Mortgage Market News

Home prices continued to rise in July due to the ongoing strength in the U.S. economy. The Case Shiller 20-city Index showed a 5% gain year-over-year, which was in line with expectations. The index has risen at a 4% or higher rate since September 2012. From June to July, prices rose 0.6%. “Prices of existing homes and housing overall are seeing strong growth and contributing to recent solid growth for the economy,” said spokesperson David Blitzer.
Consumers across the U.S. felt a bit more optimistic about the economy in September. The Conference Board reported that its Consumer Confidence Index rose to 103.0 in September, well above the 96.0 expected and up from 101.5 in August. Consumer appraisals of current conditions were more positive in September. Labor market conditions were mixed as those feeling that jobs are plentiful increased, while the feeling that "jobs are hard to get" also increased.
Analytics firm CoreLogic reported on Tuesday that cash sales made up 31% of total home sales in June, down from 34% in June 2014. The year-over-year decrease has taken place each month since January 2013. Back in January 2011, cash sales peaked at nearly 47% of total sales across the nation, while before the housing crisis in late 2007, cash sales were 25%.
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Mortgage Market News

Inflation remained tame at the consumer level as evidenced by the Core Personal Consumption Expenditure (PCE). The Core PCE rose by 0.1% in August from July, due in part to falling gas prices. Meanwhile, year-over-year Core PCE grew by 1.3%, which is well below the Federal Reserve's target level of 2%. Low inflation levels could keep the Federal Reserve from raising interest rates this year and they could hold off a hike until next year.
Americans opened their wallets in August on goods ranging from back-to-school items to new autos, signaling the U.S. economy continues to grow. The Commerce Department reported Monday that Personal Spending rose 0.4% last month, above the 0.3% expected. In addition, Personal Incomes rose 0.3%, just below the 0.4% anticipated and have been steadily rising since April. Since spending outpaced incomes, the personal savings rate ticked down to 4.6% from 4.7%.
Over in the housing markets, Pending Home Sales in August unexpectedly declined by 1.4% as rising home prices keep buyers on the fence. The National Association of REALTORS® (NAR) said that despite the weak reading, sales are still up 6.1% from a year ago. The biggest decline was seen in the Northeast falling by 5.6%, the Midwest saw a 0.4% decrease, the South saw sales fall 2.2%, while the West registered a 1.8% gain. Pending Home Sales measures housing contract activity. It is based on signed real estate contracts for existing single-family homes, condos and co-ops. A signed contract is not counted as a sale until the transaction closes.
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Mortgage Market News

The Commerce Department reported Thursday that single-family home sales surged in August, while July’s numbers were also revised higher, signaling continued strength in the U.S. housing market. New Home Sales in August rose 5.7% from July to the highest rate since 2008 and are up nearly 22% since August 2014. Expectations were calling for 515,000 units in August. In addition, July’s numbers were revised to 522,000 from 507,000. The New Home Sales report shows the number of newly constructed homes with a committed sale during the month.
Dow component and heavy equipment maker Caterpillar reported Thursday that it will be cutting up to 5,000 jobs by the end of 2016 for cost cutting measures due to tough conditions in the energy sector. The company went on to say that layoffs could total 10,000 through 2018, while revenues could decline in 2016 for a record fourth straight year. In addition, Caterpillar will also offer a voluntary retirement enhancement program this year for qualifying workers.
RealtyTrac released its August 2015 Home Sales Report on Thursday revealing that single-family home and condo sales through August were on pace for an eight-year high nationwide and in 110 out of 204 (54%) metropolitan statistical areas with sufficient sales data. A total of near 2 million single-family homes and condos sold through August in 2015, up 5.4% from the beginning of the year, to the highest total for the first eight months of the year since 2007.
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Mortgage Market News

A recent study showed that the number of homes losing value monthly tripled in the past year. The report went on to say that a majority of the homes are still gaining value, however, the national trend is lower. Weiss Residential Research CEO Allan Weiss said, “In this environment buyers and investors should be careful to avoid buying properties that are losing value by reviewing metro and zip code maps on Owners.com that show hyper-local trends in changing value."
Mortgage application volume rose in the latest week as rates continue to hover just above historical lows. The Mortgage Bankers Association (MBA) attributed the rise to significant rate volatility last week surrounding the Federal Open Market Committee meeting as rates edged lower. The MBA's Market Composite Index, a measure of total loan application volume, rose nearly 14%, while the refinance index surged nearly 18% and the purchase index saw a 9% increase.
The recent problems at Volkswagen surrounding the German car company's attempt to cheat on federal emission standards has cast a dark cloud over the entire car making industry across the globe. The National Highway Traffic Safety Administration now says it will question everything when it comes to self-certified testing at auto makers. As the lawsuits mount up at Volkswagen, most of the major companies have also endured harsh penalties. General Motors agreed to a $900 million settlement over faulty ignition switches linked to over 100 deaths, Fiat Chrysler coughed up $105 million for failing to live up to safety regulations, while Toyota paid a $1.2 billion fine to settle a criminal investigation.
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How to save $3,000, one five at a time | Marketplace.org

How to save $3,000, one five at a time | Marketplace.org
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Mortgage Market News

Housing news continues to stream in with mixed results as the sector deals with tightening inventories and rising prices. The Federal Housing Finance Agency reported on Tuesday that home prices were up 0.6% in July from June. In the year ended in July, prices were up nearly 6%. The survey is based on home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. The data comes after lower than expected results from Existing and New Home Sales in the past week. The index is 1.1% below its March 2007 peak and is roughly the same as the November 2006 index level.
A recent Harvard University study revealed that renters will continue to struggle for the next decade as an estimated 11% more households will fork over at least half of their incomes in rent in 2025. The study said that renters who pay more than half of their earnings in rent often need federal subsidies to find affordable places to live. One big factor for the recent uptick in renting was that many lost their homes during the Great Recession along with incomes declining. The report went on to say that if rents continue to grow faster than incomes, the number of households in hardship could rise as much as 25%.
U.S. Stock markets continue their roller coaster ride due to uncertainty surrounding the Federal Reserve's future interest rate hikes. Last week, the Federal Reserve held off from raising its benchmark Fed Funds Rate, which is currently at 0.00% - 0.25%. Markets hate uncertainty, and today's action sees the Dow Jones Industrial Average down well over 200 points. Yesterday, Atlanta Fed President Dennis Lockhart fueled the uncertainty flames when he said a rate hike later this year was still possible and that the Fed, in recent months, has added to the market instability and needs to refine its communication approach.
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Mortgage Market News

The Commerce Department reported on Thursday that Housing Starts fell 3% in August from July to an annual pace of 1.126 million units, below the 1.158 million expected. Within the report it showed that multifamily units fell 3% in August after the 23% decline in July. This comes after multifamily starts were up nearly 40% in June and April. Housing Starts are up 7.5% since August 2014 and remain above a one-million pace for the fifth straight month, signaling that the sector has recovered a big portion of the losses sustained when the housing bubble imploded back in 2008. In addition, Building Permits, a sign of future construction, rose 3.5% to an annual rate of 1.170 million units, above the 1.158 million expected.
The price of renting in the U.S. rose in August for the 58th straight month and are up 3.6% so far this year. Rent prices have been on the rise due to a smaller amount of units available along with an increase in demand. The average rental is lowest in Arkansas at $760, to a high of $2,640 in New York. Just recently, the Census Department reported that home ownership rates fell to 63.4%, a 48-year low.
The Philadelphia Federal Reserve released its monthly manufacturing index showing negative readings on its top line index. The Philly Fed Index fell to negative 6.0 in September after a positive 8.3 reading in August and well below the +6.5 expected. It was the first negative reading since February 2014. Within the report it did show that the employment component rose 5 points to its highest level in five months while new orders showed growth.
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Mortgage Market News

U.S. consumer spending grew in August. Retail sales increased 0.4 percent, excluding auto, gas, building materials and food. This follows July’s 0.6 percent increase and signals continued improvement in the economy. Overall, retail sales rose 0.2 percent. Strong auto sales were neutralized by a drop in sales at service stations which was fueled by lower gas prices.
The number of homes with negative equity also dropped in the second quarter. CoreLogic reported 91 percent of all mortgaged properties now have equity, after 759,000 properties regained equity in the second quarter. The total number of mortgaged residential properties with negative equity is now at 4.4 million, or 8.7 percent of all mortgaged properties, compared to 5.1 million homes, or 10.2 percent in the first quarter. The number of underwater homes has decreased year over year by 1.1 million, or 19.4 percent.
On the other side of the globe, the Shanghai Composite Index dropped for the second day in a row, marking its biggest two-day loss in three weeks. In a paper issued today, World Bank economists warn a Fed rate hike this week could further damage China and other emerging markets.
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Mortgage Market News

U.S. Stocks opened lower this morning as investors await the Fed’s decision this week on whether or not to raise the benchmark Fed Funds Rate for the first time in nine years. While many believe the rate will increase before year’s end, growing skepticism is mounting that an increase will be announced in Thursday’s Monetary Policy Statement. Signs of sustained economic recovery remain mixed both here and abroad.
The Shanghai Composite Index fell 2.7 percent, the most in three weeks. Recent data continues to suggest the Chinese economy is weaker than expected. Lower industrial output as well as the slowest pace of investment since 2000 are among the latest data points.
In its monthly report, the Organization of the Petroleum Exporting Countries (OPEC) stated it expects demand for its oil to increase 30.31 million barrels per day next year. Despite lower global demand, OPEC cited its strategy to let oil prices fall as a reason for a reduction in global surplus.
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Mortgage Market News

Inflation at the wholesale level showed a mixed picture in August. The Producer Price Index was unchanged versus the -0.1% expected, mainly due to lower oil prices. But the Core Producer Price Index, which strips out food and energy costs, showed a beefy 0.3% rise, hotter than the 0.1% expected. Wholesale or producer inflation has not yet been passed down to the consumer, mainly due to lack of wage growth. If consumers are not being paid more, businesses can’t incrementally charge more for their goods and services.
Consumers were a bit downbeat about the U.S. economy in early September. The September Consumer Sentiment Index fell to 85.7 early this month, below the 91.9 recorded in August and below the 91.5 expected. The Index measures consumer attitudes towards the economy along with feelings on current economic conditions and futures prospects. Americans attitudes on current conditions and futures expectations hit their lowest level since late 2014.
Investment banking firm Goldman Sachs reported this morning that it sees oil prices plunging to near $20 in the next few years as a glut of oil flows through the pipes around the globe, while demand slips. Oil dropped to $44/barrel in current trading, which has pushed the price that we pay at the gas pumps down. The national average price for a regular gallon of gasoline is at $2.36, down from $2.57 a month ago. Most analysts feel that the national average price of gas could hit $2 in the coming months.
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Mortgage Market News

The job market received some good news today as the number of job openings climbed to the highest level in 14 years in July. The Labor Department announced that its JOLTS (Job Openings and Labor Turnover Survey) showed that there were 5.75 million job openings in July coming from highly paid professional and business services to service sector jobs and retail trade. However, the labor market seems unable to fill many of the slots, which could eventually lead to an acceleration in wages, which have been stagnant over the past few years.
The Federal Reserve members will meet next week to discuss monetary policy and the direction of the short term Fed Funds Rate. The U.S. economy has been improving, with the expectations split between whether or not the rise in rates will come next week. However, the chief economist at the World Bank said yesterday that the Federal Reserve should wait until the global economy is on surer footing to avoid panic and turmoil in emerging markets. Early in September, Christine Lagarde from the International Monetary Fund said the Fed should not rush to raise rates this month.
Mortgage rates edged higher last week causing a decline in total mortgage loan application volume, reports the Mortgage Bankers Association (MBA). The MBA's Market Composite Index, a measure of total loan application volume, declined 6.2% in the latest week and comes after a big rise in volume in the previous week. The refinance index fell 10%, while the purchase index fell by 1%, which is 41% higher than the same week last year.
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Mortgage Market News

Analytics firm CoreLogic reported on Tuesday that completed foreclosures were down nearly 25% in July from a year ago, led by job market gains and home price appreciation. Home prices were up 7% from a year ago, while the Unemployment Rate hit 5.1% in August, the lowest in seven years. There were 38,000 completed foreclosures in July, down from the 50,000 completed in July 2014, while foreclosures were down 6.2% compared to June 2015. "As we enter the final months of 2015, the housing markets continues to gather steam buoyed by improving economic conditions and the recent pent up demand for homeownership," said Anand Nallathambi, president and ceo of CoreLogic.
Small business optimism was little changed in August from July, reports the National Federation of Independent Business as the Index rose to 95.9 from 95.4. The slight increase was paced by job openings and earnings trends, as both components were up in August from July. A spokesperson said the small businesses were not influenced by the volatility in the Stocks markets, though the surveys were mostly done right before the gyrations sparked by slowing economic conditions in China.
A recent survey of mortgage lenders revealed that 2016 is expected to be a seller's market in housing, while a large portion feel that the market could cope with a possible interest rate hike this fall. Mortgage bankers are also looking ahead to 2016 for new innovations in banks' menus of mortgage products, continued home price gains along with lowering acceptable down payments amounts by 10%.
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Mortgage Market News

The first of two key employment reports was released on Wednesday showing that private employers added fewer jobs than expected in August. ADP reported that private employers added 190,000 workers last month, below the 201,000 expected, while July was revised lower to 177,000 from 185,000. The report revealed that small businesses added 85,000 jobs, midsize, 66,000, and large companies, 40,000. Though below expectations, job growth has been steady and will be a key deciding factor for the Federal Reserve's decision on future interest rate hikes.
Worker productivity surged in the second quarter of 2015 and rose at the fastest pace since late 2013, though it has been running below more normal levels for the past year. Productivity rose by 3.3% in the second reading for the second quarter, above the 1.3% that was registered from the first reading and above the 2.8% expected. Within the report it showed that labor costs fell 1.4%, which signals that wages are not increasing, despite the fact that the Unemployment Rate has been declining.
Mortgage application volume soared in the latest week as home loan rates remained at their lowest level since late April. The Mortgage Bankers Association reported that its Market Composite Index, a measure of total loan application volume, rose by 11.3% in the latest week. In addition, the refinance index soared 17%, while the purchase index was up 4%.
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Mortgage Market News

This week's August Jobs Report could turn out to be one of the most highly anticipated data points this year by both investors and the Federal Reserve.
 
The Jobs Report could be a key deciding factor in the Fed's decision to raise rates in September or hold off until a later date.
 
A strong Jobs Report, coupled with the robust Gross Domestic Product numbers last week, could signal the time is right for a rate hike. On the other hand, a weak Jobs Report would signal it's time to wait.
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