Mortgage Market News

U.S. economic growth in the first quarter of this year fell into negative territory, due in part to the West coast port strike, harsh winter weather, along with a widening trade deficit. The Bureau of Economic Analysis reported on Friday that the second estimate for Gross Domestic Product (GDP) fell by 0.7% in the first quarter, below the 0.2% that was originally reported. Current incoming data suggests a pick up in economic growth in the second quarter, but the number remains near the anemic 1% mark. GDP measures the value of the production of goods and services.
A report out on consumers' assessments of the U.S. economy soured in May and fell to the lowest level in 2015. Consumer Sentiment declined to 90.7 in May, below the 95.9 in April after hitting the highest level since 2004 back in January of 98.1. Slow wage growth, along with many Americans working part time have put a crimp in Americans attitudes towards the U.S. economy. Stagnant wage growth leads to reluctance in consumer spending in addition to holding off on purchasing homes.
The New York Federal Reserve Bank released its 2015 Housing Survey this week revealing that U.S. households, on average, expect home price growth to continue at a 4.4% pace over the next year. The survey also showed that respondents expect home loan rates to increase in coming years, but at a moderate rate. In addition, renters report that they would rather own than rent if they had the financial resources. Many renters feel that a mortgage would be hard to obtain, although responses suggest a slight easing in perceived credit access.
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Mortgage Market News

Housing market news continues to stream in with favorable numbers this week after solid data from the Case-Shiller Home Price Index and New Home Sales earlier in the week. The National Association of REALTORS® (NAR) reported on Thursday that Pending Home Sales in April rose by 3.4%, led by the Northeast and Midwest, while all regions saw gains. The index now stands at 112.4, up 14% from April 2014 and at the highest level since May 2006 (112.5). A spokesperson from the NAR said that foot traffic remains elevated, despite limited inventory shortages in many metro areas.
The solid housing data has driven home loan rates to new highs for 2015, though still just above historically low levels. The 30-year fixed conventional home loan rate ($417,000 or less) rose to 3.87% with 0.6 in points and fees, according to Freddie Mac. A report released today by realtor.com said that delaying a home purchase this year could cost you more money in the future. The report said that interest rates and home prices are expected to climb in the next year.
Americans filing for first time unemployment benefits continue to hover near multi-year lows in the latest week as the job market continues to improve. Weekly Initial Jobless Claims rose by 7,000 in the latest week to 282,000, above the 274,000 expected. Claims have now remained below the 300,000 level for 12 straight weeks, which is a long period of time given the economic woes in the first quarter of the year. Within the report it showed that there are 2.2 million people receiving benefits after an initial week.
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Mortgage Market News

Luxury home builder Toll Brothers reported a better than expected quarterly profit due in part to a lower tax provision coupled with a pick up in business in California. Toll Brothers is forecasting an increase in housing demand with the improvement in the job market and an uptick in wages. The company reported net earnings per share of 37 versus the 35 cents expected on profits of $67.9 million, while total revenues edged lower by 1% to $852.6 million. Toll Brothers operates primarily in major metropolitan areas in the contiguous United States.
In yet another gauge on home prices, the Federal Housing Finance Agency (FHFA) reported on Monday that home prices rose 1.3% in first quarter of this year. The gain was the fifteenth consecutive quarterly price increase in the purchase only index. From February to March, prices were up 0.3%. The FHFA's Home Price Index is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. Over the past 12 months from the first quarter of 2014 to the first quarter of 2015, the index was up 5%.
The U.S. Internal Revenue Service reported on Tuesday that a crime syndicate hacked into the IRS website and stole vital personal financial information of 104,000 taxpayers. The IRS website features a service called "Get Transcript", where you can easily download several years of tax forms ---this is where the thieves obtained the information. The crooks then used the data to claim tax refunds in other people's names. But the IRS said that the information could be used for far more devious acts than just receiving the illegal returns ... the fraudsters can open up bank accounts, credit lines and steal tax refunds in the future.
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Mortgage Market News

The warmer temperatures in April helped home builders break new ground on housing units, with levels not seen in nearly eight years. The Commerce Department reported that Housing Starts surged by 20% in April from March to an annual rate of 1.14 million, which was also the biggest percentage gain in more than 24 years. The recent increase in the job markets, a strengthening in the economy, coupled with an uptick in home equity has led consumers to shed concerns and consider purchasing a new home.
The world's largest retailer, Wal-Mart, reported that higher wages and a stronger dollar pushed corporate earnings short of expectations in its latest quarterly report. Wal-Mart reported net income of $3.34 billion and earnings of $1.03, just below the $1.05 expected and well below the $1.11 from the year ago period. The company has been under pressure to raise worker pay and benefits and has announced that it will raise the minimum wage to $9 per hour this year and $10 in 2016. This change has and will impact the bottom line, but with $3.34 billion in net income in the latest quarter, no one is shedding a tear for the retailer.
At a recent conference on the outlook of the housing economy at the Mortgage Bankers Association's (MBA) National Secondary Market Conference, attendees from Fannie Mae, Freddie Mac and the MBA predicted that the U.S. Federal Reserve will begin to raise the Fed Funds Rate some time this year. The rise will most likely take place in September, after weak economic data in the first quarter of this year pushed the time frame further out from the original target of June. The one caveat from the prediction ... the refinance share of mortgage applications will likely fall.
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Mortgage Market News

Home Builder Sentiment across the nation eased a bit in May, though builders still remain optimistic. Consumers have expressed some concerns regarding their financial conditions and would like to be on more stable ground before purchasing a home. The National Association of Home Builders Housing Market Index fell two points in May to 54, below the 57 expected. The index is up nine points since the May 2014 reading of 45. Any number over 50 indicates that more builders view conditions as good rather than poor.
Gas prices at the pumps continue to rise as the spring and summer driving season is now underway. Prices have risen by 22 cents in the past three weeks as the national average price for a regular gallon of gasoline is now up to $2.80 as of Sunday. The increase has been due to a rise in oil prices and stronger demand. The survey from Lundberg said that prices are still 93 cents lower than a year ago. The highest prices were seen in Los Angeles, CA at $3.95, while Baton Rouge, LA had the lowest at $2.32.
A recent report out from Airlines for America reveled that summer airline travel is estimated to reach an all-time high this season due to a strengthening economy. It is estimated that nearly 22 million passengers will fly on U.S. airlines this summer, up nearly 5% from last year. The favored destinations: Canada, Mexico and the United Kingdom. The uptick in demand coupled with lower fuel costs will greatly add to the bottom lines of U.S. airlines companies.
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Mortgage Market News

U.S. economic data continues to stream in with mixed numbers, despite five years into a post recession period. The May Consumer Sentiment Index fell to 88.6 for the first of two readings this month and fell by the most in more than two years. Expectations were calling for a number of 96.0. A spokesman from the index said that the "decline was widespread among all age and income subgroups as well as all regions of the country." Consumer Sentiment measures the overall health of the economy as determined by consumer opinion.
Manufacturing data from the New York State region came in weaker than expected in May though still improved slightly for New York manufacturers. The Empire State Index came in at 3.1, below the 4.5 that was expected. Within the report it showed that the employment component had a slight increase, while the future employment index fell by six points. The future general business conditions fell noticeably.
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Mortgage Market News

Consumers pulled back on spending for autos and other big ticket items in April as the windfall from lower gasoline prices was tucked away in savings accounts. Stagnant wages coupled with not-so-good prospects on the economy were a few reasons for the ease in spending. Retail Sales in April were unchanged, which was below the 0.2% gain expected. When stripping out autos, sales were up just 0.1% versus the 0.4% estimated. Furthermore, after the harsh winter weather around most of the country, sales were expected to start blossoming in spring, but that hasn't panned out yet.
A recent study by the Urban Land Institute showed that those surveyed in the 19 to 36 age group, or millennials, are renting now more than they were five years ago, but most still have aspirations of owning a home in the near future. Millennials, those born in the 1980s and 1990s, are now the largest consumer segment since the Baby Boomers, estimated at 75 to 80 million and account for a quarter of the U.S. population. The millennial generation has encountered more hurdles than previous generations on the road to home ownership including strict qualifications for mortgages, a mountain of student debt, along with stagnant wage growth.
The recent rise in home loan rates and a decline in the inventory of homes have put a crimp in mortgage applications recently. The Mortgage Bankers Association reported on Wednesday that its Market Composite Index, a measure of total loan application volume, fell 3.5% in the latest and that follows a 4.6% drop in the previous week. The refinance index fell by 6%, while the share of refinance activity fell to 51%, the lowest since May 2014. The purchase index was essentially unchanged and worrisome as the spring buying season is now well underway.
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Mortgage Market News

The Bureau of Labor Statistics reported today the on the last day of March, there were 4.994 million job openings across the nation, down from 5.1 million in February, according to its Job Opening and Labor Turnover Survey (JOLTS) data. Within the report it also showed that voluntary quits rose to 2.8 million from 2.7 million in February as workers are more likely to quit their job due to the greater ease of finding something different. The report tracks millions of Americans each month who are laid off, quit or start on new job each month.
The National Federation of Independent Business (NFIB) reports that small business sentiment rose to 96.9 in April after a difficult March, but below the 98 posted in February. However, there was not an especially large gain in any of the components, except for an improvement in profit trends. In addition, small business owners are still somewhat cautious over future sales. “Overall, the Index remains steady, but it is still a few points below the average and is showing no tendency to break out into a stronger pattern of economic growth," said Bill Dunkelberg, NFIB Chief Economist.
The highest dollar amount paid for a painting took place yesterday in New York's Christies when Pablo Picasso's "Les Femmes d'Algers (Women of Algiers) sold for a record $179 million to an anonymous buyer. The bidding for the 1955 painting began at $100 million as Christies received over 30 bids in increments of $1 million. The painting last sold for $31.9 million back in 1997. Owning works of art has truly become a hard asset, along with real estate or rare cars.
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