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By Taff Weinstein at

Foreclosures Down for 7th Straight Year

Those looking for a great deal on a foreclosed home will have to wait longer as overall foreclosure activity continued to plunge annually for the 11th month in a row from last year.

Foreclosure filings declined 22% from a year ago, according to the ATTOM Data Solutions’ Foreclosure Market Report. 

"We are continuing to see a downward trend with overall foreclosure activity, especially in completed foreclosures declining year after year," said Todd Teta, chief product officer at ATTOM Data Solutions.

Lenders completed foreclosures on 10,634 properties, a drop of 4% from the prior month and 50% from a year ago for the seventh consecutive annual decline, the report showed.

It also revealed that one in every 2,411 housing units had a foreclosure filing nationwide. New Jersey had the highest foreclosure rate, with a foreclosure filing on one in every 1,117 housing units.

Source: ATTOM Data Solutions’ Foreclosure Market Report


What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.00 MBS) lost -20 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move off of their lowest levels of the year.

Overview:  We had really strong Retail Sales and Industrial Production reports which helped to pressure MBS to move lower for the week which pushed mortgage rates up a "smidge".  We had very tame inflation data and continued uncertainty over China/U.S. trade negotiations and Brexit.  Those factors provided very strong support for rates and kept rates from rising further.  

Retail Sales: Overall, this is a solid report. The Headline Retail Sales MOM for May came in at 0.5% vs est of 0.6%, but April was revised upward significantly from -0.2% all the way up to 0.3%. When you strip our autos, Retail Sales gained 0.5% vs est of 0.3%. April was revised upward from 0.1% to 0.5%.

Production: Industrial Production for May came in at double the market expectations (0.4% vs est of 0.2%). Capacity Utilization hit 78.1% vs est of 78.0%. Overall, a good report.

Consumer Sentiment: The Preliminary June Consumer Confidence Survey results were basically inline with expectations (97.9 vs est of 98.0) but the 12 month and five year inflation expectations dropped lower.

Inflation Nation:  The May Consumer Price Index (CPI) did not show any threat of inflation. The Core (ex food and energy) dropped to 2.0% from April's pace of 2.1% and was below expectations of 2.1%.  The headline CPI YOY actually dropped below 2.0% with a 1.8% reading vs estimates of 1.9%. The Atlanta Fed's Business Inflation Expectations for the 12 months remained at 2.0% and longer term (5 years) at 2.7%

 

What to Watch Out For This Week:


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

By Taff Weinstein at

Confidence in Housing Near All-Time High

The Fannie Mae Home Purchase Sentiment Index® (HPSI) increased 3.7 points in May to 92.0, just shy of the survey high set last May. 

A 13-percentage point increase in the “Good Time to Buy” component drove the index higher. The net share of respondents expecting home prices to go up and mortgage rates to go down over the next 12 months also increased by 5 and 3 percentage points, respectively.

“Another sharp rebound in the ‘Good Time to Buy’ component lifted the HPSI nearer its survey high set during last year’s homebuying season, though several uncertainties remain,” said Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae. “While consumers’ more favorable mortgage rate outlook suggests continued support for housing affordability, potential homebuyers still face supply constraints. 

Source: Fannie Mae Home Purchase Sentiment Index Report


What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.00 MBS) gained +13 basis points (BPS) from last Friday's close which caused fixed mortgage rates to remain at very low levels.

Overview:  We had another round of "solid" domestic economic data with good readings in manufacturing and services.  The Fed's Beige Book was actually a smidge more upbeat than the last one.  But we had a big miss in Friday's Non Farm Payroll data although the Unemployment Rate remained near an all-time historical low with another reading of 3.6%.  The driving factor in global interest rates was not economic data though, it was geo-political.  British Prime Minister Theresa May stepped down on Friday and the markets continued to be concerned over a lenghty trade battle with China as well as looming tariffs with Mexico.  This uncertainty caused a continued desire to park money into long bonds which continues to push mortgage rates far below where they otherwise would be.  

Jobs, Jobs, Jobs:  It's Big Jobs Friday! You can read the official BLS report here.
Here is the tale of the tape:
Jobs:
May Non Farm Payrolls 75K vs est of 185K
April Non Farm Payrolls revised downward from 263K to 224K
March Non Farm Payrolls revised downward from 189K to 153K
After revisions, the three month rolling average is now 151K.
Wages:
The Average Hourly Rate moved up 6 cents to $27.83 per hour.
Average Hourly Earnings increased by 0.2% on a MOM basis vs. estimates of 0.3%
Average Hourly Earnings increased by 3.1% on a YOY basis vs estimates of 3.2%
Unemployment:
The Unemployment Rate remained at 3.6% which matched forecasts.
The Participation Rate remained at 62.8%

ISM Services:  The May reading was very robust, coming in at 56.9 vs est of 55.4.  Any reading above 50.0 is expansionary and readings in the upper 50's are very strong. 

The Talking Fed:  We got their latest Beige Book that is prepared in advance of their next FOMC Meeting this June. You can read the official Beige Book HERE.

Here are some key takeaways:

  • A slight upgrade as the last Beige Book assessment was "slight to moderate" economic growth.  This time around it is depicted as "modest pace overall", dropping the "slight" classifier.
  • Tariffs are a major concern to businesses but overall, higher input prices increased at a modest pace in most districts.
  • The word "slow" (or variant thereof) dropped from 38 times in the last report to only 26 in this report.
  • Most districts saw modest or moderate growth in jobs and wages, though regions including Richmond and San Francisco cited difficulties finding workers or highlighted tight conditions. Wage pressures remained “relatively subdued” with some employers boosting benefits, contrary to widespread reports of continued labor shortages.
  • Farms reported struggles across the U.S. In the Minneapolis district, a wet spring threatens the planting season, with some growers saying they might not be able to plant at all this year. Anecdotes from Chicago echoed these troubles, with farmers challenged by poor weather and low crop prices. On the Chinese front, China is said to be preparing their rare-earth mineral procedure for slowing down or stopping exports to the U.S.  Also, they are looking into adding U.S. companies and individuals to a list that China will not allow business/trade with.

 

What to Watch Out For This Week:


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

By Taff Weinstein at

Why Retirees Are Fleeing Certain States

Almost 67% of all New Jersey moves were outbound last year, according to a survey from United Van Lines.

The relocation company polled 26,998 of its customers who moved last year, through Nov. 30.

A third of the people who left New Jersey also cited retirement as a primary reason for their decision to pack up and go.

In all, United logged 4,430 total shipments in the Garden State. Of these, 2,959 were sent out of state.

Maine and Connecticut round out the top three states people are moving away from due to retirement, the moving service found.

On the other hand, the Sun Belt is a hot destination for those entering their golden years.

More than 4 in 10 people who moved to New Mexico in 2018 said retirement was a top reason for relocating. Florida came in second, and Arizona followed in third, United Van Lines found.

There are several reasons why people approaching retirement might want to relocate. Chief among them is the need to stretch their savings and their Social Security checks and housing costs are a big chunk of their living expenses.

Source: United Van Lines National Movers Study

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.00 MBS) gained +29 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move lower compared to the previous week.

Overview:  We had a holiday-shortened session (Memorial Day) that saw MBS trading in a tight range until Friday.  Almost all of our gains occurred on Friday and were the result in a flight to safety by international investors amid growing concerns of several geo-political storms as well as rising concern over trade.

Inflation Nation: The Fed's mostly closely watched measure of inflation, Personal Consumption Expenditures was a little hotter than expected on a monthly basis, but the markets focus more on the YOY number which matched expectations and remains well below 2%.  Headline PCE YOY hit 1.5% vs est of 1.5% and Core PCE hit 1.6% vs est of 1.6%.

Personal Income:  The April Personal Income reading was stronger than expected (0.5% vs est of 0.3%) and a big improvement over March's pace of only 0.1%.  Spending was stronger as well with a MOM gain of 0.3% vs est of 0.2%.

Manufacturing:  The May Chicago PMI was very robust with a 54.2 vs 53.7 reading.  Any reading above 50 is expansionary.

Consumer Sentiment: The preliminary May reading was revised from 102.4 to the Final May reading of 100.0, still a nice number.

Consumer Confidence:  Whoa..this is a great reading.  The May Consumer Confidence report jumped to a reading of 134.1 which beat out estimates of 129.9 and hit the highest level since 2000.

GDP: We got our first revision to the previously released 1st QTR GDP.  It was revised downward from 3.2% to 3.1%.  The market was expecting 3.0% to 3.1% range.  If anything, this reaffirms that our 1st QTR grew at a "three handle" which means that the original print was not a mistake.  Consumer Spending was revised upward from 1.2% to 1..3%

Taking it to the House:  The April Pending Home Sales report showed a MOM drop of -1.5% vs expectations for a small gain of +0.9%.  March was revised upward though from 3.8% to 3.9%.  The MidWest was the only region that saw significant gains, perhaps due to the larger impact of SALT on states on the coasts. report showed a MOM drop of -1.5% vs expectations for a small gain of +0.9%.  March was revised upward though from 3.8% to 3.9%.  The MidWest was the only region that saw significant gains, perhaps due to the larger impact of SALT on states on the coasts. We received two data-points on housing appreciation last week.  The FHFA House Price Index (every single Fannie, Freddie, FHA and VA loan for a home purchase) showed that the values of homes based upon recent loan closings through their system grew at a 0.1% pace on a Monthly basis and 5.0% on a yearly basis in March.  The March Case-Shiller Home Price Index, which only covers 20 metro cities, showed a yearly increase of 2.7% vs est of 2.5%

Trade War:  President Trump announced that he may hit Mexico with 5% in tariffs.  This is not the result of the new trade agreement that Canada, US and Mexico have all agreed to.  This is a tariff that is designed to get Mexico to stem the flow of illegals crossing their borders onto U.S. soil.   This 5% tariff will go into effect on June 10 and then duties of up to 25% will go into effect if Mexico ignores the 5% tariff volley and does not take action to "reduce or eliminate the number of illegal aliens".

On the Chinese front, China is said to be preparing their rare-earth mineral procedure for slowing down or stopping exports to the U.S.  Also, they are looking into adding U.S. companies and individuals to a list that China will not allow business/trade with.

 

What to Watch Out For This Week:


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

By Taff Weinstein at

Housing is Still a Good Investment


The Federal Reserve Bank of New York just released their latest monthly Survey of Consumer Expectations and the results are encouraging for the housing market.

The survey showed that attitudes toward owning a home as a good financial investment remained strongly positive, with 65% of all respondents regarding the buying of property in their zip code as a “very good” or “somewhat good” investment. The survey showed that only 9% of respondents regard housing as a “bad” investment, which is down from 10.6% a year ago.

Another component of that same survey showed that expectations that their Household Finances would be better off one year from now was quite strong with 42.3% expecting to be better off and 45.95% saying they would be in About the Same financial position.  So, that means that 88.25% expect to have the same or better household finances a year from now which bodes well for the housing market as potential home buyers are more likely to invest in real estate if they feel their situation is stable or will improve.

The survey also found that expectations of future mortgage rate increases rose about 50 basis points at both the one- and three-year horizons, with older respondents assigning a higher likelihood to a mortgage rate increase than younger respondents.

Source: Federal Reserve Bank of New York

What Happened to Rates Last Week?

 

Mortgage backed securities (FNMA 4.00 MBS) gained +7 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move sideways (unchanged) compared to the previous week.

Overview:  We had a lot of housing news and it all pointed to a very healthy housing market but the markets focused more on the Federal Reserve and the release of their Minutes from their last FOMC meeting.  Overall, the Minutes really supported a "middle of the road" bias by the Fed which matched their prior statement.  

Taking it to the House: Weekly Mortgage Applications rose by 2.4%, led by a nice jump of +8.0% in Refinance Applications.  Purchases dropped by -2.0%.  April New Home Sales hit 673K vs expectations of 675K which would appear to be a miss.  But in fact, this was A VERY STRONG HOUSING REPORT.  This is due to the fact that March was revised upward to 723K which was the highest reading since October 2007!  And April, it turns out was the third best reading since 2007.  Median prices jumped to $342,200 with the average sales price at $393,700.  The April Existing Home Sales Report showed an annualized pace of 5.19 million units which is just off of March's pace of 5.21M. The market was expecting a little better reading of 5.35M. Sales of single-family homes, the key component in this report, now has a 3-month average that is positive, at 4.733 million for the best showing since August last year. Inventory moved up from 3.8 months in March to 4.2 months in April which is still extremely tight.  Median home prices rose yet again, this time by 2.9% to $267,300.


The Talking Fed:  We got the Minutes from the last FOMC meeting.  You read the official release here.

Here are some key points:

  • Many participants viewed the recent dip in PCE inflation as likely to be transitory. Survey-based measures of longer-run inflation expectations were little changed.
  • A number of participants observed that some of the risks and uncertainties that had surrounded their outlooks earlier in the year had moderated, including those related to the global economic outlook, Brexit, and trade negotiations.
  • Members observed that a patient approach to determining future adjustments to the target range for the federal funds rate would likely remain appropriate for some time, especially in an environment of moderate economic growth and muted inflation pressures, even if global economic and financial conditions continued to improve.
  • The Committee noted that it is prepared to adjust the size and composition of the balance sheet to achieve its macroeconomic objectives
  • With regard to the post-meeting statement, members agreed to remove references to a slowing in the pace of economic growth and little-changed payroll employment, consistent with stronger incoming information on these indicators.

 

What to Watch Out For This Week:


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.
 

 

 

By Taff Weinstein at

Foreclosures Drop Again

In yet another strong housing related report, foreclosure activity dropped for the 10th consecutive month.

The April 2019 U.S. Foreclosure Market Report, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 55,646 U.S. properties in April 2019, down 5 percent from the previous month and down 13 percent from a year ago for the 10th consecutive month with an annual decline.

“While overall foreclosure activity is down nationwide, there are still parts of the country that we need to keep a close eye on,” said Todd Teta, chief product officer at ATTOM Data Solutions. “For instance, Florida is seeing a steady annual increase in total foreclosure activity for the 8th consecutive month, which is being sustained by a constant annual double-digit increase in foreclosure starts.”

Lenders started the foreclosure process on 30,524 U.S. properties in April 2019, down 5 percent from last month and down 10 percent from April 2018 –third consecutive month with an annual decline.

States that posted annual decreases in foreclosure starts in April 2019, included New York (down 43 percent); Nevada (down 36 percent); Colorado (down 34 percent); Maryland (down 31 percent); and Michigan (down 25 percent).

Those major metropolitan statistical areas with a population greater than 500,000 that saw a large annual increase in foreclosure starts from last year included Orlando, Florida (up 90 percent); Miami, Florida (up 45 percent); Columbus, Ohio (up 35 percent); Portland, Oregon (up 31 percent); and El Paso, Texas (up 22 percent).

Source: ATTOM Data


What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.00 MBS) gained +20 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slightly lower compared to the previous week.

Overview:  We had another round of fairly strong domestic economic data which normally pressures interest rates higher.  But offsetting the continued strong U.S. economic growth is concern over trade talks between the U.S. and China as well as geo-political concern over Iran and instability in the EU with Brexit and Italy getting a lot of attention.  This global uncertainty pushed more money into long-bonds like MBS which helped interest rates improve slightly.

Consumer Sentiment:  The May preliminary University of Michigan's Consumer Sentiment Index blew the doors off expectations with a very robust reading of 102.4. This is the highest reading since January 2004!  Also, inflation expectations picked up to 2.5% over the next 12 months.
 
Philly Fed:  Their Business Outlook Survey for May came in a double the reading of April (16.6 vs last of 8.5) and is the best reading since January. The internal employment component was very strong, at 18.2 for a 3.5 point gain. 
 
Leading Indicators:  The composite of 10 economic components for April matched market expectations with a reading of 0.2%.
 
Retail Sales:  The April Retail Sales report was a mixed bag with upward revisions to the prior month but a miss on the headline reading for April.  The headline reading showed a contraction of -0.2% vs expectations of +0.2%.  But March was revised upward from 1.6% to 1.7%.  Retail Sales Ex-Automobiles gained 0.1% but the market was expecting 0.7%.  March was revised upward from 1.2% to 1.3%.
 
Manufacturing: The May NY Empire Manufacturing Index jumped to a very high reading of 17.8 vs est of 8.5.  Industrial Production for April was much weaker than expected, -0.5% vs est of 0.0%.  Capacity Utilization dropped from 78.5% down to 77.9%
 
Trade War: China announced tariffs of $60B on U.S. Goods which breaks down to 2,493 specific items but some of these tariffs are not new. 595 items were already tariffed at the rate of 5% and will remain at that rate. 974 new items will receive a 10% tariff and 1,078 items will move up to a new tariff rate of 20%.  In response, the U.S. Commerce Department added Huawei Technologies Co Ltd and 70 affiliates to its "Entity List" - a move that will make it much more difficult for the telecom giant to buy parts and components from U.S. companies. U.S. officials said the decision would also make it difficult for Huawei to sell some products because of its reliance on U.S. suppliers.

On a separate front, the U.S. has decided to delay increasing auto tariffs on the E.U and Japan for six months.

Canada and the U.S. have agreed to end all pending WTO tariff litigation with the agreement taking effect in ‘no later than two days'. The move will also lift the 25% steel and 10% aluminum tariffs the U.S. placed on the two trading neighbors almost a year ago in the name of national security.

What to Watch Out For This Week:


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

By Taff Weinstein at

Top Ten States for Retirement

According to recent Census Bureau data, there are more than 71 million people in the U.S. aged 60 and older. 

Each year more people reach retirement age and decide to make some changes as they enter a new phase of their lives. One big shift could be relocating to other cities or states with the help of a financial advisor. For some, the goal is to avoid paying taxes on all of their retirement savings. For others, it’s the chance to spend their golden years in a new and different climate. Regardless of what’s brought them to a locale, retirees are an important part of city and state economies.

In SmartAsset's 2019 survey, the top five states for retirees are the same as last year, though North and South Carolina did switch spots. Florida is the clear leader, but Arizona has closed the gap. While the gap between Florida and Arizona’s net migrations last year was more than 56,000, it’s about 37,700 this year.

Notably, half of the states in our top 10 do not tax income and wages. Florida, Nevada, Texas and Washington have no income tax at all. Tennessee doesn’t tax wages, which means retirees in the state don’t pay tax on income from Social Security, 401(k) plans or individual retirement account (IRAs).

states for retirement

The bottom 10 of the list includes some of the least tax-friendly states. For example, California, New York and New Jersey all rank in the bottom five. Seven of the bottom 10 states in our list also rank among the 10 most expensive states in terms of monthly housing costs, which include property taxes and homeowners insurance. However, Washington State, which ranks in the top 10 for where retirees are moving, is also the eighth most expensive state when it comes to monthly housing costs.

Source: SmartAsset Survey

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.00 MBS) lost just -7 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move sideways compared to the previous week.

Overview:  We actually had a fairly strong round of domestic economic data with a small uptick in inflation (CPI) and very strong jobs data (JOLTS).  But it was all trade talk, all the time last week with everyone's attention on the China/U.S. trade talks which ended up in an increased tariff rate on Friday.  Mortgage backed securities were confined in a very well-defined technical trading channel and effectively moved sideways for the week.

Inflation Nation: The April Consumer Price Index moved a little higher than March's pace. The Headline CPI YOY came in at 2.0% which was a tick higher than March's 1.9%. The market was expecting 2.311%.  Core (ex food and energy) moved from 2.0% yo 2.1% which matched market expectations. moved a little higher than March's pace. The Headline CPI YOY came in at 2.0% which was a tick higher than March's 1.9%. The market was expecting 2.31%.  Core (ex food and energy) moved from 2.0% yo 2.1% which matched market expectations. The April Producer Price Index remained on the same pace as March.  The Headline PPI YOY came in at 2.2% which was the same reading in March.  The market was expecting 2.3%.  Core (ex food and energy) remained at 2.4%, the market was expecting 2.5%.

Trade War: Tariffs engaged.  The tariff rate of 10% was increased to 25% on $200B of Chinese goods today as the two sides continue to negotiate.  

Jobs, Jobs, Jobs:  The March Job Openings and Labor Turnover Survey (JOLTS) once again came in above 7M with an extremely high reading of 7.488M vs est of 7.240M. Plus, February's very high reading was revised upward.  The trend of +1M more job openings than there are unemployed people looking for jobs continues and this time it is a new record with 1.7M more jobs available than unemployed.  Also, we see a recent record high of Quits have increased since a low in August 2009 and have surpassed prerecession levels. In March 2019, there were 3.4 million quits.  This means that employees are leaving one job to go to another (presumably for higher wages/benefits).

Economic Optimism:  The IBD/TIPP May reading was very robust and beat out expectations (58.6 vs ets of 54.5)

What to Watch Out For This Week:


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

By Taff Weinstein at

And the Real Kentucky Derby Winner Is.....

Louisville!  While the fabled Kentucky Derby at Churchill Downs in Louisville, KY had an unusual outcome this weekend, the City of Louisville was the big winner. 

And that is because homeowner's in Louisville, KY pay the lowest real estate taxes among the 50 biggest Metro-City areas!

LendingTree just released its study on how owning real estate impacts people in different areas around the country. 

LendingTree looked at the average amount of real estate taxes, mortgage interest and mortgage insurance premiums that were paid by homeowners in a given metro, as reflected on their tax returns. The study then ranked the nation’s 50 largest metros to show where people paid the lowest taxes on their homes.

Key findings

  • People from metros in more rural states tend to pay less in real estate taxes. Homeowners in Birmingham, Ala., Louisville, Ky., and Salt Lake City pay an average of $2,600 on real estate taxes, which is the lowest out of the nation’s 50 largest metros.
  • Louisville, Ky.
    % of returns with real estate taxes: 27.7%
    Average real estate tax amount: $2,733
    % of returns with mortgage interest paid: 24.2%
    Average mortgage interest paid: $6,297
    % of returns with mortgage insurance premiums paid: 4.3%
    Average mortgage insurance premium amount: $1,227

Source: LendingTree Real Estate Tax Survey

 
What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.00 MBS) were unchanged (+0) basis points (BPS) from last Friday's close which caused fixed mortgage rates to move sideways compared to the previous week.

Overview:  With a net change of zero basis points, it appears as if we had a pretty boring week. But actually we had a lot of volatility as the long bond market reacted to the Federal Reserve and Friday's jobs data.  Overall, the message from the Fed was that our economy and labor market are very solid but they are going to wait and see how things develop before they take any action one way or another.

 

The Talking Fed: The Federal Open Market Committee released its Interest Rate and Policy Statement on Wednesday.  You can read the official release here.
Here are some key points:

 
 
    • They kept their key interest rate (the Fed Funds Target Rate) unchanged at the 2.25%-2.50% range.
 
    • They lowered the Interest On Excess Reserves rate (IOER) by 5bps to 2.35% hoping to push banks to lend rather than parking cash at the central bank.
 
    • The decision is unanimous at 10-0; there have been no FOMC dissents since Powell became chairman in February 2018.
 
    • Not "hawkish" nor "dovish" as the statement shows that the central bank is still reluctant to signal a policy bias in either direction.
 
    • The FOMC adjusted its language on the economy, characterizing economic growth and job gains as "solid'' while saying consumer spending and business investment slowed in the first quarter; the Fed acknowledges both overall and core inflation have declined and are running below 2 percent.
 
  • Markets are focusing on Fed Chair Powell's repeated statement that the low inflation is "transitory" and will move higher to norms.
Jobs, Jobs, Jobs: Big Jobs Friday!  You can read the official BLS report here. 
Here is the tale of the tape:
Jobs:
April Non Farm Payrolls 253K vs est of 185K
March NFP revised from 196K down to 185K
Feb NFP revised from 33K up to 56K
**The rolling three month average is now 169K
Wages:
Average Hourly Earnings rose 6 cents and is now $27.77
Average Hourly Earnings YOY rose by 3.2% which matches March's pace, April Estimates were for 3.3%
Average Hourly Earnings MOM rose by 0.2%, March was revised upward from 0.1% to 0.2%
Unemployment:
The Unemployment Rate fell to 3.6% vs expectations of 3.8% and is now the lowest since 1969
The Participation Rate moved lower from 63.0% down to 62.8%

Services:  The April ISM Non-Manufacturing PMI which represents more than 2/3 of our economic engine was lighter than expected (55.5 vs est of 57.0)  Still a very good reading as it is above 50 but it was not as red hot as the market was projecting. 

Manufacturing:  The national ISM PMI had an expansionary reading of 52.8 vs est of 55.0. Prices Paid hit vs 55.0 est of 55.1

 

What to Watch Out For This Week:

The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

By Taff Weinstein at

The Most Famous House In Every State

Reader's Digest has come out with a very interesting list where they complied the most "famous" home in every state.  Some have historical significance, some architectural and some are due to celebrity status.

The list below has some gems like Helen Keller's birthplace, the Playboy Mansion and the house from the Home Alone movie:

Alabama - Helen Keller's birthplace
Alaska - Governor's Mansion
Arizona - Taliesin West
Arkansas - Johnny Cash's boyhood home
California - The Playboy Mansion
Colorado - Molly Brown's house
Connecticut - The Glass house
Delaware - Nemours Estate
Florida - Earnest Hemingway House
Georgia - Birth home of Martin Luther King, Jr.
Hawaii - Lolani Palace
Idaho - The former Idaho State Penitentiary
Illinois - The "Home Alone" house
Indiana - Culbertson Mansion
Iowa - the American Gothic House 
Kansas - Amelia Earhart's birthplace
Kentucky - Mary Todd Lincoln's house
Louisiana - Oak Valley Plantation
Maine - Harriet Beecher Stowe's house
Maryland - Mount Clare
Massachusetts - Lizzie Bordern's house
Michigan - The Ford House
Minnesota - Paisley Park
Mississippi - Elvis Presley's birthplace
Missouri - Mark Twain's boyhood home
Montana - Moss Mansion
Nebraska - Buffalo Bill's farmhouse
Nevada - Governor's Mansion
New Hampshire - Castle in the Clouds
New Jersey - Walt Whitman's house
New Mexico - Kit Carson's home
New York - Gracie Mansion
North Carolina - Biltmore Estate
North Dakota - Lawrence Welk's birthplace
Ohio - The A Christmas Story house
Oklahoma - The Marland Mansion
Oregon - The Hughes House
Pennsylvania - Fallingwater
Rhode Island - The Breakers
South Carolina - The John Joyner Smith House
South Dakota - The Summer White House
Tennessee - Graceland
Texas - Yates House
Utah - The Beehive House
Vermont - Robert Frost's house in Shaftsbury
Virginia - Mt. Vernon
Washington - Kurt Cobain's house
West Virginia - Lockwood House
Wisconsin - Laura Ingalls Wilder birthplace
Wyoming - Fossil Cabin

How many of these have you visited?

For pictures of each house and why each place was selected, visit the article on Reader's Digest

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.00 MBS) gained +29 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slightly lower compared to the previous week.

Overview:  MBS were pressured lower and trading right along our bottom support level until Friday's GDP report.  And it was a very interesting take on the GDP data by the markets. First, MBS moved lower (higher rates) on the massive headline beat of 3.2%. However, once the market read through and digested the report, it became clearer that a good chunk of the beat was due to inventory build up, which may (or may not) have been due to front running higher tariffs. The internal prices paid was also about half of market expectations. Together, these two combined to cause trades to reverse course and back into positive territory (lower rates).

GDP:  A huge beat with the release of the preliminary (will be revised several times) 1st QTR GDP of 3.2% vs est of 2.1%.  Those estimates were 0.4% a month ago and 1.9% a week ago.  This is one of the hottest 1st QTRs in recent history.  However, inflation remained at bay with GDP Prices up only  0.6% for the Quarter which was half of the market expectations of 1.3%.

Consumer Sentiment:  The preliminary April reading hit 97.2 vs et of 97.0

Durable Goods: The Preliminary March data was three times as high as expected with the headline reading coming in at 2.7% vs est of 0.8%.  When you strip out Transportation it was double the expectations, 0.4% vs est of 0.2%.  And big focal point of traders is the Non-Defense/Ex Aircraft which jumped by 1.3% vs expectations of only 0.1%. 

Taking it to the House: Existing Home Sales for March were a little lower than expected (5.21M vs est of 5.30M) on an annualized basis.  But is that a miss?  Or are the "estimates" wrong to begin with?  Regardless, time on the market fell, and we hit a new all time high for March for the median sales price.  In fact the median sales price YOY has now risen for 85 straight months.

 

What to Watch Out For This Week:


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

By Taff Weinstein at

Highest Home Prices on Record for March

While the total number of units selling is down slightly (due to limited inventory), the median home price set a new all time record for a March reading.  According to the National Association of Realtors Existing Home Sales report, the median price for a home moved upward to $259,400 which is up from March 2018 ($249,800). March’s price increase marks the 85th straight month of year-over-year gains.

Total housing inventory at the end of March increased to 1.68 million units, up from 1.63 million existing homes available for sale in February and a 2.4% increase from 1.64 million a year ago. Unsold inventory is at a 3.9-month supply at the current sales pace, up from 3.6 months in February and up from 3.6 months in March 2018.

“Further increases in inventory are highly desirable to keep home prices in check,” says Lawrence Yun, NAR's Chief Economist. “The sustained steady gains in home sales can occur when home price appreciation grows at roughly the same pace as wage growth.”

Properties remained on the market for an average of 36 days in March, down from 44 days in February but up from 30 days a year ago. Forty-seven percent of homes sold in March were on the market for less than a month.

First-time buyers were responsible for 33% of sales in March, up from last month and a year ago (32% and 30%). All-cash sales accounted for 21% of transactions in March, down from February’s 23%, but up from a year ago (20%). Individual investors, who account for many cash sales, purchased 18% of homes in March, up from February’s 16%, and up from a year ago (16%).

Distressed sales – foreclosures and short sales – represented 3% of sales in March, down from 4% last month and down from 4% in March 2018. One percent of March 2019 sales were short sales.
Source: NAR

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.00 MBS) lost just -5 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move sideways compared to the previous week.

Overview:  We had a holiday shortened week with the bond market closing at 2:00 Eastern on Thursday.  We got some fairly good economic data with strong Retail Sales and yet another strong jobs report.  The Fed's Beige Book received the most attention but it really offered no surprises.

The Talking Fed: We got to take a look at the latest Beige book prepared by the Fed in advance of their next policy meeting.You can read the official release here.
Here are some key highlights:
On Labor: "employment continued to increase nationwide, with nine districts reporting modest or moderate growth" even as the other three reporting slight growth. Furthermore, a majority of districts cited shortages of skilled laborers, most commonly in manufacturing and construction, while wages for both skilled and unskilled positions generally grew at about the same pace as earlier this year.
On Manufacturing: Contacts in many districts reported that trade-related uncertainty was weighing on activity.
- On Inflation: On balance, prices have risen modestly since the previous report. Input costs increased in the modest-to-moderate range. Tariffs, freight costs, and rising wages were often cited as key factors driving this trend.
- Economic Activity: Similar to the last report, most First District business contacts cited modest to moderate growth, with some slowing in manufacturing. 
- Retail Spending: All retail contacts for this round, covering late February through early April, reported that same-store sales grew by low- to mid-single digits on a year-over-year basis, indicating that "consumers were in a buying mood." 

Retail Sales:  The March data was much stronger than expected.  The headline reading hit 1.6% vs est of 0.9%. Ex-Autos, another beat with a 1.2% vs est 0.7% expectation.  Plus February was revised upward from -0.4% to -0.2%.

Jobs, Jobs, Jobs: For the second straight week, we got a sub-200K reading in Initial Weekly Jobless Claims (192K vs est of 205K).  The more closely watched 4 week moving average dropped down to  201,250 with is the lowest since 1969.

Philly Fed: Their Business Outlook Survey for April was a little lighter than expected but still in positive territory (8.5 vs est of 10.2)

Business Inventories:   The February data was better than expected (lower number is better) 0.3% vs est of 0.4%. 

Leading Indicators: The March Leading Economic Indicators were a little better than expected (0.4% vs est of 0.3%

 

What to Watch Out For This Week:


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.
 

By Taff Weinstein at

Foreclosures Drop to Lowest Level Since 2008

According to ATTOM Data Solutions, U.S. properties with a foreclosure filing during the first quarter of 2019, were down 23 percent from the previous quarter and down 15 percent from a year ago to the lowest level since Q1 2008.

“While some markets saw a slight uptick in foreclosure filings, that is above pre-recession levels, the majority of the major markets are well below pre-recession levels,” said Todd Teta, chief product officer at ATTOM Data Solutions. “While we did see a slight increase in U.S. foreclosure starts from last quarter, bank repossessions reached an all-time low in the first quarter of 2019, showing continuing signs of a strong housing market.”

Markets below pre-recession levels include San Jose, Memphis, Dallas-Fort Worth
The 132 out of the 220 markets (60 percent) with a population greater than 200,000 in the first quarter foreclosure activity below pre-recession averages included San Jose (79 percent below); Memphis (77 percent below); Dallas-Fort Worth (77 percent below); Las Vegas (74 percent below); and Phoenix (68 percent below).

Other major markets with first quarter foreclosure activity below pre-recession averages were San Francisco, Riverside-San Bernardino in Southern California, Chicago, Detroit and Seattle.

Bank repossessions down in 48 states and DC
Lenders repossessed 35,787 U.S. properties through foreclosure (REO) in Q1 2019, down 21 percent from the previous quarter and down 45 percent from a year ago — the 14th consecutive quarter with a year-over-year decrease in U.S. REOs.

Along with the District of Columbia, 48 states posted year-over-year decreases in REOs in the first quarter, including Arizona (down 77 percent); California (down 41 percent); Florida (down 33 percent); New Jersey (down 59 percent); and Texas (down 43 percent).

Source: ATTOM Data

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.00 MBS) lost -34 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move higher compared to the previous week.

Overview:  Mortgage rates moved a little higher last week on the heels of inflationary data that was a smidge hotter than expected and on growing optimism of a trade deal with China moving forward.

Inflation Nation:  The March Import Prices were much higher than expected with the MOM at 0.6% vs est of 0.4% and Feb revised upward from 0.6% to 1.0%. YOY Import Prices came in at 0.0% but that is a huge beat considering the estimates called for a decline of -1.3%.  The majority of the increase is attributed to energy costs. The March Producer Price Index (PPI) was a littler hotter than expected.  The Headline PPI YOY moved upward from 1.9% in Feb to 2.2% in March, the market was pricing in another 1.9% reading.  The Core PPI YoY remained at 2.4%. (PPI) was a littler hotter than expected.  The Headline PPI YOY moved upward from 1.9% in Feb to 2.2% in March, the market was pricing in another 1.9% reading.  The Core PPI YoY remained at 2.4%. The March Consumer Price Index (CPI) was a mixed bag.  The Headline CPI YOY moved upward from 1.5% in Feb to 1.9% in March, which is a large move.   However, it was largely expected with expectations in the 1.8% rang.  Meanwhile the Core (Ex Food and Energy) CPI YOY hit 2.0% vs est of 2.1%.

Jobs, Jobs, Jobs:  The February Job Openings and Labor Turnover Survey (JOLTS) continued to show very high levels of unfilled jobs and once again topped 7 million.   It was lighter than expectations (7.087M vs est of 7.550M) but January was revised upward from 7.581M to 7.625M which is a new and all time high record.

The Talking Fed: We got the Minutes from the last FOMC meeting where they seemed to tilt more to the "dovish" side of policy on Wednesday.  You can read the official release here.
Here some key takeaways:

  • *FED MAJORITY SAW RISKS WARRANTING RATES ON HOLD THROUGH 2019
  • *SOME FED OFFICIALS SAW FURTHER MODEST INCREASE LATER THIS YEAR
  • *FED OFFICIALS SAW `SIGNIFICANT UNCERTAINTIES' AROUND OUTLOOK
  • *SEVERAL FED OFFICIALS CONCERNED YIELD CURVE WAS QUITE FLAT
  • *SEVERAL FED OFFICIALS POINTED TO INCREASED DEBT, LEVERAGE
Central Bank Palooza: The European Central Bank kept their main interest rate at 0.0% and announced no real policy changes.  They did say that they would keep rates the same throughout 2019.

 

What to Watch Out For This Week:


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upo

By Taff Weinstein at

Homebuyers Spend Fewer Days Searching for a Home

According to a new report by RedFin, Americans are speeding up the time to search and tour homes before making a decision and putting in an offer.

With more homes on the market, prices growing at a slower rate and even falling in some markets, and less competition from other buyers, finding a home is a lot less stressful this year than it has been in recent years. When a buyer finds the home they want to make an offer on there’s now a greater chance that their offer will be the only one and that the seller will accept it. This has led to the shortest median home search length for buyers during the winter months in at least six years.

As the market is becoming more tenable for buyers, it’s becoming less favorable for sellers, who are waiting longer to secure a buyer this year. Nationwide, homes that sold in February spent a median 59 days on the market before going under contract, up two days from a year earlier, and following three consecutive years of acceleration.

Buyers this year are also having to see fewer homes in person and write fewer offers before successfully landing a home. Nationally, buyers toured an average of about 10 homes this winter before closing on a home, and made an average of 1.6 offers, compared to touring about 11 homes and making 1.8 offers a year ago.

Buyers’ Time on Market, 3-Month Median as of February

Metro Area Median Length of Buyer Home Search in Days (2018) Median Length of Buyer Home Search in Days (2019) Median Buyer Home Search Length (Change)
Atlanta, GA 69 74 5
Austin, TX 73 68 -5
Baltimore, MD 71 68 -3
Boston, MA 84 87 3
Chicago, IL 84 83 -1
Dallas, TX 64 69 5
Denver, CO 78 68 -10
Houston, TX 92 75 -17
Los Angeles, CA 72 72 0
Miami, FL 62 79 17
New York, NY 115 128 13
Philadelphia, PA 116 88 -28
Phoenix, AZ 66 57 -9
Portland, OR 67 68 1
Riverside, CA 72 67 -5
Sacramento, CA 83 71 -12
San Diego, CA 70 68 -2
San Francisco, CA 70 59 -11
San Jose, CA 59 56 -3
Seattle, WA 64 57 -7
Washington, D.C. 83 69 -14
National 76 73 -3

It took 73 days this winter for a typical buyer to find and close on their new home after their first home tour, faster by four days than during the same period last year and six days faster than its peak in winter 2016, according to a new report by Redfin.

Source: Redifin

 

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.00 MBS) lost just -2 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move sideways compared to the previous week.

Overview:  While rates were very similar at the end of the week compared to the prior week, we actually had a little volatility during the week with mortgage rates rising due to strong economic news and some positive sentiment on the progress of the U.S./China trade talks.  However, on Friday MBS rebounded which caused rates move back to their starting position at the beginning of the week due to a smaller than expected rise in wages and more turmoil that is the soap-opera of Brexit.

Jobs, Jobs, Jobs: We got the big jobs report on Friday.  You can read the official BLS report here.
Lets look at the Tale of the Tape:
Jobs:
March Non Farm Payrolls (NFP) higher than expected 196K vs est of 180K
February NFP revised upward to 33K from 20K, will be revised again.
January NFP revised upward to 312K from 311K
The more closely watched rolling three month average is now 180K
Unemployment:
The Unemployment rate remains at 3.8% which matched market expectations.
The Participation rate is 63.0% vs est of 62.9%, but it is a decline over Feb's pace of 63.2%
Wages:
The Average Hourly Earnings moved up by 0.1% on a MOM basis to $27.70 per hour.
Average Hourly Earnings YOY increased by 3.2%, which was below estimates of 3.4%

Services: The March ISM Services (2/3 of our economy) had a very strong and expansionary reading of 56.1, the problem is that the market was expecting 58.0 and we are coming off of a pace of 59.7 in February.  Markit ISM for March was stronger than expected though (55.3 vs est of 54.8-)

Retail Sales: This report has been all over the place over the past four months and most economists and bond traders are not giving it the weight that it once enjoyed.  The  February data appears to be much worse than expected with the headline reading at -0.2% vs est of +0.3%, however the miss is because January was revised upward from 0.2% to 0.7%. Same goes for Retail Sales Ex-Autos (-0.4% vs est of +0.4%) as January was revised upward significantly from 0.9% to 1.4%.

Manufacturing:  The March ISM Manufacturing report was stronger than expected (55.3 vs est of 54.2) This is also much stronger than February's reading of 54.2 demonstrating that their is an upward, not downward trajectory of manufacturing in the U.S.  Prices Paid were also higher (inflationary) than expected with a 54.3 vs est of 52.5 reading.

Construction Spending:  The February data was almost three times higher than expectations (1.0% vs est of 0.4%) and January was revised upward from 1.3% to 2.5%.  eading for the bell-weather Chicago PMI was lighter than expected (58.7 vs est of 61.0).  However, ANY reading above 55 is VERY robust growth.  However, Residential Spending dropped by 11.7%.  All the gains were in public works and commercial.

What to Watch Out For This Week:


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.
 

By Taff Weinstein at

New Home Sales Pop

New Home Sales were much stronger than market expectations and consensus forecasts.

February sales jumped to an 11-month high as new home sales hit 667,000 units on an annualized pace, this was 4.9% higher than January's pace and 0.6% from this time a  year ago.

At the current sales rate, it would take 6.1 months to exhaust the available supply of homes. Over many decades, 6 months of supply has been the amount that’s generally considered a sign of a market evenly balanced between supply and demand.  Inventory dropped 0.6 percent from revised January figures to 340,000, and rose 13.3 percent from a year earlier.

The median price of a home sold during the month was $315,300, which is up 3.8% from January.  The Average Sales Price moved up to 379,000.

Lower mortgage rates, low employment and solid wage growth are all factors that are driving up sales for both Existing and New Homes.

Source: U.S. Census Bureau

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.00 MBS) lost just -2 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move sideways compared to the previous week, keeping the lowest rates of 2019 alive and well.

Overview:  Mortgage rates remained at or near their lowest levels of 2019 as concerns over multiple failed votes on Brexit continued to keep money pouring into the safe-haven of U.S. bonds.  That added demand for our debt pushes rates lower.  We had very tame inflationary data (PCE) but very strong manufacturing, GDP and consumer sentiment which would normally be a factor in pushing rates higher.

Inflation Nation: The Fed's Key measure of inflation, PCE (Personal Consumption Expenditures) YOY (Year-over-Year) Core (Ex-Food and Energy) was lighter than expected, coming in at 1.8% vs est of 1.9%. However, the prior month was revised upward from 1.9% to 2.0%, so really it was a match. The Headline PCE YOY matched expectations with a 1.4% increase and the prior month moved up from 1.7% to 1.8%. We had a big miss on Personal Spending which showed MOM increase of only 0.1% vs est of 0.3% and Personal Income hit 0.2% vs est of 0.3%

Manufacturing: The March reading for the bell-weather Chicago PMI was lighter than expected (58.7 vs est of 61.0). However, ANY reading above 55 is VERY robust growth.

Consumer Sentiment: The final reading of the University of Michigan's Consumer Sentiment Index for March was revised upward from 97.8 to 98.4 which is the strongest reading since October.

Taking it to the House:  New Home Sales MOM hit 667K vs est of 620K. Plus, January was revised upward from 607K to 636K. February Pending Home Sales were down -1.0% vs est of 0.7%. Weekly Mortgage Applications jumped up by 8.9%. Refinances increased by 12% and Purchases increased by 6.0%. February New Housing Starts were lighter than expected (1.162M vs est of 1.213M) but January was revised upward from 1.230M to 1.237M. Building Permits were close to the mark with a 1.296M vs est of 1.300M reading. The January Case-Shiller 20 Metro City Home Price Index showed a YOY gain 3.6% of vs est of 4.0%. The more comprehensive FHFA Home Price Index showed a MOM gain 0.6% of vs est of 0.3%

GDP: We got the final revision to the 4th QTR GDP and it was revised lower from 2.6% to 2.2%, however 2.2% is exactly what the market was expecting. As the BEA notes, measured from the fourth quarter of 2017 to the fourth quarter of 2018, real GDP increased 3.0 percent during the period. That compared with to an increase of 2.5 percent during 2017.

What to Watch Out For This Week:


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

By Taff Weinstein at

Existing Home Sales Jump

Existing home sales increased strongly in February, experiencing the largest month-over-month gain since December 2015, according to the National Association of Realtors®. Three of the four major U.S. regions saw sales gains, while the Northeast remained unchanged from last month.

Total existing home sales are completed transactions that include single-family homes, townhomes, condominiums and co-ops.  Total sales shot up 11.8 percent from January to a seasonally adjusted annual rate of 5.51 million in February. 

Lawrence Yun, NAR's chief economist, credited a number of aspects to the jump in February sales. "A powerful combination of lower mortgage rates, more inventory, rising income and higher consumer confidence is driving the sales rebound."

The median existing-home price for all housing types in February was $249,500, up 3.6 percent from February 2018 ($240,800). February's price increase marks the 84th straight month of year-over-year gains.

Total housing inventory at the end of February increased to 1.63 million, up from 1.59 million existing homes available for sale in January, a 3.2 percent increase from 1.58 million a year ago. Unsold inventory is at a 3.5-month supply at the current sales pace, down from 3.9 months in January but up from 3.4 months in February 2018.

Properties remained on the market for an average of 44 days in February, down from 49 days in January but up from 37 days a year ago. Forty-one percent of homes sold in February were on the market for less than a month.

Source: NAR

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.00 MBS) gained +50 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move lower compared to the previous week.

Overview:  Mortgage rates dropped to their lowest levels due to three main factors: Weak manufacturing data out of Asia and Europe, a very "dovish" Federal Reserve on Wednesday, and the continued train wreck that is Brexit.  The weak economic data and geo-political instability had money flowing into the safe-haven of our U.S. bonds.

 

The Talking Fed:  As expected, they kept their key interest rate unchanged.  However, they certainly had a more "dovish" tilt to their outlook compared to their last projections in December.
They had three key releases last week:
Read the Official Fed Policy Statement 
Read their Economic Projections here.
Read their Balance Sheet Normalization plans here.
Here are some key points:

  • Fed leaves rates unchanged, says economic growth has slowed form Q4, even as labor market still strong, job gains solid
  • As expected, the Fed will taper its balance-sheet rolloff, sees it ending by the of September
  • Fed signals no rate hike this year with one increase in 2020
  • 11 officials for zero 2019 hikes, four for one hike
  • Federal Open Market Committee still sees a sustained economic expansion, strong labor market conditions, and inflation near 2% objective as the most likely outcomes; will be “patient” in determining what rate moves may be appropriate, given global economic and financial developments and “muted” inflation pressures.
  • Says overall inflation on a 12-month basis has declined, largely due to lower energy prices, while core gauge remains close to 2 percent; now says market-based measures of inflation compensation have remained low in recent months; continues to see survey-based measures of longer-term inflation expectations as little changed
  • The Committee intends to continue to allow its holdings of agency debt and agency mortgage-backed securities (MBS) to decline, consistent with the aim of holding primarily Treasury securities in the longer run.
    • Beginning in October 2019, principal payments received from agency debt and agency MBS will be reinvested in Treasury securities subject to a maximum amount of $20 billion per month; any principal payments in excess of that maximum will continue to be reinvested in agency MBS.
    • Principal payments from agency debt and agency MBS below the $20 billion maximum will initially be invested in Treasury securities across a range of maturities to roughly match the maturity composition of Treasury securities outstanding; the Committee will revisit this reinvestment plan in connection with its deliberations regarding the longer-run composition of the SOMA portfolio.
    • It continues to be the Committee's view that limited sales of agency MBS might be warranted in the longer run to reduce or eliminate residual holdings. The timing and pace of any sales would be communicated to the public well in advance.

Taking it to the House: A block-buster Existing Home Sales Report for February with one of the largest monthly gains on record. 5.510M annualized units beat out estimates of 5.10M and represents a 11.2% MOM gain. The March NAHB Housing Market Index remained at 62, the market was expecting 63. Any reading above 50 is positive and above 60 is very strong.

What to Watch Out For This Week:


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

By Taff Weinstein at

Rents Move Higher Making Owning more Attractive

Monthly rental payments for both single-family homes and multifamily apartments are now rising at the fastest pace in nearly a year, according to Zillow.

The median monthly rent in February came in at $1,472, an increase of 2.4 percent compared with February 2018. For the typical renter, this means about $400 more a year. 

Of course all real estate is local, with rents now significantly higher than a year ago in Orlando, Florida (+7.0 percent), Phoenix (+6.8 percent), Riverside, California (+6.2 percent), Tampa, Florida (+5.5 percent) and Pittsburgh (+4.9 percent). Rents in New York City have seen no effect from Amazon’s decision not to build a new headquarters there. Rents in Northern Virginia, where Amazon is still on track to hire thousands of employees, are expected to rise, as home sales and prices are already getting a boost from investors.

The priciest major metro in the country remains San Jose, Calif., at $3,547 in February, up 1.4 percent from a year earlier. It’s followed by San Francisco at $3,448 a month (up 1.6 percent), Los Angeles at $2,835 a month (up 3.5 percent), San Diego at $2,643 a month (up 4.2 percent) and New York at $2,419 (up 1.2 percent).

Source: Zillow Research

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.00 MBS) gained +10 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move sideways compared to the previous week.

Overview:  Once again, we had some moderate to very strong domestic economic data that would normally be a force that causes MBS to sell off and cause mortgage rates to rise.  But geo-political concerns provide enough global fear to keep demand levels for our bonds at very lofty levels which kept rates at very low levels.  Great Brittan couldn't get their Brexit plans passed and the best they could do after two failed votes last week was to delay their divorce from the Eurozone.

Jobs, Jobs, Jobs: Wow...another new record! The January Job Openings and Labor Turnover Survey (JOLTS) showed 7.581M unfilled positions which beat out estimates calling for a very high level of 7.310M. Per the BLS, the number of Unemployed is 6.2M...so there are 1.381M MORE JOBS THAN THERE ARE PEOPLE LOOKING FOR JOBS.

Inflation Nation: The Feb Headline Consumer Price Index YOY was lighter than expected (1.5% vs est of 1.6%). Core (Ex Food and Energy) YOY hit 2.1% vs est of 2.2%. Prices fell in prescription drugs and auto prices but shelter costs moved up 3.4% YOY. 

Consumer Sentiment: The Preliminary March University of Michigan's Consumer Sentiment Index was much higher than expected (97.8 vs est of 95.3) and a big improvement over Feb's final reading of 93.8

Central Bank Palooza: The Bank of Japan kept their key interest rate at -0.1%.

Taking it to the House: New Home Sales for January hit 607K vs est of 620K. But December was revised upward fro 621K to 652K. Weekly Mortgage Applications rose by 2.3%. Purchases increased by 4.0% but Refinances fell by -0.2%.

What to Watch Out For This Week:


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

By Taff Weinstein at

Which Time Zones Have the Most Affordable Housing?

Every year when some states "spring forward" like they did this weekend, the national conversation always turns to "daylight savings time" and if we should keep that system in place.   But we thought it would be a good opportunity to focus on housing affordability in the different time zones.

What is "Affordability"?  Well Nerd Wallet calculated it by comparing median household incomes and median home prices, assuming a 20% down payment. A place with high incomes and low home prices is more affordable for buying a home than an area with low incomes and high home prices.

Each quarter, NerdWallet calculates the home affordability for 178 metropolitan areas, matching the list of metros for which the National Association of Realtors publishes median home prices. This quarter, NerdWallet sorted the metro areas by time zone, slicing the contiguous United States roughly into fourths. There were big differences in affordability of homes among time zones.

No surprise as cities in the Pacific time zone have the least-affordable housing in the country, and the Central time zone has the most-affordable housing.  

Here is a great example of a least affordable area:
San Jose-Sunnyvale-Santa Clara, California - Pacific Time Zone
Median home price: $1,250,000
Median household income: $117,474
Principal and interest payment: $5,313 (54.3% of monthly income)
This is the only one of the 178 metro areas with a median house price in the seven figures. A buyer of a typical home, after making a 20% down payment, would get a mortgage of $1 million. Just the principal and interest on the mortgage would cost the typical family more than half its monthly income.

Here is an example of a most affordable area:
Most affordable: Decatur, Illinois - Central Time Zone
Median home price: $89,300
Median household income: $51,970
Principal and interest payment: $380 (8.8% of monthly income)
This central Illinois city had the lowest median house price among the 178 metro areas that the National Association of Realtors tracks. Decatur’s population declined 5.2% from 2010 to 2017, and buyers don’t seem to be in a hurry to take advantage of low house prices. Those factors make Decatur more of a buyer’s market than other metros mentioned in this article. At the end of the fourth quarter of 2018, half the homes listed for sale in Decatur had been on the market for more than 108 days. For the entire United States, the median number of days on market was 80.

Source: Nerd Wallet, WCPO Cincinnati

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.00 MBS) gained +44 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move lower compared to the previous week.

Overview:  We had very strong economic data with ISM Services (2/3 of our economy) hitting their 4th best level in 20 years and Average Hourly Earnings beating out estimates with a YOY gain of 3.4%.  But concern over Brexit, China Trade and very weak economic data out of Europe, pushed MBS prices higher which inversely pushes mortgage rates lower.

Jobs, Jobs, Jobs: We got the Big Jobs report on Friday and while the headline Non-Farm Payroll missed, overall it was very strong.
Here is the tale of the tape:
Jobs: February Non Farm Payrolls (NFP) were much lighter than expected with a reading of 20K (not a typo) vs estimates in the 180K range. However, everyone expects that to be revised upward by 50K to 100K next time around.
January NFP were revised upward from 304K to 311K
December NFP were revised upward from 222K to 227K
The more closely watched rolling three month moving average is now 186,000 which is extremely solid.
Wages:

Average Hourly Earnings YOY rose by 3.4% vs est of 3.3%
Average Hourly Earnings MOM rose by 0.4% vs est of 0.3%
The national average hourly rate rose by 11 cents and is now $27.66
Employment:
The Unemployment Rate dropped from 4.0% in January to 3.8% in February, the market was expecting 3.9%.
The number of unemployed persons decreased by 300,000 to 6.2 million.
The Labor Force Participation Rate remained at 63.2%

ISM Services: Wow, the February ISM Non Manufacturing had the 4th best reading in 20 years and handily beat market expectations (59.7 vs est of 57.3). This is more important than last week's ISM Manufacturing release as this represents more than 2/3 of our economy.

Taking it the House: January Building Permits were higher than expected (1.345M vs est of 1.289M) and New Housing Starts also beat out estimates (1.230M vs est of 1.197M).

Central Bank Palooza: The European Central Bank kept their key interest rate at 0.00% but came out with a much more dovish approach. ECB President Mario Draghi went full-dove and admitted that its forecasts were way off and revised 2019 growth expectations "substantially" lower (from 1.7% to +1.1%) and slashed all inflation forecasts with 2019 GDP at 1.1% vs their original expectations of 1.7% and inflation of 1.2% vs original "guestimates" of 1.6%.

What to Watch Out For This Week:


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

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