Entries by Taff Weinstein

By Taff Weinstein at

Where Are Millennial's Moving?

Haven Life Insurance Agency LLC (Haven Life), an online life insurance agency, conducted a new study that reveals from 2012 to 2017, millennials moved to large metropolitan areas that already had large concentrations of them.

The survey noted that millennials are living a life of luxury in expensive neighbors with higher wages, rising home prices, and an overall increase in the cost of living. In these areas, the experiences are abundant, and some districts even cater to the lifestyle of these youngsters.

Millennials flocked to large metro areas that have a high concentration of their fellow comrades despite higher home prices and cost of living. The data showed these folks aren't moving to rural America nor the suburbs.



The reason for an extended stay in the city could be due to the delay in marriage and starting families -- thanks to insurmountable student loan debts, high-interest credit card payments, and 72/84 month auto loans -- has made their financial mobility limited.

Millennials are less price-conscious than any other generation, despite the fact that the 2008 financial crash was a little over a decade ago.

Haven Life examined data from the Census Bureau to compile a list of the top 50 cities. The life insurance agency also examined data from Zillow to determine its median home prices and data from the Bureau of Economic Analysis's Regional Price Parity dataset for the cost of living figures.

Portland, Seattle, Denver, San Francisco, and Austin metropolitan areas were some of the hottest regions where millennials were moving to over the period.

Source: Haven Life

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.500 MBS) gained just +5 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move sideways from the prior week and remained near their lowest levels of the year.

Overview:  We continued to see very strong economic data which caused market participants to begin to question the need for a Fed rate cut this week.  2nd QTR  GDP beat out estimates with a solid growth rate of 2.1% and Durable Goods Orders were almost three times higher than expected.

GDP: We got our first look at the 2nd QTR GDP and it was much better than expected. The Headline number grew at 2.1% pace vs est of 1.8%.  The Price Index broke well above 2.0% with a 2.5% reading which is a significant movement from the Q1 pace of 0.8%.  PCE QoQ were at 2.3% vs est of 0.6%.  Core PCE QoQ hit 1.8% vs est of 2.0%.

Durable Goods Orders.  The June Headline Durable Goods Orders were much higher than expected (2.0% vs est of 0.7%). When you strip out the volatile transportation sector, it was up 1.2% vs est of 0.2%. The most important reading is the  Ex-Defense  which was up 3.1% vs est of 1.3%

Central Bank Palooza:  The European Central Bank kept their key interest rate at 0.0% and their deposit rate at -0.4%.  President Mario Draghi said that the ECB is waiting for new economic forecasts before pressing the button on new stimulus that would require preparation in a situation that remains complex.

Kick the Can: President Donald Trump and congressional leaders struck a two-year U.S. debt ceiling and budget deal. The budget deal would raise U.S. discretionary spending to $1.37 trillion in fiscal year 2020, up from $1.32 trillion this year. The deal moves the U.S. closer to dodging the threat of debt default and automatic, across-the-board spending cuts. It also could prevent a government shutdown when funding expires after Sept. 30, though lawmakers will have to pass separate appropriations bills for that measure.

Brexit: Boris Johnson is the new British Prime Minister which was widely expected over the past month.  Most likely not much will happen with Brexit until the cabinet and parliament return from their Summer break in September.

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

Rising Home Prices, A Mixed Blessing

Median home prices have been steadily rising since the end of the housing crises.  In fact, median home prices are up 35% since 2009 which is representative of a very healthy and vibrant housing market.  As home prices continue their slow and steady march upward, investing in real estate has never made more sense.  But it also means that the ability to participate in the housing market is becoming more difficult for one key segment - First Time Home Buyers.

Point2Homes analyzed data from the National Association of Realtors and the US Census and found some compelling facts:
    • The share of first-time buyers has been on a downward trend – entry-level buyers represented 50% of the total sales numbers in 2010, whereas in 2018 this share dropped to 33%;
    • The price difference between a home bought by a first-timer and a home purchased by a move-up buyer is also decreasing, going from 31% in 2009 to 27% in 2018;
    • The median age of a first-time buyer increased from 30 years old in 2009 to 32 years old in 2018, but the median age of repeat buyers has really gone up: from 48 years old in 2009 to 55 in 2018;
    • The average size of a new home increased from 1,580 sq.ft. in 2008 to 1,670 sq.ft. in 2013, only to start dropping again, settling at 1,600 sq.ft. in 2018.

MEDIAN HOME PRICE CHANGES: These rapidly increasing prices put a lot of pressure on prospective homebuyers from both segments, but demand is bound to increase for more affordable homes, which are, of course, starter homes and condos. As a response to the growing demand, between 2009 and 2018, the median price of an entry-level home has risen faster than home prices in the move-up buyer segment. Currently, a first-time homebuyer needs to pay 31% more for a home, compared to a repeat buyer, who is looking at a smaller increase of 25%.

PRICE GAP: The price gap between starter homes and homes bought by repeat buyers is slowly closing. According to their analysis of NAR and US Census numbers, in 2009 there was a 31% difference between the median price of a starter home and the median price of a home from the repeat buyer segment. By 2018, that difference fell to 27%, pointing to a slow but insidious trend.

SHARE OF FIRST-TIME BUYERS: As a consequence, since 2009, when the share of first-time buyers reached 47% of total sales, and especially since 2010 when this share hit 50%, the percentage of first-timers has been in free fall. In the total number of sales, first-time buyers represented only 32% in 2015, and that share only crawled back to a meager 33% in 2018.
Source: Point2Homes

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.500 MBS) gained +22 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slightly lower from the prior week and remained near their lowest levels of the year.

Overview:  Overall, the economic data was very solid with better than expected readings in key Retail Sales and Manufacturing that continue to point solid growth.  The Fed's Beige book also showed an aggregate economy that is growing at a moderate pace in most districts.  Usually, strong economic data like we had last week would be negative for MBS (higher mortgage rates) but the rising tension in Iran, a sputtering China-U.S. trade negotiation and a looming showdown on the debt ceiling provided plenty of support for long bonds and kept rates low for the week.

Retail Sales:  The June Headline came in at 4 X the market expectations (0.4% vs est of 0.1%).  Retail Ex-Autos had the same reading.  The Control Group for Retail Sales increased by 0.7% vs est of 0.3%.

Manufacturing:  We got a couple of regional reports that were significantly stronger than expected.  The Philly Fed came in at 21.8 vs est of 5.0. The July regional Empire Manufacturing Index was much stronger than expected, coming in at 4.3 vs expectations of only 0.8 and quite a large swing from June's contraction of -8.6

 

The Talking Fed:  The Fed's Beige Book was released Wednesday. You can read it here.
Here are a few highlights:

Among the various indicators suggesting a solid, stable, expanding economy, the Beige Book notes that:

  • In most Districts, sales of retail goods increased slightly overall,
  • Activity in the non-financial services sector rose further
  • Tourism activity was broadly solid, with Atlanta and Richmond recording robust growth in this sector,
  • Some Districts continued to report healthy expansion in the transportation sector.
  • Home sales picked up somewhat, but residential construction activity was flat.
  • Nonresidential construction activity increased or remained strong in most re-porting Districts, and commercial rents rose
  • A modest pickup in manufacturing activity since the last reporting period was observed in a few Districts
  • Increased demand for loans was broad-based, with all but two Districts noting some growth in financing activity
  • Employment grew at a modest pace, as labor markets remained tight; contacts across the country experiencing difficulties filling open positions.
    • The reports noted continued worker shortages across most sectors, especially in construction, information technology, and health care.
  • Compensation grew at a modest-to-moderate pace, similar to the last reporting period, although some contacts emphasized significant increases in entry-level wages.
  • Rate of price inflation was stable to down slightly from the prior reporting period. Districts generally saw some increases in input costs, stemming from higher tariffs and rising labor costs.
  • Reduced supply boosted prices for some agricultural goods; some Districts noted increased upward transportation pricing pressures, while others highlighted price declines due to reduced demand for shipping services.

 

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 Best and Worst States to Start a Small Business

A strong local housing market is very closely tied to the strength of the local economy and small businesses are one of the of the biggest driving forces in many local economies.

In a recent study, WalletHub compared the 50 states across 26 metrics for startup success, assigning each state a number in each category, then computing which states are the most business-friendly overall.

The results are hardly surprising: High-tax states in the northeast offer some of the worst conditions for businesses, while low-tax states in the Sun Belt have some of the best conditions.

States that offer the right conditions for success, such as access to cash, skilled workers, affordable office space and other factors, can be critical in helping a business thrive.

See the complete ranking below:

  1. Texas 
  2. Utah   
  3. Georgia   
  4. North Dakota 
  5. Oklahoma   
  6. Florida   
  7. Arizona   
  8. California   
  9. Montana   
  10. Colorado   
  11. Idaho   
  12. Washington   
  13. Mississippi
  14. North Carolina
  15. Louisiana
  16. Kansas
  17. Minnesota
  18. Michigan
  19. Nebraska
  20. Tennessee
  21. Kentucky
  22. South Dakota
  23. Maine
  24. Indiana
  25. Nevada
  26. Oregon
  27. New Mexico
  28. Alaska
  29. Alabama
  30. Wisconsin
  31. Arkansas
  32. Missouri
  33. Wyoming
  34. Ohio
  35. Illinois
  36. Massachusetts
  37. Iowa
  38. South Carolina
  39. Virginia
  40. Maryland
  41. West Virginia
  42. New York
  43. Vermont
  44. Delaware
  45. Pennsylvania
  46. Connecticut
  47. Hawaii
  48. New Hampshire
  49. New Jersey
  50. Rhode Island


What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.500 MBS) lost -20 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slightly higher but remained near their lowest levels of the year.

Overview:  We saw an uptick in inflation (CPI and PPI), and that coupled with the prior week's strong jobs data has bond traders pulling back their hedges for a 50 BPS rate cut from the Fed this month down to a 25BPS.  This pulled a little premium out of bond yields.

 

Inflation Nation: The headline June Core CPI (ex food and energy) YOY broke back above 2.0% and was a little higher than expectations (2.1% vs est of 2.0%).  CPI YOY hit 1.6% vs est of 1.6%. (ex food and energy) YOY broke back above 2.0% and was a little higher than expectations (2.1% vs est of 2.0%).  CPI YOY hit 1.6% vs est of 1.6%. The headline June Core PPI (ex food and energy) YOY was higher than expected (2.3% vs est of 2.2%) and the PPI YOY was also higher than expected (1.7% vs est of 1.6%).  These readings do not get the same weight as the CPI data does but these do show upward pricing pressure.

The Talking Fed:  Fed Chair Jerome Powell gave his semi-annual monetary policy report to the House Financial Services Committee and the Senate Banking Committee.  Here is the statement that he read to them: You can read them here.

Here are a few bullet points from his statement:

  • Hawkish "The economy performed reasonably well over the first half of 2019, and the current expansion is now in its 11th year."
  • Hawkish "Our baseline outlook is for economic growth to remain solid, labor markets to stay strong, and inflation to move back up over time to the Committee's 2 percent objective."
  • Dovish "Inflation has been running below the Federal Open Market Committee's (FOMC) symmetric 2 percent objective, and crosscurrents, such as trade tensions and concerns about global growth, have been weighing on economic activity and the outlook."
  • Dovish "Growth in business investment seems to have slowed notably, and overall growth in the second quarter appears to have moderated. The slowdown in business fixed investment may reflect concerns about trade tensions and slower growth in the global economy."

The Minutes from the last FOMC meeting certainly pointed to a rate cut at the July meeting. You can read the official Minutes here.  While once again the markets are focusing on the most dovish of notes, but there was actually a mixed bag.

  • Many Fed Officials saw a stronger case for a rate-cut amid rising risks
  • Several officials didn't yet see a strong rate-cut case
  • A few Fed officials saw a rate cut risking financial imbalances
  • Many Fed officials in June saw risks weighted to the downside

 

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

Most Affordable Places to Get Married and Buy a Home in the Same Year

Two of the most expensive life events (a wedding and a down payment on a home) often combine in the same year when a couple says "I Do".  Redfin examined data to see which metropolitan areas had the lowest combined cost for an average wedding and the average purchase of a home in that area.

Cleveland, Detroit and Pittsburgh are the most affordable places where couples can throw a wedding and also cover a down payment on their first home, in all three Midwestern metro areas, the average combined cost of a wedding and a down payment is less than $65,000, compared with the national average of more than $109,000. 

San Francisco, where the typical wedding and down payment costs add up to $325,000, is the most expensive place to get married and buy a home, followed by Los Angeles($168,000) and New York($158,000). 

To determine how much cash couples in different parts of the country would need on hand to throw a wedding and buy their first home, Redfin calculated down payment amounts in 25 metro areas, assuming a 20 percent down payment on the median list price as of April 2019. Redfin paired it with metro-level and national data on wedding costs from WeddingWire, which found the average cost of a wedding, including an engagement ring, ceremony and reception, and honeymoon to be $38,700 in 2018. 

Source: RedFin

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.500 MBS) gained just +8 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move sideways but remained at their lowest levels of the year.

Overview:  We had a holiday-shortened week with really only three full trading sessions.  MBS remained at elevated levels but saw a significant pull back from their weekly highs due to a very strong jobs report on Friday.

Jobs, Jobs, Jobs: Big Jobs Friday hit and the data was quite strong.  You can read the official Bureau of Labor and Statics report here.
Tale of the Tape:
Jobs:
Non-Farm Payrolls for June 224K vs est of 160K
NFP for May revised from 75K to 72K
NFP for April revised from 224K to 216K
The more closely watched three month rolling average is at a very healthy level of 171,000
Wages:
The Average Hourly Earnings rate rose 6 cents to $27.90 per hour.
Average Hourly Earnings on a YOY basis increased by 3.1% which matched May's pace.  The expectations were for a pace of 3.2%.
Average Hourly Earnings on a MOM basis increased by 0.2%, the market was expecting 0.3%
Unemployment:
The Unemployment Rate rose from 3.6% in May to 3.7% in June. The market expected 3.6%
The Labor Force Participation Rate increased from 62.8% in May to 62.9% in June.

ISM:  The June ISM Non-Manufacturing (Services) hit close to the mark with a 55.1 vs 55.9 estimate.  This is the lowest reading since July of 2017 but is still well above the expansionary level of 50.0. Services account for  more than 2/3 of our economic output.  ISM Manufacturing on a national level is alive and well.  Unlike several recent regional manufacturing surveys (Chicago PMI, Empire Manufacturing, Philly Fed, etc), the ISM Manufacturing report still shows expansion with a 51.7 vs a 51.0 estimate.

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

Pending Home Sales Rise in May

Pending home sales increased in May, according to the National Association of Realtors® (NAR). Three of the four major regions saw growth in contract activity, with the West experiencing a slight sales decline.

Pending home sales are when there is a contract on a home but it has not closed yet and this index is a forward looking indicator for housing sales. The Pending Home Sales Index, climbed 1.1% to 105.4 in May, up from 104.3 in April.

Lawrence Yun, NAR chief economist, said lower-than-usual mortgage rates have led to the increase in pending sales for May. “Rates of 4% and, in some cases even lower, create extremely attractive conditions for consumers. Buyers, for good reason, are anxious to purchase and lock in at these rates.”

Yun said consumer confidence about home buying has risen, and he expects more activity in the coming months. “The Federal Reserve may cut interest rates one more time this year, but there is no guarantee mortgage rates will fall from these already historically low points,” he said. “Job creation and a rise in inventory will nonetheless drive more buyers to enter the market.”

Source: National Association of Realtors


What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.00 MBS) gained just +2 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move sideways and remained at their lowest levels of the year.

Overview:  We got a mixed-bag of economic data with low inflation and weak manufacturing but strong GDP, Personal Income and Spending and Consumer Sentiment.  But the bond market was "on pause" as it awaited any progress in the U.S./China Trade negotiations.  These were expected to get back on track during the G20 meeting.  They did actually get back on track but that announcement was not made until after the markets were closed for the weekend.  

Inflation Nation:  The May Personal Consumption Expenditures (PCE), the Fed's key measure of inflation remained well below their target rate of 2% and matched market expectations.  The Headline PCE YOY hit 1.5% vs est of 1.5% and the Core (ex food and energy) YOY reading came in at 1.6% vs est of 1.6%.

Income and Spending:  We saw a nice spike in Personal Income in May, up 0.5% vs est of 0.3% on a MOM basis.  Personal Spending increased by 0.4% on a MOM basis which matched market expectations but the prior month saw a very nice revision upward from 0.3% to 0.6%.

Manufacturing:  The bell-weather Chicago PMI showed its first contraction in 2.5 years.  Any reading below 50 is contractionary, the market was expecting a reading of 53.1, so this was a surprise to the downside.  This report is a mixed bag though as prices, employment and inventories rose at very expansionary rates.  The culprit was new orders which tanked and dragged down the overall reading.

Consumer Sentiment:  The final June University of Michigan's Consumer Sentiment Index was revised from the preliminary reading of 97.9 to 98.2, the market was expecting 98.0

GDP:  We got the FINAL revision to the 1st QTR GDP, it came in at 3.1% which is what is was after the first revision and it is what the market expected.  This was originally released at 3.2% but has been stuck at 3.1% after revisions.

Durable Goods Orders:  At first glance. the headline May data (subject to revision) was much weaker than expected (-1.3% vs est of -0.1%).  However, the Headline data is overweighted with big ticket items.  For example, just a couple of plane orders can swing  that number in a big way. So, when you strip out the very volatile Transportation Sector, the Core reading was stronger than expected (0.3% vs est of 0.1%).  Non-Defense Capital Goods Orders ex-Aircraft great at 0.4% vs est of 0.1%.

 

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

Buyers and Sellers Agree Now is a Good Time to Make an Offer

According to the National Association of Realtors' 2019 Q2 Homeownership Opportunities and Market Experience (HOME) Survey, 73% of people believe that now is a good time to sell a home, which is an increase over last quarter at 65% and 65% of people believe that now is a good time to buy a home, which is consistent with the previous quarter.

This means that the vast majority of people continue to believe that we have a housing market on solid footing.

NAR Chief Economist Lawrence Yun said  that " Lower mortgage rates, along with job and wage growth, will lead to an increase in sales and thereby contribute positively to economic growth in the upcoming quarters,"

Source:NAR HOME report


What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.00 MBS) gained +27 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move downward to their lowest levels of the year.

Overview:  Last week was all about the major Central Banks and the prospect for low inflation and lower cost of funds.  We heard from 4 out of the top six world economies' Central Banks and they all had a similar theme: They are all worried about stubbornly low inflation and the overhang of a prolonged trade war.  This caused global long bonds to rally which in turn, caused mortgage rates to decrease.  

Central Bank Palooza:

The Talking Fed: The much awaited FOMC (in)action finally hit on Wednesday.  You can read their official Policy Statement Here.
You can read their Economic Projections here.
Here are some key takeaways from them:

  • Kept their Key Interest Rate at 2.25% to 2.50%
  • The removed the term "patient" from their policy statement
  • One Voting Fed Member voted against their policy which means either they wanted to lower or increase rates and not keep them the same.
  • The Dot-Plot chart showed that 8 FOMC members are forecasting for at least one rate cut in 2019, 8 members showed NO rate changes in 2019 and One person showed One rate hike.
  • Fed Chair Powell stressed in his live remarks that the Dot Plot chart is not the official Fed forecast for rates.
  • The FOMC says it will "act as appropriate to sustain the expansion" and "closely monitor" incoming information, language that echoes Powell's recent speech but is new to the statement.
  • No recession!  The Fed is forecasting positive GDP growth at least through 2021
    • 2019 median GDP growth 2.1% vs 2.1%
    • 2020 median GDP growth 2.0% vs 1.9%
    • 2021 median GDP growth 1.8% vs 1.8%
  • No threat of inflation!  Fed shows that they do not expect to break above their 2% target rate for some time.
    • 2019 median core PCE inflation 1.8% vs 2.0%
    • 2020 median core PCE inflation 1.9% vs 2.0%
    • 2021 median core PCE inflation 2.0% vs 2.0%
  • Fed Chair Powell confirmed that he would serve out his full four year term despite any political pressure. 
European Central Bank: Super Mario to the rescue.  ECB President Mario Draghi did all but promise a wave of helicopters dropping cash into the masses today.  He said that if the outlook doesn’t improve and inflation doesn’t strengthen, "additional stimulus will be required" adding that the ECB can amend its forward guidance, that rate cuts remain “part of our tools” and asset purchases are also an option. In short,a full dovish capitulation by the ECB chief.

Japan:  The Bank of Japan kept their key interest rate unchanged at -0.1% (Vote 7 to 2).  The BofJ said “Downside risks concerning overseas economies are likely to be significant, and it is also necessary to pay close attention to their impact on firms’ and households’ sentiment in Japan.”

Great Brittan:  The Bank of England kept their key interest rate at 0.75% (Vote 9 to 0). The BofE said that UK economic growth has “weakened slightly in the first half of the year” and “downside risks to growth have increased.” and “Globally, trade tensions have intensified, domestically, the perceived likelihood of a no-deal Brexit has risen. Trade concerns have contributed to volatility in global equity prices and corporate bond spreads, as well as falls in industrial metals prices. Forward interest rates in major economies have fallen materially further.”

 

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 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.
 

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