Shelter Six:  September Home Sales Surge

October 26, 2020 by · Leave a Comment 

September Existing-Home Sales surged 9% from August and 21% from a year ago to the best level since May 2006, as the Median Existing-Home Price pushed 15% higher than a year ago.

September National Inventory levels were down 19% from a year ago to a 2.7-month supply and remain the primary obstacle to even stronger sales activity.

Builder Confidence shot up in October from 83 to a record-high index score of 85, according to the NAHB.

The Mortgage Bankers Association projects 2021 purchase originations to rise by 8.5% to $1.54 Trillion, which would be an all-time high.

MBA projects total 2021 originations (including refinances) to be $2.5 Trillion, which would be a drop off from this year’s projected $3.2 Trillion.

The CFPB extended the “GSE Patch” indefinitely last week, preventing the Debt Ratio on most loan programs being capped at a rigid 43% effective on Jan 10th of next year.

Rate Update

The uncertainties around the election and a potential stimulus package are putting some upward pressure on rates right now, but rates continue to hold steady around 3%.

This Week

New Home Sales will be released on Monday, 3rd Quarter Gross Domestic Product (GDP) on Thursday, and the Core PCE Price Index on Friday.

Shelter Six:  Retail Sales Surge

October 19, 2020 by · Leave a Comment 

Expect mortgage rates to be more volatile over the next few weeks with the election drawing near and continued covid uncertainty.

Remember, when it comes to rates, bad news is good news.  The more uncertainty, confusion, or weakness there appears to be, the more rates will hold steady or even drop.

Likewise, the more stable things are or if the fight against covid goes better than expected, the more likely rates will push up.

Retail Sales jumped 1.9% from August, have shown 5 straight months of gains, and are now above the levels seen prior to the pandemic.

Consumer spending accounts for over two-thirds of all economic activity in the U.S., so the Retail Sales figures are a key indicator of growth.

Contributing to the low rates this year is low inflation, and September’s Core CPI figure of only 1.7% indicates that low inflation seems here to stay.

Rate Update

Last week’s major economic data was mixed and had little impact, but an increase in coronavirus cases around the world helped rates hold steady around 3% and near record lows.

This Week

This will be a very light week for economic data with the spotlight on the housing sector.  Existing Home Sales will be released on Tuesday and Housing Starts on Thursday.

Shelter Six:  Mortgage Forbearance Figures Plummet

October 12, 2020 by · Leave a Comment 

The number of mortgages in active forbearance saw the largest one-week decline since the pandemic began, according to Black Knight.

As of October 6, forbearance figures fell 18% to only 5.6% of all active mortgages, bringing the total number of plans below 3M for the first time since mid-April.

The catalyst for the massive drop in forbearance figures is the result of the initial people entering forbearance hitting the end of their initial 6-month term.

A key index measuring the strength of the services industry shot up much more than expected in September, the fourth straight month of solid recovery.

According to a monthly Fannie Mae survey, 83% are not concerned about losing their job, and 56% think it is a good time to sell a home (up from 48% the previous month).

Temporary mortgage underwriting flexibilities have been extended for loans with application dates prior to Oct 31 for Conforming, FHA, and VA, and to Nov 30 for USDA.

Rate Update

Rapidly shifting headlines about government stimulus caused interest rate volatility last week, but rates ended the week with little net change and near record lows.

This Week

The Consumer Price Index will come out on Tuesday while Retail Sales will be released on Friday.

Shelter Six:  Strong Employment Figures Keep Economic Momentum Moving Forward

October 5, 2020 by · Leave a Comment 

The economy added a solid 661K jobs in August and the Unemployment Rate dropped from 8.4% to 7.9% after peaking at 15% in April.

The economy has now recovered roughly half of the 22 Million jobs lost in March and April.

August Pending Home Sales jumped 8.8% from July and 24% from a year ago to an all-time high.

The August Core PCE Price Inflation Index was only 1.6% higher than a year ago and well within the Fed’s stated 2% target.

News that President Trump tested positive for the coronavirus initially caused mortgage rates to drop slightly (bad news typically pushes rates lower).

Upbeat news around a potential fiscal stimulus package, however, caused rates to push higher (a stimulus package could put upward pressure on rates).

Rate Update

The net effect was little change as rates continue to hold steady near record lows and will most likely stay super low until good news regarding the pandemic emerges.

This Week

The ISM National Services Index is due out on Monday, the JOLTS report on Tuesday, and minutes from the September 16 Fed meeting on Wednesday.