Mortgage Market News

Annual home price gains are beginning to slow due to rising mortgage rates along with difficulties in qualifying for a mortgage, reports the Case Shiller 20-city Index in February. The Index fell to 12.9%, just below the 13% expected and down from the 13.2% recorded year-over-year in January. The 12.9% is down from a recent high of 13.7% with 13 of the 20 tracked cities posting lower annual rates.
The Conference Board reported this morning that its Consumer Confidence Index fell in April to 82.3, down from the 83.9 registered in March. The 82.3 missed expectations of 83.2. The Conference Board said that consumers assessed current business and labor market conditions less favorably than in March. However, consumers do not see the economy or the labor markets losing the momentum that has been building up over the past several months.
The U.S. homeownership rate fell to its lowest level in nearly 19 years due to rising mortgage rates and higher home prices. The Census Bureau reported that the homeownership rate fell to 64.8% in the first quarter of 2014, down from the 65.2% in the final quarter of 2013. That is the lowest rate since the 64.7% recorded in the second quarter of 1995. The rate peaked at 69.2% in June 0f 2004.
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Mortgage Market News

Consumers views on economic conditions surged in April to its highest reading since July, as reported by the Thomson Reuters/University of Michigan's final reading on Consumer Sentiment. The Index rose to 84.1, above the 82.6 expected. Consumer expectations rose to 74.7 in April from 70.0 in March.
A recent study of U.S. manufacturing shows that the sector has grown more competitive with factories in China, Brazil and most of the globe's other major economies. In China, rising energy costs and wages have cut into the edge that China has held on most other manufacturing nations. Labor costs have soared by 187% in the last decade in China, while the U.S. has seen an increase of only 27%. In addition, China's currency has risen more than 30% against the dollar, which make its goods produced and sold abroad more expensive to purchase.
The closely watched Monthly Employment Report will be released next Friday on May 2 and will be scrutinized by traders and investors around the globe. It is expected that employers added 210,000 new workers in April. Last December and January job growth averaged just 114,000 per month, which was due in part to the harsh winter weather. February and March averaged a more robust 194,000 per month and the sector will have to continue to create at least that amount to get back to more healthy levels.
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Mortgage Market News

The Commerce Department reported today that March New Single-Family Home Sales plunged by 14.5% from February to an annual rate of 384,000 units. The 384,000 was far below the 455,000 that was expected with declines in three of the four U.S. regions. Sales have been stung by rising mortgage rates and home prices, as well as low inventories. The median sales price hit $229,000 in March, up nearly 13% from the year-ago period.
Despite some of the lowest home loan rates this year, mortgage applications continue to decline. The Mortgage Bankers Association reported today that its Market Composite Index, a measure of total loan application volume, fell by 3.3% in the latest week. Within the report it revealed that the refinance index fell by 4%, while the purchase index dropped 3%.
The heart of corporate earnings season is this week with some big names reporting today, such as Proctor & Gamble, Boeing, AT&T, Facebook and Apple. Of the 85 companies that have reported quarterly earnings in the S&P 500 through Monday morning, 67% have beaten estimates. However, companies had lowered their earnings guidance before the season began and there have been no overwhelming positive surprises.
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Mortgage Market News

Housing news was abundant today as the sector is in the midst of the spring buying season. The National Association of REALTORS® reported today that March Existing Home Sales fell by 0.2% from February to an annual rate of 4.59 million units. Last month's sales volume remained the slowest since July 2012. Higher home prices coupled with low inventories along with harsh winter weather in the beginning of March curbed demand. The median sales price was $198,500, up nearly 8% from the year ago period, while there was a 5.2 month supply of Existing Homes.
The Federal Housing Finance Agency (FHFA) reported this morning that its February Home Price Index (HPI) rose by 0.6% from January to its third straight monthly increase. Since February of 2013, prices were up nearly 7% but the change slowed to the weakest in 13 months. The HPI rose from January to February in seven of the ten Census regions.
Higher gas prices at the pump are eating into the pockets of consumers as the spring and upcoming summer driving seasons get underway. The national average price for a regular gallon of gasoline is at $3.66, up from $3.52 a month ago. Higher costs for ethanol, since it is blended with gasoline, is pushing prices higher. In addition, lower gas inventories and pent up demand from the harsh winter is helping to push prices higher. Also, refineries are switching over from winter blends to summer blends of gasoline, which costs more to refine, which accounts for why your gas mileage seems better in the summer.
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Mortgage Market News

Americans filing for first time unemployment benefits are hovering near seven-year lows as employers are slowing the pace of layoffs. The Labor Department reported that Weekly Initial Jobless Claims came in at 304,000, below the 312,000 that was expected. The 304,000 is up from 302,000 in the prior week, which was the lowest level since September of 2007. The four-week moving average of claims, which irons out seasonal abnormalities, dropped by 4,750 to 312,000.
Manufacturing in the Philadelphia region picked up this month and comes after a weak reading from New York State released earlier in the week. The Philly Fed Index surged to 16.6 this month, well above the 8.6 that was expected and up from the 9.0 registered in March. Within the report it showed that the employment component rose to 6.9 from 1.7, while the average workweek also increased.
Oil prices continue to move higher due to the ongoing tensions in Ukraine and as a brighter looking U.S. economy signaled an uptick in demand for energy. Higher oil prices are pushing prices higher at the pump and with the onset of the spring and summer driving season, the national average price for a regular gallon of gasoline is at $3.65, up from $3.52 a month ago.
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Mortgage Market News

The Mortgage Bankers Association reported today that its Market Composite Index, a measure of total loan application volume, rose by 4.3% in the latest week after four straight weekly declines. The refinance index gained 7%, while the purchase index squeaked out a 1% gain. The refinance share of mortgage activity increased to 52% from 51% from one week earlier.
The housing sector received news this morning that March Housing Starts rose by nearly 3% to an annual rate of 946,000 units, but below the 955,000 that was expected. The 946,000 is down almost 6% from the March 2013 rate of 1,005,000. Within the report it showed that single-family starts in March came in at an annual rate of 872,000, up 7.7% from the 2013 March annual rate of 810,000. Building Permits, a sign of future construction, came in at an annual rate of 990,000, below expectations.
The Federal Reserve will release its Beige Book on Wednesday afternoon, which is always disseminated ahead of its Federal Open Market Committee (FOMC) meeting. The FOMC meeting is scheduled for April 29-30. The Beige Book gathers anecdotal information on current economic conditions in its Districts through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts and other sources.
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Mortgage Market News

Consumers across the nation stepped up spending in March after dismal spending in the beginning of the year, due to the severely harsh winter weather. Retail Sales rose by 1.1% last month, the biggest gain since September 2012, while February's 0.7% rise was revised up from 0.3%. Retail Sales account for 1/3 of consumer spending and consumer spending accounts for about 2/3s of the U.S. economy.
Home loan lending declined in the first quarter of 2014 due to rising interest rates and home prices. Total lending came in at about $226 billion, the lowest level since 1997 and less than one-third of the 2006 average. Home loan rates are up from the best levels seen early in 2013 after the Federal Reserve began to taper its massive stimulus program. Wells Fargo recently reported that its home-loan originations fell to $36 billion in the first quarter after it exceeded $100 billion for seven straight quarters through June 2013.
Banking giant Citigroup reported first quarter earnings of $3.9 billion or $1.30 per share, easily beating the $1.14 per share estimated by Thomson Financial Research. The gains were due in part to solid performances from its consumer and international businesses. In addition, the bank also grew both loans and deposits, while holding the line on its expenses.
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Mortgage Market News

The Mortgage Bankers Association (MBA) reported today that its Market Composite Index, a measure of total loan application volume, fell by 1.6% in the latest week for its 4th straight weekly decline. The refinance index fell 5% and is at its lowest level since the end of 2013. In addition, the refinance share of mortgage activity fell to 51% of total applications to its lowest level since July 2009. The purchase index rose by 2.7% as the spring buying season gets underway.
Corporate earnings season kicked off yesterday with Alcoa reporting a profit decline due to a drop in aluminum prices though the company did beat earnings expectations. Investors will be looking for the impact of the harsh winter weather for 1st quarter earnings, with signs of optimism for the 2nd quarter. Later this week, banking giants JPMorgan Chase and Wells Fargo will report their numbers.
Mortgage credit availability increased slightly in March from February as reported by the Mortgage Bankers Association's Mortgage Credit Availability Index. The MBA said that many lenders and investors are providing borrowers seeking higher loan amounts with a broader range of financing options.
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Mortgage Market News

Inside Mortgage Finance recently reported that the home loan market has experienced its worst first quarter in since 2000. In January, February and March of this year, mortgage originations amounted to $192 billion, down 26% from the fourth quarter of 2013 and down 60% from the first quarter of 2013. Higher home loan rates, tighter credit and declining inventories are some of the reasons behind the slowdown.
Americans across the nation who have been unemployed for longer than six months are finding it harder and harder to get full-time work . Recent finding from Princeton University revealed that only 11% of the long-term unemployed find permanent, full-time work a year later. Most will find unsteady work, with 14% finding part-time work and 11% landing temporary work.
Prices at the pump continue to rise as the spring driving season gets underway and leads to the big kick-off weekend with Memorial Day at the end of May. The national average price for a regular gallon of gasoline is at $3.61, the highest price since late July 2013, but 4 cents under its year ago point. Gasbuddy recently reported that prices could top out at $3.65 a gallon in the next few weeks
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Mortgage Market News

The job markets improved in March after dismal job creations in December, January and early February. ADP reported that private employers added 191,000 jobs in March, which was below the 215,000 expected and up from the 178,000 created in February, which was revised from 139,000. ADP said that businesses with more than 1,000 employees added the most jobs last month.
The Mortgage Bankers Association (MBA) reported today that its Market Composite Index, a measure of total loan application volume, fell by 1.2% in the latest week. The refinance index fell 3%, while the purchase index edged up 1%. The MBA's survey covers over 75% of U.S. residential mortgage applications.
The closely watched S&P 500 Index closed at yet another record high yesterday of 1,885 as traders kicked off the second quarter of 2014. April has been historically the top performing month of the year returning 1.7% on average over the past 40 years. The S&P did hit a multi-year low of 666 back in the depths of the Great Recession in March of 2006 and has been climbing ever since due to an improving economy along with the Fed's massive stimulus programs.
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Mortgage Market News

Home prices continue to rise, due in part to a tight supply of available homes for sale. CoreLogic, a real estate data provider, reported that home prices, including distressed sales, rose by 12.2% from February 2013 to February 2014. This represents 24 consecutive months of year-over-year increases. From January to February, there was a 0.8% gain. However, prices are still nearly 17% below the peak, which was set in April 2006.
National manufacturing held steady in March from the prior month as reported by the Institute for Supply Management (ISM). The ISM Index came in at 53.7 versus the 54.0 expected and just below the 53.2 recorded in February. Readings above 50 indicates expansion. Within the report it showed that the employment component fell 1.2 points to 51.1, while the new orders index increased 55.1 from 54.5.
A big decline in private residential home building caused a stagnation in construction spending in February, a sign that the harsh winter weather continued to cause some major hurdles for the economy. February construction spending barely increased by 0.1% to an annual rate of $955.7 billion last month, while January was revised lower to -0.2% from the original estimate of +0.1%.
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