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

August 31, 2020 by · Leave a Comment 

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.

Shelter Six:  Stellar Housing Trends Continue

August 24, 2020 by · Leave a Comment 

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.

Shelter Six:  Consumer Spending Boosts Economic Recovery

August 17, 2020 by · Leave a Comment 

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.

Shelter Six:  Strong Jobs Report Boosts Economic Recovery

August 10, 2020 by · Leave a Comment 

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.

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

August 3, 2020 by · Leave a Comment 

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.