Declining mortgage rates lifted home builder confidence in January
Declining mortgage rates lifted home builder confidence in January while low unemployment, strong job growth should support housing demand in the coming months, reports the National Association of Home Builders (NAHB). The NAHB Housing Market Index rose two points this month from December to 58, above the 56 expected. NAHB Chief Economist Robert Dietz said, “Lower interest rates that peaked around 5% in mid-November and have since fallen to just below 4.5% will help the housing market continue to grow at a modest clip as we enter the new year.”
Low mortgage rates also contributed to a surge in mortgage application volumes in the latest week. The Mortgage Bankers Association (MBA) reports that its market Composite Index, a measure of total mortgage loan application volume, rose 13.5% in the week ended January 11. The Refinance Index jumped nearly 19% while the Purchase Index rose 9.1%. "The spring home buying season is almost upon us, and if rates stay lower, inventory continues to grow, and the job market maintains its strength, we do expect to see a solid spring market," said Mike Fratantoni, MBA Vice President and Chief Economist.
Solid earnings from Bank of America and Goldman Sachs lifted U.S. stocks to four-week highs in today's session and well above the lows seen on Christmas Eve. The closely watched S&P 500 Index has risen 11% from the December 24 low of 2,351 to the current level of 2,615. A signal from the Fed that rate hikes may be on hold, a solid U.S. economy, strong labor market and plain old fashioned bargain hunting are a few reasons behind the recent advance in the equity markets.
Mortgage rates continues to decline this week due in part to the meltdown in the stock markets, which drove bond prices higher.
Mortgage rates continues to decline this week due in part to the meltdown in the stock markets, which drove bond prices higher. Freddie Mac reports that the 30-year fixed-rate mortgage fell by seven basis points to 4.55% with an average 0.5 in points and fees. Freddie Mac said, "The drop in mortgage rates should stem or even reverse the slide in home sales that occurred during the second half of 2018."
Consumer confidence edged lower in December after November's decline as job prospects and business conditions weakened. The Conference Board's Consumer Confidence Index fell to 128.1 this month down from 136.4 in November. Within the report, it showed that most components declined. Lynn Franco, Senior Director of Economic Indicators at The Conference Board said, “Expectations regarding job prospects and business conditions weakened, but still suggest that the economy will continue expanding at a solid pace in the short-term. While consumers are ending 2018 on a strong note, back-to-back declines in Expectations are reflective of an increasing concern that the pace of economic growth will begin moderating in the first half of 2019.”
The Dow Jones Industrial Average rose 1,086 points in yesterday's trading session fueled by extremely oversold conditions and strong holiday sales. It was the largest point gain in the 122-year history of the closely watched stock index. The big gain comes after the Dow fell 653 points on Christmas Eve, which was the worst Christmas Eve performance ever. The Dow, S&P and NASDAQ are lower for 2018.
The Commerce Department reported this morning that New Home Sales fell 8.9%
The Commerce Department reported this morning that New Home Sales fell 8.9% in October from September to an annual rate of 544,000, below the 575,000 expected. However, sales in September were revised higher to 597,000 from 553,000. Sales were down 12% from October 2017. Across the country, sales fell in the Northeast, Midwest and the South with gains seen in the West. There was a 7.4 month supply of homes for sale on the market in October, above six months that is seen as normal. The median sales price fell 3.1% from a year ago, to $309,700.
The Mortgage Bankers Association reports that its Market Composite Index, a measure of total mortgage loan application volume, rose 5.5% for the week ended November 23. The refinance index increased 0.5% while the purchase index increased 8.9% from one week earlier. The 30-year fixed-rate conforming mortgage fell to 5.12% from 5.16%, with points decreasing to 0.46 from 0.48. The survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990.
Economic growth remained strong in the third quarter of 2018 fueled in part by last year's tax cuts. The Bureau of Economic Analysis reports that the second read for the third quarter of 2018 was unchanged from the first read at 3.5%. That is down from 4.2% in the second quarter. Within the report, it showed that key inflation components declined from the previous reading. Consumer spending fell to 3.6% from 4%.
Mortgage delinquencies edged high in September, reports Black Knight, a leading provider of integrated software, data and analytics solutions.
Mortgage delinquencies edged high in September, reports Black Knight, a leading provider of integrated software, data and analytics solutions. Mortgage delinquencies jumped 13% in September, the largest single-month increase since November 2008. Hurricane Florence had an impact during the month with delinquencies rising 38% month-over-month, with more than 6,000 borrowers already missing a payment as a direct result of the storm.
Extreme volatility has gripped the U.S. Stock markets with the closely watched S&P 500 now down nearly 10% from its all-time closing high of 2,929 hit back on September 21. The S&P is now in negative territory for 2018 as traders watch the 2,650 level as support as it closed at 2,656 yesterday. Stocks are trying to rebound this morning. Tariff issues, some sluggish outlooks from corporate America, modest weakness in the manufacturing sector, geopolitical headlines along with profit taking have sent equities lower.
Mortgage rates were essentially unchanged in the latest week after the big rise seen since December 2017. Freddie Mac reports that the 30-year fixed-rate mortgage rose just 1 basis point in the week ended October 25 with an average 0.50 in points and fees. Sam Khater, Freddie Mac’s chief economist, says, “We expect rates to continue to rise, which will put downward pressure on homebuying activity. While higher borrowing costs will keep some people out of the market, buyers with more flexibility could take advantage of the decreased competition."