Mortgage Market News

The National Association of REALTORS® (NAR) reported on Monday that Pending Home Sales in January fell 2.5% from December. The NAR said that winter storms in parts of the country coupled with overheated home prices were the reasons for the unexpected declines. Pending Home Sales, an indicator of future closed sales, are just 1.4% higher than January of 2015.
"While January's blizzard possibly caused some of the pullback in the Northeast, the recent acceleration in home prices and minimal inventory throughout the country appears to be the primary obstacle holding back would-be buyers," said Lawrence Yun, chief economist for the NAR.
Business activity in the Chicago region fell into contraction territory in February. Chicago PMI fell to 47.6 this month, below the 55.6 in January and below the 52.0 expected. Within the report it showed that new orders and production rates also declined. A reading below 50 signals contraction. When asked what impacts lower oil prices had on activity, 48% of the respondents said that lower prices were boosting business due to lower freight and transportation costs.
Gas prices at the pumps remained low over the weekend with the national average price at $1.74 for regular, up nearly 4 cents in the last week. A petroleum analyst said that the eight-month decline at the pump looks like it's coming to an end. The highest price seen was $4.11 back in July of 2008. The drop in prices has come as oil prices have plunged due to a big surge in supplies of crude oil.
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Mortgage Market News

The National Association of REALTORS ® reported on Tuesday that January Existing Homes Sales edged up 0.4% from December to an annual rate of 5.47 million units, above the 5.30 million expected: this was the highest level since July. In the past year, sales are up 11%, the largest year-over-year gain since the 16.3% annual rise in July 2013. Existing Home Sales is a measure of the selling rate of pre-owned single-family homes.
The Case Shiller 20-city Home Price Index rose 5.7% from the same period last year, inline with expectations. A spokesperson said that while home prices continue to rise, the pace is slowing a bit. From November to January, prices were up 0.8%. The big gains were seen in Portland, San Francisco and Denver. The ongoing positive signs from the labor markets are one of the reasons for making home affordability attractive to consumers, which is gradually pushing prices higher.
The Conference Board reported on Tuesday that Consumer Confidence hit a a seven-month low in February as the recent Stock market losses early in the year continues to weigh on the minds of Americans. Consumer Confidence fell to 92.2 this month, Below the 97.3 expected and down from the 97.8 recorded in January. “Consumers’ short-term outlook grew more pessimistic, with consumers expressing greater apprehension about business conditions, their personal financial situation, and to a lesser degree, labor market prospects,” said Lynn Franco, director of economic indicators at the board.
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Mortagge Market News

The Commerce Department reported that January Housing Starts fell 3.8% from December to an annual rate of 1.099 million units versus the 1.171 million expected, a three-month low. All four major regions across the country saw declines in starts, while a big East Coast snowstorm caused a halt in some late month construction in that area. January Building Permits, a sign of future construction, fell 0.2% from December to 1.202 million units, just above the 1.200 million expected, while December was revised lower to 1.204 million from 1.232 million.
Wholesale inflation, as measured by the Producer Price Index (PPI), rose 0.1% in January, above the -0.2% expected and above the -0.2% recorded in December. On an annual basis, PPI decreased 0.2% after declining 1.0% in December. However, Core PPI, which strips out volatile food and energy, surged 0.4%, well above the 0.0% expected and up 0.8% annually. The one month jump in Core prices does not constitute a pattern and the Fed will more closely watch the Consumer Price Index releasing on Friday. Inflation overall remains tepid with no threat of gathering speed at this time.
Economic growth appears to have slowed in late 2015 and at the start of 2016, perhaps foreshadowing another year of potentially unspectacular economic growth, according to Fannie Mae’s Economic & Strategic Research Group’s February 2016 Economic and Housing Outlook. On the housing front, home price gains are likely to outpace household income growth as the year continues. However, the rise in home prices should help lift underwater mortgages and create a healthier housing market.
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Mortgage Market News

Global Stock markets melted down overnight and the carnage is spilling over here in the U.S. markets. Economic weakness in both Europe and China coupled with big share price losses in European bank shares are a few of the reasons behind the recent decline. Yesterday, Federal Reserve Chair Janet Yellen said that the global economic malaise could be hit by the current turmoil, which added fuel to the decline in the major U.S. Stock indexes.
A recent report from the National Association of REALTORS® (NAR) found that receding housing inventories are constraining the housing market, causing potential buyers to remain on the sidelines. And the NAR said the problem is not going to end anytime soon. Tighter inventories coupled with an uptick in buyers have pushed home prices higher. “Without a significant ramp-up in new home construction and more homeowners listing their homes for sale, buyers are likely to see little relief in the form of slowing price growth in the months ahead,” said Lawrence Yun, NAR chief economist.
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Mortgage Market News

The first of two key labor market reports was released today showing that private employment slowed a bit in January from December, but the final number was better than expectations. ADP reported that private employment grew by 205,000 in January, below the 267,000 recorded in December, which was revised higher from 257,000. Solid growth was seen in service providers, which added 192,000 to the total. The 205,000 jobs created was above the 190,000 expected.
Over in the service sector, the Institute for Supply Management (ISM) reported that its ISM Service Index fell 2.3 points to 53.5 in January as growth in the service sector slowed a bit. A reading above 50 indicates the non-manufacturing sector economy is generally expanding; below 50 indicates the non-manufacturing sector is generally contracting. Within the report it showed that new orders as well as the employment component decreased.
Given the recent mediocre readings in economic data, chances of an interest rate hike from the U.S. Federal Reserve are decreasing. In addition, the Bank of Japan's recent move to a negative interest rate policy, weak economic growth in the fourth quarter, and a fairly dovish statement from the last week's Fed meeting have all lowered the chances even further. Traders now see less than a 30% chance of even one rate hike at any Federal Reserve meetings this year, according to data from the CME Group.
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