Fannie Mae reports that its key housing index surged in March just in time for the spring homebuying season.
Fannie Mae reports that its key housing index surged in March just in time for the spring homebuying season. Declining mortgage rates as well as a drop in prices were two reasons behind the increase. The Fannie Mae Home Purchase Sentiment Index jumped 5.5 points in March to 89.8, the highest level since June 2018. The good time to buy and good time to sell components both increased in March. Doug Duncan, senior vice president and chief economist at Fannie Mae said, "Consumers appear to have regained some confidence in the housing market, with perceptions of both home buying and home selling conditions returning to their longer-term trends."
Gas prices at the pumps continued to increase over the past week as demand holds steady while inventories continue to lighten, reports motor club AAA. The national average price for a regular gallon of gasoline is at $2.74, up $0.08 from last week and up $0.28 from a month ago. The increase is also due in part to the rise in oil prices, which hit five-month highs this week. A year ago, the price was $2.66 a gallon. The all-time high for a gallon of gas was $4.11 hit back on July 17, 2008.
Good news was reported this morning in the housing sector as the spring buying gets underway.
Good news was reported this morning in the housing sector as the spring buying gets underway. Sales of new single-family houses rose nearly 5% in February from January recording the largest monthly gain in 11 months. The Census Bureau reports that New Home Sales came in at an annual rate of 667,000 in February versus the 618,000 expected. Sales were marginally higher year-over-year by 0.6%. Across the country, big gains were seen in the Northeast and Midwest with a slight gain in the South while the West saw flat sales. The average sales price was $379,600 with inventories were at a 6.1 month supply.
Inflation remained subdued in February as demand for goods and services eased a bit with somewhat slowing growth. The Federal Reserves favorite inflation gauge, the Core Personal Consumption Expenditure (PCE), fell to 1.8% year-over-year in January from the 2% recorded in December. The Fed has a target rate of 2%. If inflation remains low, the Fed will be on hold for any rate hikes in 2019 and could even cut in the fall.
Mortgage rates continued to decline in the latest survey due in part to low inflation levels
Mortgage rates continued to decline in the latest survey due in part to low inflation levels, a slowing global economy along with a dovish tone from the Federal Reserve. Freddie Mac reports that the 30-year fixed-rate mortgage fell three basis points to 4.28% with an average 0.40 in points and fees. It is the lowest rate seen since February 8, 2018. Low rates, improving home affordability and more housing inventory than last year sets up for a solid spring buying season. Fannie Mae released its March 2019 Economic and Housing Outlook showing lower growth while home sales are expected to stabilize. For all of 2019, Gross Domestic Product is expected to come in at 2.2%, below the 3.1% seen in 2018 due in part to the fading fiscal impact of the Tax Cuts and Jobs Act. Fannie Mae expects housing demand to increase due to a solid labor market, low rates and strong household formation. Americans filing for first-time unemployment benefits fell in the latest week and hover near 50-year lows. A strong labor market coupled with a solid U.S. economy have left employers looking for good candidates to fill open positions. Weekly Initial Jobless Claims fell by 9,000 in the latest week to 221,000. The four-week moving average of claims, which irons out seasonal abnormalities, rose 1,000 to 225,000.
Lower mortgage rates coupled with an increase in refinance application volume spurred on an increase in refinance closings in January, reports Ellie Mae.
Lower mortgage rates coupled with an increase in refinance application volume spurred on an increase in refinance closings in January, reports Ellie Mae. The January Ellie Mae Origination Insight Report showed the percentage of refinance closings increased to 35% of total applications, up from 29% in December. Ellie Mae went on to report that the time to close all loans dropped to 45 days in January, down from 47 days in December. Jonathan Corr, president and CEO of Ellie Mae said, "We anticipate that as we move into the traditionally busier spring months, the percentage of home purchases will increase relative to refinances."
Given the light economic calendar this week, next week there are several hurdles for the markets to contend with. The main event will be Fed Chair Powell in front of Congress on Tuesday and Wednesday giving his semi-annual testimony on the U.S. economy and monetary policy. The Bond markets will have to digest a whopping total of $113 billion of Treasury securities which could impact trading. A slew of economic data will also be released next week which will cover a wide range of the U.S. economic landscape and culminates with Friday's Core PCE data. The Core PCE, currently at 1.9%, is the Fed's favorite inflation gauge with a target of 2%. The Fed has forecasted that the Core PCE will stay close to current levels for three years out, which should hold interest rates relatively low.
Mortgage rates continued to edge lower in the latest week to low levels seen a year ago.
Mortgage rates continued to edge lower in the latest week to low levels seen a year ago. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage fell four basis points to 4.65% with an average 0.43 in points. Lower rates didn't push mortgage application activity higher as the purchase index declined while the refinance index was unchanged. The MBAs Market composite Index, a measure of total mortgage loan application volume, fell 3.7%.
Inflation at the consumer level remained tame in latest report due in part to declining gas prices at the pumps. The Consumer Price Index (CPI) was unchanged in January, reports the Bureau of labor Statistics. Over the last 12 months, CPI increased 1.6% from 1.9% in the previous reading. The gasoline index fell 5.5% during the month. If inflation remains subdued, the Fed will not likely raise the benchmark short-term Fed Funds Rate in 2019.
Gas prices at the pumps remain lower than last year as oil supply is somewhat outpacing demand. The U.S. is now the largest exporter of oil in the world where just a five years ago it was more dependent on foreign imports. The price for a regular gallon of gasoline is at $2.27 and is as low as $2.13 in parts of New Jersey. That is down from $2.56 a year ago and up from $2.24 a month ago. Prices will begin to rise modestly as the late spring and summer driving season kicks off while refineries switch over to the more costly refined summer blends.