobs, Jobs, Jobs: The November Job Openings and Labor Turnover Survey (JOLTS) was much lighter than expected (6.800M vs est of 7.233M) and was the first time below 7M unfilled jobs since November 2018.

Consumer Sentiment: The Preliminary January reading was fairly strong at 99.1, the market was expecting 99.3.  The one year inflation outlook rose from 2.3% to 2.5%.

What to Watch Out For This Week:

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.

By Taff Weinstein at

Buying a Home is more Affordable than Renting in most of the U.S

In the newly released ATTOM Data Solutions 2020 Rental Affordability Report, it shows that owning a median-priced, three-bedroom home is more affordable than renting a three-bedroom property in 455, or 53 percent, of the 855 U.S. counties analyzed for the report.

However, the analysis shows a split between different-sized markets, with ownership more affordable mainly in lightly populated counties and renting more affordable in more populous suburban or urban areas.

“Home ownership is a better deal than renting for the average wage earner in a slim majority of U.S. housing markets. However, there are distinct differences between different places, depending on the size and location from core metro areas,” said Todd Teta, chief product officer with ATTOM Data Solutions. “For sure, either buying or renting is a financial stretch or out of reach for individual wage earners throughout most of the country in the current climate. But with interest rates falling, owning a home can still be the more affordable option, even as prices keep rising.”

Counties with a population of at least 1 million, where buying a home is more affordable than renting, were Miami-Dade County, FL; Broward County, FL; Wayne County (Detroit), MI; Philadelphia County, PA; Hillsborough County (Tampa), FL; Cuyahoga County (Cleveland), OH and Allegheny County (Pittsburgh), PA.

What Happened to Rates Last Week?

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Mortgage backed securities (FNMA 3.000 MBS) gained just +5 basis point (BPS) from last Friday's close which caused fixed mortgage rates to remain at the same levels compared to the prior week.

Overview: Overall, we had another week of very solid economic data with strong readings in the Services and Labor sectors which would normally be negative for mortgage rates. But, more that offsetting the strong economic data was geo-political concern which drove up demand for U.S. long bonds and helped to keep mortgage rates low for yet another week.

Jobs, Jobs, Jobs: We had Big Job's Friday! You can read the official BLS report here.

Tale of the Tape:
Jobs:
December Non Farm Payrolls increased by 145K which was below estimates of 164K.
November NFP revised lower from 266K down to 256K.
October NFP revised lower from 156K down to 152K.
The rolling 3 month average is now a respectable 184K.

Wages:
The average hourly rate increased by 3 cents to $28.32
Average Hourly Earnings MOM increased by 0.1% vs est of 0.3%
Average Hourly Earnings YOY increased by 2.9% vs of 3.1%
Employment:
The Unemployment Rate remained at 3.5%
The Participation Rate remained at 63.2%
The U6 Unemployment Rate dropped from 6.9% down to 6.7%

Geo-Political: On the U.S./Iran/Iraq front, we had a few developments that "spooked" bonds. First, is the fact that Iran once again attacked U.S. military installations just North of Baghdad with rocket(s).  Secondly, it was confirmed that the Ukrainian 737/800 jet was downed by an Iranian missile.  The vast majority of the passengers were Canadian (there were no U.S. passengers).  It very well may have been struck down in error by Iran but none-the-less it is an issue.

Services: ISM Non Manufacturing PMI for December hit 55.0 vs est of 54.5.  This represents more that 2/3 of our economic output, any reading above 50.0 is expansionary, its the best reading since August

Factory Orders: November orders shrank by -0.7% but that was actually better than market

What to Watch Out For This Week:

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.

By Taff Weinstein at

Freddie Mac's Housing Forecast Rosy for 2020

The housing market will hold steady this year, according to the Freddie Mac December Forecast. You can read their official report here.

Freddie Mac expects home sales to jump from 6 million in 2019 to 6.2 million in 2020 and to 6.3 million in 2021. Price growth will likely continue to decelerate through 2021, with projected annual growth rates of 2.8%, and 2.1% in 2020 and 2021, respectively.

Modest gains in home sales and house prices will spur purchase mortgage originations, according to the forecast. Purchase originations will climb to $1,333 billion in 2020, and finally edging up to $1,377 billion in 2021.

Meanwhile, Freddie anticipated refinance originations, estimated at $846 billion in 2019, to slow to $650 billion in 2020 and $475 billion in 2021

The average rate of the 30-year fixed-rate mortgage will hover at 3.8% in 2020 and 2021.

“A more accommodative monetary policy stance and robust labor market helped the US housing market regain its footing in 2019,” said Freddie Mac Chief Economist Sam Khater. “Improved sentiment, lower financial market volatility, and trade headwinds are setting up a favorable economic environment for continued real estate market growth in 2020.”

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.000 MBS) gained +33 basis point (BPS) from last Friday's close which caused fixed mortgage rates to move slightly lower compared to the prior week.


Overview: We had another holiday-shortened week.  The economic data was a mixed bag with very strong consumer and construction data but continued weakness in manufacturing.  The biggest movement was on Friday as long bonds rallied which pushed mortgage rates lower.  This was due entirely to investors putting money in the safe-haven of U.S. long bonds due to military escalation with Iran.

Manufacturing: The December ISM Manufacturing PMI was weaker than expected (47.2 vs est of 49.0) but the Prices Paid (a key measure of inflation) shot up to 51.7 vs est of 47.5. The December Chicago PMI improved from November's pace of 46.3 to 48.9 and just edged out estimates calling for a level of 48.0. But this marks the 4th month in a row with a reading below 50.0.

Construction Spending: The November data showed a MOM big pickup of 0.6% vs est of 0.3%, plus we see a huge revision to October from -0.8% to +0.1%

Jobs, Jobs, Jobs: The Challenger-Grey Job Cut Report showed a big drop in announced corporate layoffs from 44,569 in November down to 32,843 in December. Initial Weekly Jobless Claims came in at 222K vs est of 225K.  The more closely watched 4 week moving average increased to 233,250.

Consumer Confidence: The Conference Board's December survey came in at 126.5 vs est of 128.0 which is a nice gain from November's reading of 125.5
The Talking Fed: We got the Minutes from the last FOMC meeting at 2:00. You can read the official release here
There were no surprises or details that had not been expected.

The Talking Fed: We got the Minutes from the last FOMC meeting at 2:00. You can read the official release here. There were no surprises or details that had not been expected.

What to Watch Out For This Week:

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.

By Taff Weinstein at

Pending Home Sales Jump

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, rose 1.2% to 108.5 in November. Year-over-year contract signings jumped 7.4%. An index of 100 is equal to the level of contract activity in 2001.

“Despite the insufficient level of inventory, pending home contracts still increased in November,” said Lawrence Yun, NAR’s chief economist, noting that housing inventory has been in decline for six straight months dating back to June 2019. “The favorable conditions are expected throughout 2020 as well, but supply is not yet meeting the healthy demand.”

“Sale prices continue to rise, but I am hopeful that we will see price appreciation slow in 2020,” said Yun. “Builder confidence levels are high, so we just need housing supply to match and more home construction to take place in the coming year.”

The regional indices had mixed results in November. The Northeast PHSI slid 0.1% to 96.3 in November, 2.6% higher than a year ago. In the Midwest, the index rose 1.0% to 102.5 last month, 5.0% higher than in November 2018.

Pending home sales in the South decreased 0.2% to an index of 125.0 in November, a 7.7% increase from last November. The index in the West grew 5.5% in November 2019 to 98.4, an increase of 14.0% from a year ago.

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.500 MBS) gained +18 basis point (BPS) from last Friday's close which caused fixed mortgage rates to move slightly lower compared to the prior week.

Overview: We had a holiday-shortened week with very little economic data to absorb and very few traders to absorb it.  As usual, we saw a very small improvement in rates due to a compressed trading calendar as many traders simply "parked" some cash into the safe-haven of long bonds while they checked out for the week. 

Taking it to the House: Weekly Mortgage Applications fell by -5.3%.  Both Purchase Applications and Refinance Applications dropped by 5.0%.  November New Home Sales showed an annual gain of 17% from this time last year (719K vs 615K).  On a MOM basis it was up 1.3%.

Jobs, Jobs, Jobs: Initial Weekly Jobless Claims were lower than expected, 222K vs est of 224K.  The more closely watched 4 week moving average is now 228K.

What to Watch Out For This Week:

 

 

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.

By Taff Weinstein at

New Home Sales Improve

Sales of newly built homes rose in November according to the U.S. Census Bureau and Department of Housing and Urban Development (HUD).

New home sales increased by 1.3% from October for an seasonally adjusted annual rate of 719,000.  Last year, this was much lower at 615,000, so this is a large annual gain.

The median sales price of new houses sold in November increased to $330,800.  The average sales price increased to $388,200.

Supply is still tight though with only a 5.4 month supply of newly constructed  homes on the market.

What Happened to Rates Last Week?

 

Mortgage backed securities (FNMA 3.500 MBS) lost -17 basis point (BPS) from last Friday's close which caused fixed mortgage rates to move upward compared to the prior week.

Overview: We had a very solid week for economic data with real strength in labor and housing which pressured rates higher.  Across the board, the major Central Banks (China, Japan, England) all left their key interest rates alone and did not announce any new policy.

GDP: The 3rd Quarter Gross Domestic Product was released (yet again) and it remained at its previously revised rate of growth of 2.1%.

Inflation Nation: The Fed's key measure of inflation, the Personal Consumption Expenditures ex-Food and Energy on a YOY basis, came in at 1.6% vs est of 1.6%.  But the headline PCE YOY was higher than expected - 1.5% vs est of 1.3%.  Personal Income MOM was 0.5% vs est of 0.3% and Personal Spending came in at 0.4% vs est of 0.4%

Consumer Sentiment: The final reading for December's UofM Consumer Sentiment Index was revised to 99.3 vs est of 99.2.

Taking it to the House: November Existing Home Sales set a couple of November records.  The median home price was $271,300 which is the highest price on record and months of available inventory hit 3.7 months which is the lowest on record.  The total unit sales hit 5.35M which was lighter than expectations of 5.44M, but there was simply not enough inventory to support further sales gains. Weekly Mortgage Applications pulled back by -5.0%.  Refinances fell by -7.0% and Purchase Applications weakened by -2.0%. pulled back by -5.0%.  Refinances fell by -7.0% and Purchase Applications weakened by -2.0%. November Building Permits were much better than expected (1.482M vs est of 1.410M).  When you look at the SFR permits, they were up 0.8% to a rate of 918K units. New Housing Starts increased by 1.365M vs est of 1.345M. Again, SFR are looking better by gaining 2.4% for a rate of 938K units. increased by 1.365M vs est of 1.345M. Again, SFR are looking better by gaining 2.4% for a rate of 938K units. The December NAHB Sentiment Index reached a 20 year high with a reading of 76.

Jobs, Jobs, Jobs: Yet another very strong labor report.  The October Job Openings and Labor Turnover Survey (JOLTS) once again showed well over 7M unfilled jobs and beat out market expectations (7.267M vs est of 7.018M).

What to Watch Out For This Week:

 

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.

By Taff Weinstein at

Home Builder Sentiment Best in 20 Years

A stronger economy and a severe housing shortage have the nation’s homebuilders feeling better than they have in two decades.

Builder confidence in the newly built, single-family home market jumped 5 points in December to 76, the highest reading since June 1999, according to the National Association of Home Builders Housing Market Index. Anything above 50 is considered positive.

November’s reading was also revised higher by 1 point. To put that into perspective, the index stood at 56 last December and in 2009 which was at the worst of the housing crash, builder sentiment hit a low of just 8.

“Builders are continuing to see the housing rebound that began in the spring, supported by a low supply of existing homes, low mortgage rates and a strong labor market,” said NAHB Chairman Greg Ugalde, a homebuilder and developer from Torrington, Conn.

Builders’ confidence is clearly based on what they’re seeing in their showrooms. Of the index’s three components, current sales conditions rose 7 points to 84, sales expectations in the next six months rose 1 point to 79 and buyer traffic increased 4 points to 58.

Source: The National Association of Home Builders

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.500 MBS) gained +10 basis point (BPS) from last Friday's close which caused fixed mortgage rates to remain at or near the same levels as the prior week.

Overview: We had a very big week! Our Federal Reserve kept their key interest rate unchanged and told the market that they expected to not touch their Fed Funds rate until 2021. The other Central Banks also stood pat. Brexit is back on track with the Conservative Party wining a landslide victory in the UK and picked up more than enough seats to finally leave the EU. A phase one trade deal with China was announced but its not signed and details keep emerging on what it really does and does not contain.

The Talking Fed: The FOMC released their Interest Rate Decision and Policy Statement. You can read the official release here. The FOMC also released their Economic Projections. You can read their economic projections here.

Here are some key points:

  • They kept their key interest rate in the 1.50% to 1.75% rate which is unchanged from the prior Fed meeting.
  • The vote was 10-0.
  • Says rates are currently “appropriate” to support growth, jobs and inflation, while the statement omitted prior language that said “uncertainties about this outlook remain”.
  • Their dot plot chart derived from their Economic Projections show that their rate projections from 13 out of 17 officials expect no change in their key interest rate through the end of 2020; most see higher rates as likely in 2021, with a further increase expected in 2022.
  • The FOMC said the labor market and household spending were strong, while business investment and exports were weak. The Fed said it will continue to monitor information “including global developments and muted inflation pressures.”
  • The Fed lowered their Unemployment Rate from 3.7% down to 3.5% for 2020 and the longer run Unemployment Rate from 4.2% to 4.1%.
  • GDP forecasts remained unchanged: 2019 2.2%, 2020 2.0%, 2021 1.9% and 2022 1.8%.

Inflation Nation: The November Consumer Price Index (CPI) was inline with estimates as the Core (ex food and energy) YOY reading was 2.3% vs est of 2.3%. The Headline YOY CPI was a tick higher 2.1% vs est of 2.0%.

Retail Sales: November Retail Sales were lighter than expected with a headline MOM reading of 0.2% vs est of 0.4%.  However October was revised upward to 0.4%. When you strip out Autos, Retail Sales grew at monthly pace of only 0.1% vs est of 0.4%.  October was revised higher to 0.3%.

What to Watch Out For This Week:

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.

 

By Taff Weinstein at

Loan Limits Raised

Fannie Mae and Freddie Mac have announced their new (and higher) conforming loan limits for 2020 and the good news is that more homebuyers will be able to purchase a home via a conventional mortgage than being forced to obtain a Jumbo mortgage which often requires a larger down downpayment and has higher mortgage rates.

Fannie Mae and Freddie Mac will let mortgage borrowers nationwide take out home loans over $500,000 in 2020.

The Federal Housing Finance Agency announced that it will increase the limit on conforming loans, meaning mortgages that adhere to the standards imposed by Fannie Mae and Freddie Mac to a maximum of $510,400 nationwide. In high-cost areas, the maximum loan limit for mortgages acquired by Fannie Mae and Freddie Mac will be $765,600.

By law, conforming loan limits must be adjusted to reflect changes in home prices across the U.S. The FHFA noted that its data show home prices had increased on average 5.38% between the third quarters of 2018 and 2019. Therefore, the loan limits increased by that percentage. In high-cost areas, the law allows loan limits to be set 50% higher than the baseline level nationally. Special provisions also establish different loan limit calculations for Alaska, Hawaii, Guam and the U.S. Virgin Islands.

This is the fourth consecutive year that the conforming loan limit has increased. Between 2006 and 2016, the FHFA held loan limits at $417,000. When loan limits were increased for the first time in 2017, it sparked enthusiasm across the mortgage industry as lenders expected it could lead to more people seeking home loans, because the lower loan limit forced many people to get jumbo loans that don’t always offer competitive financing.

For consumers, the higher limits are an indication that while home prices are still heading higher which further supports home ownership as a valuable financial tool.

Source: Fannie Mae, Freddie Mac, National Association of Realtors.

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.500 MBS) lost -2 basis point (BPS) from last Friday's close which caused fixed mortgage rates to remain at or near the same levels as the prior week.

Overview: We had some very positive economic news with strong readings in the Labor sector, Services sector, and in Consumer Sentiment.  All would normally combine for higher mortgage rates but concern and uncertainty over the trade war with China and the Brexit vote kept mortgage rates steady.

Jobs, Jobs, Jobs: The Bureau of Labor and Statistics released their Employment Situation for November and it was a big-time beat. You can read the official release here.

Here is the Tale of the Tape:

Jobs:

November Non Farm Payrolls 266K  vs est of 180K
October NFP revised upward from 128K to 156K
September NFP revised upward from 180K to 193K
The rolling three month average is now a robust 205K

Wages:
Average Hourly Earnings rose by 7 cents to $28.29
Average Hourly Earnings increased by 3.1% on a YOY basis vs est of 3.0%.  Last month was revised upward from 3.0% to 3.2%
Employment:
The Headline Unemployment Rate dropped to 3.5% vs est of 3.6%
The U6 Unemployment Rate dropped from 7.00% down to 6.90%
The Participation Rate dropped from 63.3% to 63.2%

Consumer Sentiment: The Preliminary December release was much stronger than expected (99.2 vs est of 96.5)

Services: The November ISM Non Manufacturing (Services), which account for more than 2/3 of our economic engine, continued to show expansion with a reading of 53.9.  But that was a little below market expectations of 54.7

Central Bank Palooza: The Bank of Canada kept their key interest rate at 1.75%

Manufacturing: The November Markit Manufacturing Index was stronger than expected (52.6 vs est of 52.2) and remained in expansionary territory but the ISM Manufacturing Index came in below 50 which is contractionary (48.1 vs est of 49.2).

What to Watch Out For This Week:

 

 

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.

By Taff Weinstein at

Inventory Relief on the Horizon

Housing inventory has been tight for a decade, due to strong housing demand from low unemployment levels, rising wages and super low mortgage rates.  According to the National Association of Realtors, the Total housing inventory at the end of October sat at 1.77 million units, which sits at only a 3.9-month supply.

Between 2007 and 2017, about 730,000 homes were released into the US market by people aged 60 and older, according to Zillow. Between 2017 and 2027, that number is expected to spike to 920,000 per year. Between 2027 and 2037, it’s expected to rise to 1.17 million per year.

“This means more than 27% of today’s owner-occupied homes will become available by 2037,” Zillow said.

“The Silver Tsunami is estimated to hit in earnest as the number of seniors aged 60 or older who pass away each year rises during the 2020s and 2030s,” Zillow said in a news release.

The wave of homes becoming available will be so large that it will impact the economy in traditional retirement areas, Zillow predicted.

“Retirement hubs like Florida and Arizona are likely to feel the sharpest impact,” Zillow said. “If demand erodes because fewer people choose to retire there in the coming years, those areas might end up with excess housing. Also heavily impacted will be regions like the Rust Belt, which saw younger people move away in recent decades, leaving older generations to make up a larger share of the populations.”

Source: Zillow

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.500 MBS) gained just +10 basis point (BPS) from last Friday's close which caused fixed mortgage rates to remain at or near the same levels as the prior week.

Overview: We had a holiday-shortened week with really only three full trading sessions.  Long bonds (including mortgage backed securities which are what control mortgage rates) moved sideways.  We some very strong economic data which is negative for rates but very low inflationary data which is positive for rates.

GDP: The 3rd QTR GDP was revised upward from the preliminary release of 1.9% to 2.1%.

Manufacturing: The November Chicago PMI remained in contractionary territory (anything below 50) but was in line with estimates (46.3 vs est of 46.0) and was an increase from October's reading of only 43.2. October Durable Goods Orders were much stronger than expected (+0.6% vs est of -0.8%).  Ex Transportation it was +0.6% vs est of +0.1%.


Inflation Nation: The Fed's key measure of inflation, PCE Core (ex food and energy) YOY actually moved lower from 1.7% to 1.6%.

Consumer: Personal Income was flat at 0.0% vs est of 0.3%, Spending did pick up though with a MOM reading of 0.3% vs est of 0.3%.

Taking it to the House: The trailing September 20 Metro City Case Shiller Home Price Index YOY hit 2.1% which matched expectations. The FHFA Housing Price Index MOM showed a gain of 0.6% which beat out forecasts of 0.2%.  New Home Sales in October hit 733K vs est of 709K, plus September was revised higher from 701K to 738K

Consumer Confidence: The Conference Board's November reading was lower than expected, 125.5 vs est of 126.9.

What to Watch Out For This Week:

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.

By Taff Weinstein at

Existing Home Sales and Prices Increase

Existing-home sales rose in October, according to the National Association of Realtors. The four major U.S. regions were split last month, with the Midwest and the South seeing growth, and the Northeast and the West both reporting a drop in sales.

Total existing-home sales are completed transactions that include single-family homes, townhomes, condominiums and co-ops.  They increased by 1.9% in October to a seasonally-adjusted annual rate of 5.46 million units, overall sales are now up by 4.6% from a year ago (5.22 million in October 2018).

The median existing-home price for all housing types in October was $270,900, which is up 6.2% from October 2018 ($255,100), prices rose in all regions. October’s price increase marks 92 straight months of year-over-year gains.

Total housing inventory at the end of October sat at 1.77 million units, which is down approximately 2.7% from September and 4.3% from one year ago (1.85 million). Unsold inventory sits at a 3.9-month supply at the current sales pace, down from 4.1 months in September and from the 4.3-month figure recorded in October 2018.

Properties typically remained on the market for 36 days in October, up from 32 days in September and consistent with October 2018 numbers. Forty-six percent of homes sold in October 2019 were on the market for less than a month.

Source: National Association of Realtors

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.500 MBS) gained just +1 basis point (BPS) from last Friday's close which caused fixed mortgage rates to remain at or near the same levels as the prior week.

Overview: We had a fairly quite week in the bond market and the net change of only one basis point is certainly reflective of that. We had some solid housing news but no major economic releases that had the gravitas to impact mortgage rates.  The bond market (which controls mortgage rates) was held in a narrow range as there was nothing really new on the trade front.

Consumer Sentiment: The final reading of the November UofM Consumer Sentiment Index increased from 95.7 to 96.8.

Taking it to the House: October Existing Home Sales were in line with estimates (5.46M vs est of 5.47M), it was a very solid report.   October Existing Home Sales were in line with estimates (5.46M vs est of 5.47M), it was a very solid report. October Building Permits were higher than expected (1.461M vs est of 1.385M).  The SFR component moved up by 3.2% to 909K. Housing Starts came in at 1.314M vs est of 1.32M. The SFR component moved up by 2% to 936K. The November NAHB Housing Market Index remains in very high territory, coming in at 70. October the reading was 71. Any reading above 50 is positive and readings in the 70s are very high.

Manufacturing: The November Philly Fed Manufacturing Survey was stronger than expected (10.4 vs est of 7) and was double October's pace.

The Talking Fed: We got the Minutes from the last FOMC meeting you can read the official release here.

Central Bank Palooza: The People's Bank of China dropped their key interest rate from 4.20% to 4.15%.

Central Bank Palooza: The Central Bank Palooza:  The People's Bank of China dropped their key interest rate from 4.20% to 4.15%. dropped their key interest rate from 4.20% to 4.15%.

What to Watch Out For This Week:

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

By Taff Weinstein at

Bidding Wars

Nothing makes a seller feel better and a home buyer feel worse than a bidding war.  This is when multiple offers come in, driving up the price of the property for sale.

Historically low unemployment rates, rising wages and mortgage rates that are lower than a year ago, combined with limited inventories of homes for sale in certain geographic areas, are all contributing factors.

The table above was compiled by RedFin and shows that the national average is that 10% of all listings have experienced a bidding war.  Things are really hot in Seattle with more than a third of listings seeing buyers lined up and wiling to up their bid.

Source: RedFin

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.500 MBS) gained +21 basis points (BPS) from last Friday's close which caused fixed mortgage rates to remain at or near the same levels as the prior week.

Overview:  Fed Chair Jerome Powell and a bevy of other Federal Reserve Governors and Presidents made it clear to the markets that the Fed is in a holding pattern for the near future.  Our economic data for the week was tepid, showing growth but not a strong enough pace to concern long bond traders about inflation.  The swirling "news" stories about the Chinese trade negotiations received most of the attention from market participants as that process is still "up in the air".

Retail Sales: The October data was a mixed bag.  The Headline MOM reading beat out expectations with a gain of 0.3% vs est of 0.2%.  But when you strip out Autos, Retail Sales had a monthly gain of +0.2% which was lighter than expectations of a +0.4% gain.

Inflation Nation:  The October Consumer Price Index YOY was a smidge higher than expected (1.8% vs est of 1.7%), and the Core (ex food and energy) was a smidge lower than expected (2.3% vs est of 2.4%).  The October Producer Price Index YOY was higher than expected (1.1% vs est of 0.9%), and so was the Core (ex food and energy) 1.6% vs est of 1.5%).

The Talking Fed: Fed Chair Powell gave his testimony on his economic outlook to the Joint Economic Committee. This committee has both Senate  and House representatives. You can read his official prepared remarks here.

Overall, it was fairly upbeat.  As far as rates and monetary policy, it addressed it by saying "As monetary policy operates with a lag, the full effects of these adjustments on economic growth, the job market, and inflation will be realized over time. We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market, and inflation near our symmetric 2 percent objective."

What to Watch Out For This Week:

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.

 

By Taff Weinstein at

Mortgage Payment Delinquency Rate Lowest since 1999

Mortgage loan performance remains good on a national level with overall delinquencies and foreclosures both declining.

The firm’s data shows that the overall delinquency rate (mortgages 30 or more days past due or in foreclosure) nationally in August was 3.7%, a 0.2 percentage point decrease year-over-year. This was the lowest rate for any August in at least the last 20 years.

The foreclosure inventory rate (mortgages at some stage of the foreclosure process) was down 0.1 percentage points to 0.4%. That tied the prior nine months as the lowest for any month since at least January 1999.

There was a decline in serious delinquencies (90+ days past due including loans in foreclosure), of 0.2 percentage points year-over-year to 1.3%.

“Delinquency rates are at 14-year lows, reflecting a decade of tight underwriting standards, the benefits of prolonged low interest rates and the improved balance sheets of many households across the country,” said Frank Martell, president and CEO of CoreLogic.

Source: CoreLogic


What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.500 MBS) lost -29 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slightly higher compared to the prior week.

Overview: We had a week of very solid economic data with continued expansion in the Services sector (2/3 of our economy), Jobs and Consumer Sentiment.  All of which painted a good economic picture which pressured mortgage rates higher.  Rates also were responding to news, reports and tweets that trade negotiations with China were progressing which is also somewhat negative for rates. 

Consumer Sentiment: The preliminary UofM Consumer Sentiment reading came in at 95.7 vs est of 95.9.  This is the best reading since July and a nice improvement from October's final read of 95.5.

Services:  The October ISM Non Manufacturing National PMI continued to show expansion with a reading of 54.7 , the market was expecting 53.5.  This marks a trend of expansion in the Services sector that began in 2009.

Jobs, Jobs, Jobs: The September Job Openings and Labor Turn Over Survey (JOLTS) once again showed over 7M unfilled jobs for the 18th straight month!  It came in at 7.024M vs est of 7.028M.  August was revised upward significantly from 7.051M to 7.301M.

The Talking Fed: New York Federal Reserve President John Williams said  that any changes in interest rates from here will depend on the incoming economic data but policymakers should be preemptive in taking steps to keep the expansion alive.

What to Watch Out For This Week:

 

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.

 

By Taff Weinstein at

Homeowners Staying in their Homes Longer

The typical American homeowner in 2019 had spent 13 years in their home, up from eight years in 2010. Median home tenure increased in all of the 55 metros Redfin analyzed.

Many local governments have put policies in place that reduce property tax burdens for senior citizens, which have made it more affordable for older people to stay in their homes longer. For example in Texas, where homeowners tend to stay put the longest, homeowners over the age of 65 have the option to defer property taxes until the home is sold.

Homeowners age 67 to 85 are remaining homeowners longer causing a shortage of 1.6 million homes according to a report by Freddie Mac. In San Francisco, the median homeowner had been in their home for 14 years in 2019, compared to only 10 years in 2010. At the same time, there are about half as many homes for sale in San Francisco than there were in 2010, and the homes that are for sale are more expensive — the median home price has more than doubled in San Francisco since 2010.

Homeowners who already live with walkable access to amenities like schools, parks and shops are more likely to stay put in homes. And when homeowners stay put that means fewer homes are for sale. In zip codes with above-average Walk Score? ratings for their metro, the median home tenure is 11 months longer and there is more competition for the homes that are listed with homes staying on the market eight fewer days compared to zip codes with below-average Walk Score ratings. That means first-time homebuyers who are still looking to own a home and start a family are relegated to neighborhoods in less walkable exurbs on the outskirts of town.

Source: Freddie Mac and Redfin.

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.500 MBS) gained +33 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move lower compared to the prior week.

Overview: We had very solid jobs data last week which would normally be very negative for mortgage rates, but offsetting that was concern that the U.S./China Trade deal (a.k.a. Phase 1) was loosing some steam with the cancellation of the summit in Chile.  The Fed did lower their Fed Fund rate but that had little to no impact on mortgage rates.  Inflation was tame (PCE) and we continue to see weakness in the Manufacturing sector.

GDP: The Grand Daddy of them all. The first look at the 3rd QTR GDP was much stronger than expected (1.9% vs est of 1.6%).  This data set will be revised several times.

The Talking Fed: The Federal Reserve Open Market Committee lowered their key interest rate by a 1/4 point to 1.75% which was widely expected. You can read their official statement here. Here are a couple of key highlights from their statement and Powell's live comments:

  • There were two dissenting votes (the two votes were against a rate decrease).  Last time, there were three dissenting votes - 2 for no action and 1 for a steeper cut.
  • The statement omits the familiar pledge from recent months to “act as appropriate to sustain the expansion”; Fed instead says it will monitor incoming information as it “assesses the appropriate path” of rates which seems to be a "tip of the hat" that they are less inclined to lower rates in December.
  • Fed lowered two other key interest rates by quarter point, bringing interest on excess reserves rate to 1.55% and discount rate to 2.25%
  • Powell said, "I think we would need to see a really significant move up in inflation that’s persistent before we would consider raising rates to address inflation concerns.”
  • “The Committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate.”

Jobs, Jobs, Jobs: We had a very solid jobs report.  You can read the official BLS release here.

Tale of the Tape:
Jobs - Non Farm Payrolls (NFP):
October NFP 128K vs est of 89K
September NFP revised upward from 136K to 180K
August NFP revised upward from 168K to 219K
The rolling three month average is now a killer 176K

Wages:
Average Hourly Earnings rose by six cents.
Earnings MOM rose by 0.2% vs est of 0.3%
Earnings YOY rose by 3.0% vs est of 3.0%, September was revised upward from 2.9% to 3.0%

Employment:
The Unemployment Rate ticked up from 3.5% to 3.6% which was expected.
The Participation Rate increased from 63.2% to 63.3% (which is why the Unemployment Rate Increased).
The U6 Unemployment Rate ticked up from 6.9% to 7.0% but was below the expectations of 7.2%


Inflation Nation: The Fed's key measure of inflation, Personal Consumption Expenditures (PCE) were inline with expectations. The Core (ex food and energy) YOY hit 1.7% vs est of 1.7% and the Headline YOY number hit 1.3% vs est of 1.4%.  Personal Spending matched expectations of 0.2% but it was really a beat because the prior month was revised upward from 0.1% to 0.2%. Personal Income also matched expectations (0.3% vs est of 0.3%) and again it was really a beat because the prior month was revised from 0.4% to 0.5%.

Manufacturing: The Markit Manufacturing PMI report for October showed expansion with a 51.3 reading. But the ISM Manufacturing report of October showed another month of contraction with a 48.3 vs est of 48.9 reading. Chicago PMI was dismal with a contractionary reading of 43.2 vs est of 48.0.

What to Watch Out For This Week:

 

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.

 

 

By Taff Weinstein at

Existing and New Home Sales Gain Momentum

We got two very important housing reports last week and both showed some real strength in our housing market. The National Association of Realtor's Existing Home Sales Report for September showed a small decrease in sales but that was only due to the fact that there are no houses to buy.  Inventory remains near an all time low.

But the report did show that owning real estate has really been a great investment as the median sales price increased to $272,100 which is a 5.9% increase over the past 12 months and marks the 91st straight month of home price increases.

Total housing inventory at the end of September sat at 1.83 million units, approximately equal to the amount of existing-homes available for sale in August. Unsold inventory is at a 4.1-month supply at the current sales pace, down from the 4.4-month figure recorded in September 2018.

Properties typically remained on the market for 32 days in September, up from 31 days in August and even with September 2018. Forty-nine percent of homes sold in September 2019 were on the market for less than a month.

First-time buyers were responsible for 33% of sales in September, up from 31% in August.

In a separate report, the Census Bureau's New Home Sales report for September showed that the median sales price of new houses sold in September 2019 increased to 299,400.The average sales price was $362,700.  Sales increased to an annualized pace of 701K units which is a gain of 1.6%.


What Happened to Rates Last Week?

ortgage backed securities (FNMA 3.500 MBS) lost just -2 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move sideways compared to the prior week.

Overview:  Mortgage backed securities (which directly controls mortgage rates) moved in a very narrow range and were squeezed sideways for the week. The economic news was not that great which would normally have helped rates out but positive momentum on Trade and Brexit kept rates in check.

Taking it to the House: The September New Home Sales matched market expectations at 701K. matched market expectations at 701K. The August FHFA Housing Price Index showed a MOM gain of0.2%  vs est of 0.4%. Weekly Mortgage Applications fell by -11.9%. Refinance Applications tanked by -17.0% and Purchase Applications pulled back by -4.0%. Existing Home Sales for September came in at 5.38M vs est of 5.45M. Even though mortgage rates have been incredibly low, the culprit is lack of inventory as prices keeping moving higher as the Median Sales Price is up 5.9% YOY to $256,900.  Unsold inventory is only at a 4 month supply and properties remained on the market for only 32 days.

Durable Goods: The Headline September Durable Goods Orders were much weaker than expected (-1.1% vs est of -0.8%), when you strip out Transportation, it was also a miss but less pronounced (-0.3% vs est of -0.2%).

Central Bank Palooza:  There were no surprises from the European Central Bank as they kept their key interest rate at 0.0% and their deposit rate at -0.5%.  They also kept the QE-Infinity in place that they announced two meetings ago. as they kept their key interest rate at 0.0% and their deposit rate at -0.5%.  The Peoples Bank of China kept their key interest rate at 4.2%.

What to Watch Out For This Week:

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.

By Taff Weinstein at

Top Ten Metro Migration Locations

Twenty-six percent of home searchers looked to move to another metro area in the third quarter of 2019, up from 25 percent the year before, according to a new report from Redfin. This is a new all-time high for the national share of home-searchers looking to relocate, likely driven by those leaving expensive metros in search of more affordable homes.

Moving In — Metros with the Highest Net Inflow

After two quarters at the top of our list of metro areas with the highest net inflow, Phoenix fell to number three in the rankings in the third quarter, passed by Boston at number one and Sacramento at number two. A net inflow means more people are looking to move in than leave, while a net outflow means there are more people looking to leave than people looking to move in.

Seventeen percent of homebuyers searching in the Boston metro area were looking from other metro areas in the third quarter, up from both a year earlier (12.0%) and the second quarter (14.1%). New York continues to be the top origin city for people looking to move to Boston, and Boston is the top destination for people looking to leave New York.

Moving Out — Metros with the Highest Net Outflow

The list of metros people most-often looked to leave was once again topped by New York, San Francisco, Los Angeles and Washington, D.C. in the third quarter. Net outflow is defined as the number of people looking to leave the metro minus the number of people looking to move to the metro.

Source: RedFin

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.500 MBS) lost just -7 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move sideways compared to the prior week.

Overview:  Mortgage backed securities (which directly controls mortgage rates) moved in a very narrow range, testing an key technical support level located at the 100 day moving average all week.  This kept mortgage rates nice and steady for the week.

Retail Sales:  The headline reading for September was much lower than expected (-0.3% vs est of +0.3%).  Part of that miss was due to an upward revision to August from 0.4% to 0.6%.  When you strip out Autos, Retail Sales were down -0.1% vs est for a gain of +0.2%.  August was revised higher from 0.0% to 0.2%.

The Talking Fed: We got the Fed's Beige Book on Wednesday. You can read the official release here. 

Here are a few key highlights:

  • The economy expanded at a slight to modest pace since the prior report

  • Household spending was solid on balance.

  • Employment rose slightly amid reports of persistent worker shortages. Labor market tightness across skill levels and occupations was widely cited as a factor restraining hiring.

  • Wages rose moderately in most Districts, with upward pressure noted for lower-skill workers in the retail and hospitality industries and for higher-skill professional and technical workers.

  • Agricultural conditions deteriorated further due to the ongoing impacts of adverse weather, weak commodity prices, and trade disruptions.

Taking it to the House: Weekly Mortgage Applications increased by just 0.5%.  Refinance Applications popped by 4.0% but Purchase Applications tanked by -4.0%.  The October NAHB Housing Market Index hit 71 vs est of 68.  September New Housing Starts were lighter than expected (1.256M vs est of 1.320M) but the weakness was in multifamily.  The key housing market SFR actually made gains to 918K on an annualized basis. Building Permits were stronger than expected (1.387M vs est of 1.335M). SFR permits rose to 882K.

What to Watch Out For This Week:

 

 

 

 

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.

 

 

 

By Taff Weinstein at

Locations Close to Public Transit Boost Home Values

Neighborhoods located within a half-mile of public transit services outperformed those in areas farther from public transit based on a number of factors, according to a report released today by the American Public Transportation Association (link is external) and the National Association of Realtors®. “The Real Estate Mantra – Locate Near Public Transportation” highlighted the critical role public transportation plays in determining real estate values, revealing that commercial and residential real estate market sales thrive when residents have mobility options close by.

The report explored seven metropolitan regions – Boston; Hartford; Los Angeles; Minneapolis-St. Paul; Phoenix; Seattle; and Eugene, OR – that provide access to heavy rail, light rail, commuter rail and bus rapid transit. Residential properties within these areas had 4-24% higher median sale prices between 2012 and 2016, the report found. Commercial property near public transit also witnessed value gains in the studied cities, where four of the regions saw median sales prices per square foot increase between 5-42%.

Transportation costs in transit-oriented areas are significantly lower than in other regions, with an average annual savings of $2,500 to $4,400 for the typical household. One in four households in close proximity to transit does not own a vehicle, according to the study.

The seven sample areas were examined by residential and commercial sales performance, rent, neighborhood characteristics, local government interventions and housing affordability.

“Public transit’s benefits go beyond moving people from point A to point B,” said APTA President and CEO Paul P. Skoutelas. “Public transportation is a valuable investment in our communities, our businesses, and our country. Public transportation gets people to jobs and educational opportunities and helps businesses attract employees and customers.”

“Access to public transportation is an extremely valuable community amenity that increases the functionality and attractiveness of neighborhoods, making nearby communities more desirable places to live, work and raise a family,” said NAR 2019 First Vice President Charlie Oppler, who spoke at Monday’s press conference along with 2019 New York State Association of Realtors® President Moses Seuram. “The results of our report, conducted over multiple years alongside the American Public Transportation Association, should reiterate to policymakers at all levels of government the importance of investing in modern, efficient infrastructure that facilitates growth and helps our nation keep pace in a rapidly evolving world.”

Neighborhoods with high-frequency public transportation are in high demand. While property values and rents have risen, contributing to healthy local economies, the rapidly increasing demand for housing near public transit has resulted in constrained housing supplies.

“As the conversation surrounding housing affordability continues, public transportation agencies are critical allies in working with elected officials and community leaders in the effort to increase housing opportunities and maximize value around stations,” said Skoutelas.

Source: National Association of Realtors

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.000 MBS) lost -72 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move higher compared to the prior week.

Overview:  Mortgage rates moved higher on "hopium".  Hope of a trade deal, and hope over a Brexit negotiation.  While both saw a lot of progress, neither one really materialized last week.

Trade War:  On Friday afternoon, President Trump said that a "substantial" Phase I deal had been reached with China and that it will be written over the next 3 week period leading up to the meeting in Chile. The Phase I deal includes major agricultural purchases by China and the tariff hike scheduled for October 15th will not happen now.  They have an agreement for transparency in FX currency. Phase II will begin right after Phase I is actually signed. 

Inflation Nation: The headline Consumer Price Index (CPI) YOY kept the same pace as last month.  The YOY number came in at 1.7% which was the same as last month.  The Core (ex food and energy) also matched last month's YOY pace with a reading of 2.4%.

Consumer Sentiment: The Preliminary UofM Consumer Sentiment Index was much higher than expected (96.0 vs est of 92.0) and is the best reading since July.

Brexit:  Hopes of a compromise increased after positive comments from after Donald Tusk, EU council president, said he had seen “promising signals” about the chance of a fresh Brexit agreement between the UK and the EU.

What to Watch Out For This Week:

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.

 

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