Shelter Six:  Stellar Housing Rebound Continues

The spectacular housing rebound continued in August with both Existing-Home and New-Home Sales hitting the highest levels since 2006.

Existing-Home Sales were up 2% from July and 11% from last year, while New-Home Sales were up 5% from July and 43% from last year.

Extremely limited inventory remains the primary trouble spot as levels were down 19% from a year ago to a 3-month supply nationally, which was the lowest level since 2004.

Lack of inventory and surging lumber prices continue to drive up home prices, which were up 11% nationally in August from a year ago.

Mortgage forbearance figures continue to dwindle and are down to a five-month low of 6.8% of all mortgages, per Black Knight as of Sept 22.

Starting Oct 1, there will be potential temporary lapses with both the USDA Rural Housing Program and the National Flood Insurance Program.

Rate Update

Mortgage Rates were flat last week near record lows and will most likely hold steady until good news regarding the pandemic emerges.

This Week

Employment figures are the most highly anticipated economic data of the month and are due out on Friday.

September 28, 2020 by · Leave a Comment

Shelter Six:  Federal Reserve Pledges to Keep Rates Low

There were few surprises from last week’s Federal Reserve meeting as the Fed reiterated it does not plan to raise short-term rates over the next couple of years.

The steady recovery in consumer spending continues with August Retail Sales figures rising a solid .6% from July and now up 3% over last year.

The National Association of Home Builders (NAHB) reported that builder confidence in the new-home market hit an all-time high for the second month in a row in September.

August Housing Starts declined 5% from July, but the weakness was entirely due to a 23% decline in multi-family units, which are very volatile from month to month.

Single-family Housing Starts actually increased 4% from July, and single-family Building Permits, a leading indicator of future construction, rose 6% from July.

Rising cost of lumber and delays for building materials, however, threaten to slow down new construction (lumber prices are up more than 170% since mid-April, adding more than $16K to typical new-home price).

Rate Update

Last week’s economic data and Federal Reserve meeting had little impact on mortgage markets, and rates again held steady around 3% levels.

This Week

It will be a very light week for economic data with Existing Home Sales due out on Tuesday, New Home Sales on Thursday, and Durable Orders on Friday.

September 21, 2020 by · Leave a Comment

Shelter Six:  Home Buyers and Sellers More Optimistic

Both home buyers and sellers reported greater optimism in Fannie Mae’s August Home Purchase Sentiment Survey.

Respondents indicating that it is a good time to buy increased from 53% to 59%, while respondents indicating that it is a good time to sell increased from 45% to 48%.

Despite recent Unemployment stats, respondents had little concern about job security with 78% reporting they were not concerned about losing their job (up 2% from July).

Inflation reports came in a little higher than expected last week, but were still far below the readings from the first few months of the year prior to the pandemic.

About 6M homeowners have been in forbearance at some point over the last six months and about 2M have now exited with only about 7% still in forbearance.

Self-employed borrowers pursuing a mortgage are now facing additional steps, including a YTD P&L, bank statements that support income, and a written business analysis.

Rate Update

Freddie Mac has been tracking rates since 1971 and last week’s were the lowest ever reported with the 30-year at 2.86% with .8 points, and the 15-year at 2.37% with .7 points.

This Week

The Fed meets on Wednesday. Retail Sales will also be released on Wednesday and Housing Starts on Thursday.

September 14, 2020 by · Leave a Comment

Shelter Six:  Strong Economic Data Continues to Roll In

The faster-than-expected economic rebound continues as last week’s economic data again came in stronger than anticipated.

In August, the economy added a massive 1.37M new jobs and Unemployment dropped from 10.2% to 8.4%.

Strong reports also came out for both the manufacturing and services industries, while weekly Jobless Claims declined to the lowest level since the pandemic started.

According to CoreLogic, home prices grew in July by the fastest rate in nearly two years, up 1.2% from June and 5.5% from last July.

Forbearance figures have flattened out and are now holding steady in the 7% range after peaking around 9% in June, and there has been no uptick after the Fed’s unemployment insurance benefits expired.

Temporary underwriting flexibilities on things such as verifications of employment and exterior-only appraisals have been extended again for several more months.

Rate Update

The 30-year Conforming rate continues to hover around and slightly under 3%. Expect more or the same as long as the Fed keeps buying bonds.

This Week

The Consumer Price Index, the most widely followed monthly inflation report, is due out on Friday.

September 7, 2020 by · Leave a Comment

Shelter Six:  July New Home Sales 36% Higher Than Last Year

The Fed unveiled a major shift in policy last week to allow inflation and unemployment to run higher, abandoning decades of precedent and ensuring rates will stay low for years to come.

The new policy is known as “average inflation targeting” and will allow inflation to run above the Fed’s 2% goal “for some time” following periods when it has run below 2%.

As a result of the change, it is expected that the Fed will raise the Federal Funds Rate at a slower pace than in the past when labor market conditions improve.

The strong housing data continues to roll in. Last week’s New Home Sales report rose 14% from June and 36% from last July to the best level since 2006.

Fannie Mae and Freddie Mac announced a nationwide suspension of single-family foreclosures and evictions has been extended from Aug 31 through the end of the year.

The FHFA pushed the implementation date for a new Conforming .5% refinance fee from Sept 1 to Dec 1 (loans under $125K will be exempted).

Rate Update

Although a volatile week, the 30-year Conforming rate trickled down last week and fell slightly back under 3%.

This Week

The ISM National Manufacturing Index will be released on Tuesday, the ISM National Services Index on Thursday, and Employment figures on Friday.

August 31, 2020 by · Leave a Comment

Shelter Six:  Stellar Housing Trends Continue

July Existing Home Sales surged a massive 25% from June to the highest level since 2006, according to NAR.

Inventory of existing homes fell nationally to a 3.1-month supply (6 months considered normal) after being at a 3.9-month supply in June and 4.2-month supply last July.

To help with inventory concerns, more homes need to be built and this explains why July Builder Confidence surged the most since 1990, according to the NAHB.

July Housing Starts were also up much higher than expected (23% from June) representing the highest increases in four years.

Housing Permits, which are a good indicator of the future, also climbed 19% from June.

Construction trends are recently toward custom-homes (built for specific owners) and smaller homes.

Rate Update

Mortgage Rates fell slightly last week and continue to hover a hair above 3%.

This Week

New Home Sales will be released on Tuesday and the Core PCE Price Index on Friday.

August 24, 2020 by · Leave a Comment

Shelter Six:  Consumer Spending Boosts Economic Recovery

Consumer Spending continued to rebound for the third straight month in July, up 1.2% from June and 2.7% from a year ago.

Inflation, always a concern to mortgage rates, came in stronger than expected last week largely due to a jump in auto and apparel costs.

A Mortgage Bankers Association survey showed mortgage applications for new home purchases up 1% from a very strong June and 39% from a year ago.

Home prices were up 4.2% over the Second Quarter of the year, after increasing 7.7% over the First Quarter.  The Second Quarter National Median Price was $291,300.

Initial Jobless claims for the week ending August 8 decreased to below a million for the first time in five months, an encouraging sign for the labor market recovery.

The most popular ARM index, LIBOR, is being replaced this month by the Secured Overnight Financing Rate, or SOFR.

Rate Update

Mortgage rates pushed higher last week due to a new fee added by Fannie Mae and Freddie Mac’s regulator as well as inflation figures coming in stronger than expected.  30-year rates are now a little over 3% for the first time since early June.

This Week

It will be a very light week for economic data with Housing Starts to be released on Tuesday and Existing Home Sales on Friday.

August 17, 2020 by · Leave a Comment

Shelter Six:  Strong Jobs Report Boosts Economic Recovery

Employment figures again came in stronger than expected with the economy adding a massive 1.8M jobs in July (1.5M had been forecasted).

The Unemployment Rate dropped from 11.1% to 10.2%.  Average Hourly Earnings increased and were 4.8% higher than a year ago.

According to Black Knight, the average-priced home is now the most affordable it’s been since late 2016, despite home prices rising for the last 97 straight months.

Buying power is up 10% over last July, with buyers able to afford nearly $32K more home than they could last year.

The number of mortgages in forbearance dropped by 101K last week to 7.5% of all mortgages (4M total loans), according to Black Knight’s August 7th report.

A big reason for the drop is that most forbearance plans were initially set up for 90 days and a large number are expiring now at the end of each month (500K at end of July).

Rate Update

Mortgage rates slid lower again hitting an all-time low last week.  30-year rates continue to be under 3% for those who qualify for the best terms.

This Week

The Consumer Price Index will come out on Wednesday with Retail Sales released on Friday.

August 10, 2020 by · Leave a Comment

Shelter Six:  U.S. Homeownership Rate Surges to 67.9%

June Pending Home Sales soared 16.6% from May and, in the space of two months, have catapulted from the lowest levels ever to the highest levels in over 15 years.

The May U.S. National Home Price Index rose 4.5% year-over-year, according to S&P CoreLogic Case-Shiller Index, and is now 18.6% higher from where it peaked in 2006.

Second Quarter GDP figures fell a record 32.9% but this was actually a little better than the 35% decline expected, and more recent data has had much better results.

The U.S. Homeownership Rate jumped significantly to 67.9% in the Second Quarter, up from 65.3% the previous quarter and to the highest level since 2008.

The Homeownership Rate peaked at 69% in 2004-2005 before beginning a steady decline to a low point of 62.9% in 2016.

Homeownership was strongest in the South at 71.1% and jumped to 40.6% for those under 35 (up from 36.4% the previous quarter).

Rate Update

The Fed met last week and reiterated that it will do “whatever it takes” to support the economy. 30-year rates reacted by dropping to new all-time lows.

This Week

The ISM National Manufacturing Index will be released on Monday, the ISM National Services Index on Wednesday, and Employment figures on Friday.

August 3, 2020 by · Leave a Comment

Shelter Six:  June Housing Starts and Retail Sales Figures Surge

With record levels of mortgage volume clogging lenders’ pipelines, it is critical to set realistic expectations and deadlines with customers.

Appraisals are taking a solid two weeks right now, so best to put 20 days in the Appraisal Contingency, as it can take the lender a few days to order and review the appraisal.

It is also recommended to put in at least 25 days for the Financing Contingency and leave a solid 30 days for closing.

After plummeting in April, Builder Confidence has surged and more than doubled over the last 3 months. And, for good reason, as June Housing Starts were up 17% from May.

June Retail Sales rose 7.5% from May, well above the consensus of 5%, and are shockingly 1.1% above the June 2019 level.

According to Black Knight, forbearance figures decreased last week to the lowest level since the peak in May to 7.77% of all mortgages (4.12M borrowers).

Rate Update

Rates continue to trickle down to new lows as the 30-year is around or even under 3%.  Rates are projected to stay super low as long as the pandemic continues, and the Fed keeps buying bonds.

This Week

Existing Home Sales will be released on Wednesday and New Home Sales on Friday.

July 20, 2020 by · Leave a Comment

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