By Taff Weinstein at
We got two very important housing reports last week and both showed some real strength in our housing market. The National Association of Realtor's Existing Home Sales Report for September showed a small decrease in sales but that was only due to the fact that there are no houses to buy. Inventory remains near an all time low.
But the report did show that owning real estate has really been a great investment as the median sales price increased to $272,100 which is a 5.9% increase over the past 12 months and marks the 91st straight month of home price increases.
Total housing inventory at the end of September sat at 1.83 million units, approximately equal to the amount of existing-homes available for sale in August. Unsold inventory is at a 4.1-month supply at the current sales pace, down from the 4.4-month figure recorded in September 2018.
Properties typically remained on the market for 32 days in September, up from 31 days in August and even with September 2018. Forty-nine percent of homes sold in September 2019 were on the market for less than a month.
First-time buyers were responsible for 33% of sales in September, up from 31% in August.
In a separate report, the Census Bureau's New Home Sales report for September showed that the median sales price of new houses sold in September 2019 increased to 299,400.The average sales price was $362,700. Sales increased to an annualized pace of 701K units which is a gain of 1.6%.
What Happened to Rates Last Week?
ortgage backed securities (FNMA 3.500 MBS) lost just -2 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move sideways compared to the prior week.
Overview: Mortgage backed securities (which directly controls mortgage rates) moved in a very narrow range and were squeezed sideways for the week. The economic news was not that great which would normally have helped rates out but positive momentum on Trade and Brexit kept rates in check.
Taking it to the House: The September New Home Sales matched market expectations at 701K. matched market expectations at 701K. The August FHFA Housing Price Index showed a MOM gain of0.2% vs est of 0.4%. Weekly Mortgage Applications fell by -11.9%. Refinance Applications tanked by -17.0% and Purchase Applications pulled back by -4.0%. Existing Home Sales for September came in at 5.38M vs est of 5.45M. Even though mortgage rates have been incredibly low, the culprit is lack of inventory as prices keeping moving higher as the Median Sales Price is up 5.9% YOY to $256,900. Unsold inventory is only at a 4 month supply and properties remained on the market for only 32 days.
Durable Goods: The Headline September Durable Goods Orders were much weaker than expected (-1.1% vs est of -0.8%), when you strip out Transportation, it was also a miss but less pronounced (-0.3% vs est of -0.2%).
Central Bank Palooza: There were no surprises from the European Central Bank as they kept their key interest rate at 0.0% and their deposit rate at -0.5%. They also kept the QE-Infinity in place that they announced two meetings ago. as they kept their key interest rate at 0.0% and their deposit rate at -0.5%. The Peoples Bank of China kept their key interest rate at 4.2%.
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
Twenty-six percent of home searchers looked to move to another metro area in the third quarter of 2019, up from 25 percent the year before, according to a new report from Redfin. This is a new all-time high for the national share of home-searchers looking to relocate, likely driven by those leaving expensive metros in search of more affordable homes.
Moving In — Metros with the Highest Net Inflow
After two quarters at the top of our list of metro areas with the highest net inflow, Phoenix fell to number three in the rankings in the third quarter, passed by Boston at number one and Sacramento at number two. A net inflow means more people are looking to move in than leave, while a net outflow means there are more people looking to leave than people looking to move in.
Seventeen percent of homebuyers searching in the Boston metro area were looking from other metro areas in the third quarter, up from both a year earlier (12.0%) and the second quarter (14.1%). New York continues to be the top origin city for people looking to move to Boston, and Boston is the top destination for people looking to leave New York.
Moving Out — Metros with the Highest Net Outflow
The list of metros people most-often looked to leave was once again topped by New York, San Francisco, Los Angeles and Washington, D.C. in the third quarter. Net outflow is defined as the number of people looking to leave the metro minus the number of people looking to move to the metro.
Source: RedFin
What Happened to Rates Last Week?
Mortgage backed securities (FNMA 3.500 MBS) lost just -7 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move sideways compared to the prior week.
Overview: Mortgage backed securities (which directly controls mortgage rates) moved in a very narrow range, testing an key technical support level located at the 100 day moving average all week. This kept mortgage rates nice and steady for the week.
Retail Sales: The headline reading for September was much lower than expected (-0.3% vs est of +0.3%). Part of that miss was due to an upward revision to August from 0.4% to 0.6%. When you strip out Autos, Retail Sales were down -0.1% vs est for a gain of +0.2%. August was revised higher from 0.0% to 0.2%.
The Talking Fed: We got the Fed's Beige Book on Wednesday. You can read the official release here.
Here are a few key highlights:
The economy expanded at a slight to modest pace since the prior report
Household spending was solid on balance.
Employment rose slightly amid reports of persistent worker shortages. Labor market tightness across skill levels and occupations was widely cited as a factor restraining hiring.
Wages rose moderately in most Districts, with upward pressure noted for lower-skill workers in the retail and hospitality industries and for higher-skill professional and technical workers.
Agricultural conditions deteriorated further due to the ongoing impacts of adverse weather, weak commodity prices, and trade disruptions.
Taking it to the House: Weekly Mortgage Applications increased by just 0.5%. Refinance Applications popped by 4.0% but Purchase Applications tanked by -4.0%. The October NAHB Housing Market Index hit 71 vs est of 68. September New Housing Starts were lighter than expected (1.256M vs est of 1.320M) but the weakness was in multifamily. The key housing market SFR actually made gains to 918K on an annualized basis. Building Permits were stronger than expected (1.387M vs est of 1.335M). SFR permits rose to 882K.
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
Neighborhoods located within a half-mile of public transit services outperformed those in areas farther from public transit based on a number of factors, according to a report released today by the American Public Transportation Association (link is external) and the National Association of Realtors®. “The Real Estate Mantra – Locate Near Public Transportation” highlighted the critical role public transportation plays in determining real estate values, revealing that commercial and residential real estate market sales thrive when residents have mobility options close by.
The report explored seven metropolitan regions – Boston; Hartford; Los Angeles; Minneapolis-St. Paul; Phoenix; Seattle; and Eugene, OR – that provide access to heavy rail, light rail, commuter rail and bus rapid transit. Residential properties within these areas had 4-24% higher median sale prices between 2012 and 2016, the report found. Commercial property near public transit also witnessed value gains in the studied cities, where four of the regions saw median sales prices per square foot increase between 5-42%.
Transportation costs in transit-oriented areas are significantly lower than in other regions, with an average annual savings of $2,500 to $4,400 for the typical household. One in four households in close proximity to transit does not own a vehicle, according to the study.
The seven sample areas were examined by residential and commercial sales performance, rent, neighborhood characteristics, local government interventions and housing affordability.
“Public transit’s benefits go beyond moving people from point A to point B,” said APTA President and CEO Paul P. Skoutelas. “Public transportation is a valuable investment in our communities, our businesses, and our country. Public transportation gets people to jobs and educational opportunities and helps businesses attract employees and customers.”
“Access to public transportation is an extremely valuable community amenity that increases the functionality and attractiveness of neighborhoods, making nearby communities more desirable places to live, work and raise a family,” said NAR 2019 First Vice President Charlie Oppler, who spoke at Monday’s press conference along with 2019 New York State Association of Realtors® President Moses Seuram. “The results of our report, conducted over multiple years alongside the American Public Transportation Association, should reiterate to policymakers at all levels of government the importance of investing in modern, efficient infrastructure that facilitates growth and helps our nation keep pace in a rapidly evolving world.”
Neighborhoods with high-frequency public transportation are in high demand. While property values and rents have risen, contributing to healthy local economies, the rapidly increasing demand for housing near public transit has resulted in constrained housing supplies.
“As the conversation surrounding housing affordability continues, public transportation agencies are critical allies in working with elected officials and community leaders in the effort to increase housing opportunities and maximize value around stations,” said Skoutelas.
Source: National Association of Realtors
Mortgage backed securities (FNMA 3.000 MBS) lost -72 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move higher compared to the prior week.
Overview: Mortgage rates moved higher on "hopium". Hope of a trade deal, and hope over a Brexit negotiation. While both saw a lot of progress, neither one really materialized last week.
Trade War: On Friday afternoon, President Trump said that a "substantial" Phase I deal had been reached with China and that it will be written over the next 3 week period leading up to the meeting in Chile. The Phase I deal includes major agricultural purchases by China and the tariff hike scheduled for October 15th will not happen now. They have an agreement for transparency in FX currency. Phase II will begin right after Phase I is actually signed.
Inflation Nation: The headline Consumer Price Index (CPI) YOY kept the same pace as last month. The YOY number came in at 1.7% which was the same as last month. The Core (ex food and energy) also matched last month's YOY pace with a reading of 2.4%.
Consumer Sentiment: The Preliminary UofM Consumer Sentiment Index was much higher than expected (96.0 vs est of 92.0) and is the best reading since July.
Brexit: Hopes of a compromise increased after positive comments from after Donald Tusk, EU council president, said he had seen “promising signals” about the chance of a fresh Brexit agreement between the UK and the EU.
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
According to ATTOM Data Solutions’ newly released Home Flipping Report, there were 59,876 U.S. single family homes and condos flipped during the second quarter of 2019. That number is up 12.4 percent from Q1 2019, but down 5.2 percent from Q2 2018.
The report revealed that homes flipped in Q2 2019 represented 5.9 percent of all home sales during the quarter. That number is down from a post-recession high of 7.2 percent in Q1 2019, but up from 5.4 percent in Q2 2018.
Also noted in the report, homes flipped in the second quarter of 2019 generated a gross profit of $62,700 (which is the difference between the median sales price and median paid by investors). That number is up 2 percent from Q1 2019, but down 2 percent from Q2 2018.
On a national level, the gross flipping profit of $62,700 in Q2 2019 translated into a 39.9 percent ROI compared to the original acquisition price. That number is down from a 40.9 percent gross flipping ROI in Q1 2019 and from a margin of 44.4 percent in Q2 2018. Returns on home flips have dropped six quarters in a row and eight of the last 10, now standing at the lowest level since Q4 2011.
The report states that among the 149 metro areas analyzed in the report with at least 50 home flips in Q2 2019, five had gross ROI flipping profits of more than 100 percent: Scranton, PA (134 percent); Pittsburgh, PA (132.5 percent); Reading, PA (129.3 percent); Kingsport, TN (104.1 percent) and Augusta, GA (101.1 percent).
On the zip code level, the top 10 zips to flip in Q2 2019 based on gross ROI, with at least 10 more flips during the quarter, included 49426-Ottawa County, MI (324.9 percent); 48205-Wayne County, MI (317.4 percent); 19134-Philadelphia County, PA (303.8 percent); 60617-Cook County, IL (292.9 percent); 37771-Loudon County, TN (289.5 percent); 60628-Cook County, IL (287.9 percent); 37716-Anderson County, TN (277.6 percent); 60619-Cook County, IL (262.1 percent); 32254-Duval County, FL (260.0 percent); and 19139-Philadelphia County, PA (259.7 percent).
The Q2 2019 gross flipping profit for these top 10 zips were as follows: 49426-Ottawa County, MI ($227,100); 48205-Wayne County, MI ($36,500); 19134-Philadelphia County, PA ($79,000); 60617-Cook County, IL ($123,000); 37771-Loudon County, TN ($127,375); 60628-Cook County, IL ($118,750); 37716-Anderson County, TN ($110,993); 60619-Cook County, IL ($152,000); 32254-Duval County, FL ($78,000); and 19139-Philadelphia County, PA ($120,750).
Source: ATTOM Data Solutions
What Happened to Rates Last Week?
Mortgage backed securities (FNMA 3.000 MBS) gained +42 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move lower compared to the prior week.
Overview: Mortgage rates moved lower after the one-two punch of weaker than expected manufacturing and services data which raised expectations for the potential of two more rate cuts by the Federal Reserve this year. We had a very solid jobs report on Friday with a new 50 year low for Unemployment (3.5%).
Services: The National ISM Services PMI was weaker than expected (52.6 vs est of 55.0). While any reading above 50 is still expansionary (meaning that the services sector which accounts for 85% of our economic output, grew last month) it is the slowest rate of growth since 2016.
Manufacturing: The September National ISM Manufacturing PMI hit 47.8 vs est of 50.1 which is the lowest (worse) level since 2009. Prices Paid hit 49.7 vs est of 45.5.
Jobs, Jobs, Jobs: We got the Big Jobs report on Friday. You can read the official BLS release here.
Here is the tale of the tape:
Jobs:
September Non-Farm Payrolls (NFP) increased by 136K vs expectations in the 140K to 145K range.
August NFP was revised upward from 130K to 168K
July NFP was revised upward from 159K to 166K
The more closely watched rolling three month average is 157K which is very attractive.
Wages:
The Average Hourly Earnings are $28.09
The MOM change is 0.0% vs. market expectations of 0.3%
The YOY change is 2.9% which is lower than the recent trend of 3.2%
Unemployment:
The headline Unemployment Rate dropped to 3.5%, the lowest in 50 years. The market was expecting it to remain at 3.7%.
The U6 Unemployment Rate dropped to 6.9% in a very rare appears below the 7.0% mark. The last month was at 7.2%
The Participation Rate remained at 63.2%
The Talking Fed: Fed Chair Powell spoke on Friday. You can read his prepared statement here.
Here are a few key sentences from the speech:
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 increased in August, a welcome rebound after a prior month of declines, according to the National Association of Realtors®. Each of the four major regions reported both month-over-month growth and year-over-year gains in contract activity.
The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, climbed 1.6% to 107.3 in August, reversing the prior month’s decrease. Year-over-year contract signings jumped 2.5%. An index of 100 is equal to the average level of contract activity.
“It is very encouraging that buyers are responding to exceptionally low interest rates,” said Lawrence Yun, NAR chief economist. “The notable sales slump in the West region over recent years appears to be over. Rising demand will reaccelerate home price appreciation in the absence of more supply.”
All regional indices are up from July, with the highest gain in the West region. The PHSI in the Northeast rose 1.4% to 94.3 in August and is now 0.7% higher than a year ago. In the Midwest, the index increased 0.6% to 101.7 in August, 0.2% higher than August 2018.
Pending home sales in the South increased 1.4% to an index of 124.4 in August, a 1.8% bump from last August. The index in the West grew 3.1% in August 2019 to 96.4, an increase of 8.0% from a year ago.
Yun noted that historically low interest rates will affect economic growth, especially home buying, going forward.
“With interest rates expected to remain low, home sales are forecasted to rise in the coming months and into 2020,” said Yun. “Unfortunately, so far in 2019, new home construction is down 2.0%. The hope is that housing starts quickly move into higher gear to meet the higher demand. Moreover, broader economic growth will strengthen from increased housing activity.”
Source: The National Association of Realtors
Mortgage backed securities (FNMA 3.500 MBS) lost just -1 basis point (BPS) from last Friday's close which caused fixed mortgage rates to remain unchanged from than the prior week.
Overview: Mortgage rates moved sideways as speculation and sentiment towards a trade deal with China pressured rates higher while offsetting that was the geo-political uncertainty of a potential impeachment that pressured rates lower. These two opposing forces squeezed rates to move sideways.
Inflation Nation: The Fed's key measure of inflation, Core PCE YOY matched market expectations with a 1.8% reading in August. The pace was 1.7% in July. The headline PCE was 1.4% vs est of 1.3%.
Income and Spending: Personal Income continues to grow, this time by 0.4% in August. Personal Spending grew by 0.1% which was below estimates of 0.3%.
Durable Goods: The August Headline Durable Goods Orders was better than expected (0.2 vs est of -1.2). Ex Transportation it grew at 0.5% vs est of 0.2%.
Consumer Sentiment: The final reading for the September UofM Consumer Sentiment Index was revised higher from 92.0 to 93.2
Taking it to the House: August Pending Home Sales MOM were much better than expected with a 1.6% vs est of 0.9%. YOY they came in at +2.5% vs est of -1.9% which is a huge beat. Weekly Mortgage Applications decreased by -10.1% led by a big drop of -15.0% in Refinance Applications. Purchase Applications were more level at -3.0%. New Home Sales in August shot up and beat out estimates (713K vs est of only 660K).
Gross Domestic Product: The third and final release of the 2nd QTR GDP remained at 2.0% which was widely expected. The Price Index was revised higher from 2.5% to 2.6%, the markets were expecting it to be revised lower to 2.4%.
What to Watch Out For This Week:
Mortgage backed securities (FNMA 3.500 MBS) lost just -1 basis point (BPS) from last Friday's close which caused fixed mortgage rates to remain unchanged from than the prior week.
Overview: Mortgage rates moved sideways as speculation and sentiment towards a trade deal with China pressured rates higher while offsetting that was the geo-political uncertainty of a potential impeachment that pressured rates lower. These two opposing forces squeezed rates to move sideways.
Inflation Nation: The Fed's key measure of inflation, Core PCE YOY matched market expectations with a 1.8% reading in August. The pace was 1.7% in July. The headline PCE was 1.4% vs est of 1.3%.
Income and Spending: Personal Income continues to grow, this time by 0.4% in August. Personal Spending grew by 0.1% which was below estimates of 0.3%.
Durable Goods: The August Headline Durable Goods Orders was better than expected (0.2 vs est of -1.2). Ex Transportation it grew at 0.5% vs est of 0.2%.
Consumer Sentiment: The final reading for the September UofM Consumer Sentiment Index was revised higher from 92.0 to 93.2
Taking it to the House: August Pending Home Sales MOM were much better than expected with a 1.6% vs est of 0.9%. YOY they came in at +2.5% vs est of -1.9% which is a huge beat. Weekly Mortgage Applications decreased by -10.1% led by a big drop of -15.0% in Refinance Applications. Purchase Applications were more level at -3.0%. New Home Sales in August shot up and beat out estimates (713K vs est of only 660K).
Gross Domestic Product: The third and final release of the 2nd QTR GDP remained at 2.0% which was widely expected. The Price Index was revised higher from 2.5% to 2.6%, the markets were expecting it to be revised lower to 2.4%.
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
Fintech company Black Knight has released their latest review of mortgage delinquency and foreclose starts, and the news is very positive:
August’s 36,200 foreclosure starts made for the lowest single-month total since December 2000
The number of loans in active foreclosure inventory also fell; at 253,000, it’s the fewest since 2005
Prepayment activity – typically a good indicator of refinance activity – continues to press upward, increasing 5% from July to reach a three-year high
August’s prepayment rate was up 62% from the same time last year and 2.5 times the 18-year low hit in January
Total U.S. loan delinquency rate (loans 30 or more days past due, but not in foreclosure): 3.45%, Month-over-month change: -0.15%,Year-over-year change: -1.49%
Total U.S. foreclosure pre-sale inventory rate: 0.48%,Month-over-month change: - 2.42%,Year-over-year change: -11.46%
Total U.S. foreclosure starts: 36,200 Month-over-month change: -7.65%,Year-over-year change: -23.14%,
Monthly prepayment rate (SMM): 1.50% Month-over-month change: 5.45%, Year-over-year change: 61.77%
Foreclosure sales as % of 90+: 1.81%, Month-over-month change: 3.20%,Year-over-year change: -6.80%
Number of properties that are 30 or more days past due, but not in foreclosure: 1,813,000,Month-over-month change: 6,000,Year-over-year change: 4,000
Number of properties that are 90 or more days past due, but not in foreclosure: 444,000,Month-over-month change: 0, Year-over-year change: -62,000
Number of properties in foreclosure pre-sale inventory: 253,000,Month-over-month change: -5,000,Year-over-year change: -28,000
Number of properties that are 30 or more days past due or in foreclosure: 2,066,000 Month-over-month change: 1,000Year-over-year change: -23,000
Mortgage backed securities (FNMA 3.000 MBS) gained +35 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move a smidge lower than the prior week.
Overview: As expected, the Federal Reserve lowered their key interest rate. However, mortgage rates were unchanged on Fed day. This was a very "hawkish" rate cut as the Fed stated strong economic growth and actually raised their economic projections. The biggest volatility of the week came on Friday on "news" that a Chinese Trade delegation would not be touring some American Farmer operations when they visit in October, the markets took that as a sign that negotiations were going poorly and caused mortgage rates to improve slightly on a flight to quality.
Taking it to the House: August Exiting Home Sales were stronger than expected with an annualized sales pace of 5.49M units vs expectations of 5.37M. The median sales price rose by 4.7% on a YOY basis and is now $278,000. Housing inventory at the end of August decreased to 1.86 million, down from 1.90 million existing-homes available for sale in July, and marking a 2.6% decrease from 1.91 million one year ago. Unsold inventory is at a 4.1-month supply at the current sales pace, down from 4.2 months in July and from the 4.3-month figure recorded in August 2018. Properties typically remained on the market for 31 days in August, up from 29 days in July and in August of 2018. Forty-nine percent of homes sold in August were on the market for less than a month. Weekly Mortgage Applications were basically flat at -0.1%. Purchase Applications jumped by 6.0% while Refinance Applications fell by -4.0%. August New Housing Starts were much stronger than expected (1.364M vs est of 1.250M). SFR rose 4.4% for a rate of 919K. Building Permits also beat out estimates (1.419M vs est of 1.300M). SFR rose by 4.5% to an annualized rate of 866K.
The Talking Fed: You can read the Fed's official policy statement here.
They also released their Economic Projections You can read the official release here.
Here is a summary of their action:
They lowered their Fed Fund Rate from 2.25% to 2.00%
They lowered their Interest Rate on Excess Reserves 30BPS to 1.80%
The vote was 7-3. With the 2 dissenting votes wanting NO rate change and 1 dissenting vote for a larger rate cut of 50BPS instead of the 25BPS.
According to the “dot plot chart” of individual expectations, five members thought the FOMC should have held its previous range of 2% to 2.25%, five approved of the 25 basis point cut but keeping rates there through the rest of the year (which means that 10 out of 17 "dots" see no more cuts this year), and seven favored at least one more cut this year.
The committee "hung their hat" once again on “the implications of global developments for the economic outlook as well as muted inflation pressures” as the primary rationale for the cut.
Members actually raised their expectations for growth since the last summary of economic projections in June. The committee now sees GDP rising at a 2.2% pace this year, compared with 2.1% in June, though the longer-run expectations remain at 1.9%.
Inflation projections were unchanged at 1.8% for 2019 and 2.5% over the longer run.
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
A group of Swiss researchers have their proof of concept in the DFAB House, described as "the first habitable building designed and planned using a choreography of digital fabrication methods."
The DFAB House is 3 levels and features 3D printed ceilings, energy efficient walls, timber beams assembled by robots and an intelligent home system. The house is near Zurich and was developed by a team of experts at ETH Zurich University with help from thirty industry partners. It took four years to develop and build the house, which measures 2,370 square feet and required 60% less cement than a traditional building. The DFAB House also passed stringent Swiss building codes.
This isn't the first digital fabrication project to come about, either. Chinese company WinSun demonstrated 3D printing for architectural purposes in 2014 by manufacturing 10 single story houses in one day. The next year, it printed an entire apartment building and a neoclassical mansion. The projects remain in development stages.
What Happened to Rates Last Week?
Mortgage backed securities (FNMA 3.000 MBS) lost -132 basis points (BPS) from last Friday's close which caused fixed mortgage rates to rise to their highest levels since July 11th.
Overview: Yet another round of very solid domestic economic data (Retail Sales, CPI) caused long bond traders to shift their expectations from a 50BPS Fed rate down to a 25BPS to 0BPS range. We also saw some rare positive momentum in trade talks between the U.S. and China. The ECB kept their interest rate the same but did announce a new round of QE but the markets don't believe that they have the ability to actually carry out their new bond buying program. Those three areas hammered MBS pricing and drove mortgage rates higher.
Trade War: President Trump has agreed, as a gesture of good will, to move the increased Tariffs on 250 Billion Dollars worth of goods (25% to 30%) back from October 1st to October 15th. Beijing announced that it would indeed encourage state-owned companies to begin "goodwill" purchases of US soybeans, pork and other farm goods (desperately needed by China) by issuing waivers from trade-war tariffs. Beijing also waived import tariffs on more than a dozen US goods. Beginning Sept. 17, China will remove 25% tariffs on 16 types of US exported goods for one year - a sign of good will ahead of talks between US and Chinese trade delegations.
Retail Sales: Headline August Retail Sales came in a double market expectations of 0.4% vs est of 0.2%. Plus the big beat in July of 0.7% was not a fluke as it was revised even higher to 0.8%. Ex-Autos, Retail Sales were flat at 0.0%.
Inflation Nation: The August Headline Consumer Price Index (CPI) YOY increased by 1.7% vs est of 1.8%. The Core (ex food and energy) CPI YOY increased by 2.4% vs est of 2.3%
Central Bank Palooza: The European Central Bank (ECB) kept their key interest rate at 0.0%, However, they did lower their Deposit Rate from -0.4% down to -0.5%. This was widely expected but the unknown was the announcement of a NEW bond buying program of $20B Euros per month of net asset purchases "for as long as it deems necessary".
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 100 largest private landowners in the US own a combined 40 million acres, an area roughly the size of Florida. The top ten landowning families control an area roughly equivalent in size to the state of West Virginia.
In a recent story, Bloomberg matches some of the largest landowning families with some of their flagship parcels of land.
According to BBG, the top 100 private landowners own property in 39 states. Their parcels suit a number of purposes, from investment, conservation, tax benefits or simply the bragging rights that come with owning large chunks of the US.
Their names are (units in acres):
John Malone: 2.20 million
Emmerson family: 1.96 million
Ted Turner: 1.92 million
Stan Kroenke: 1.38 million
Reed family: 1.33 million
Irving family: 1.25 million
Brad Kelley: 1.15 million
Singleton family: 1.10 million
King Ranch heirs: 0.93 million
Peter Buck: 0.93 million
Media moguls John Malone and Ted Turner own more than 4 million acres in 12 states, much of it ranch-land out west. Turner owns a herd of 51,000 bison, the largest privately owned bison herd in the world.
A popular category among the largest property owners is ranch land, which represents 58% of the property owned by the top 100, or more than 23 million acres, mostly concentrated near the Texas-Mexico border.
King Ranch, a south Texas institution founded in 1835, is bigger than Rhode Island. More than 400 miles to the north is the country’s largest ranch behind a single continuous fence, belonging to LA Rams co-owner Stan Kroenke.
What Happened to Rates Last Week?
Mortgage backed securities (FNMA 3.500 MBS) lost just -5 basis points (BPS) from last Friday's close which caused fixed mortgage rates to remain at their best (lowest) levels of 2019 for the sixth week in a row.
Overview: We had a solid round of domestic economic data with very strong ISM Services and a rock-solid jobs report on Friday. The Fed left the door open for a rate decrease in September but appears to be in the 1/4 point camp rather than the 1/2 point camp. Their commentary was actually fairly positive on our economy.
Jobs, Jobs, Jobs: We had Big Jobs Friday! You can read the official BLS report here.
Lets look at the Tale of the Tape:
Jobs:
August Non Farm Payrolls (NFP) 130K vs est of 158K
July NFP revised from 164K to 159K
June NFP revised from 193K to 178K
The more closely watched 3 month rolling average is now 156K (anything above 130K is good and above 150K is very, very strong).
Wages:
The average hourly earnings increased to $28.11.
Average Hourly Earnings MOM increased by 0.4% vs est of 0.3%
Average Hourly Earnings YOY increased by 3.2% vs est of 3.1%
Unemployment:
The Unemployment Rate remained at 3.7% vs est of 3.7%
The Participation Rate ticked up from 63.0% to 63.2%, estimates were 62.9%
The Talking Fed: Fed Chair Jerome Powell said that “Political factors play absolutely no role in our process, and my colleagues and I would not tolerate any attempt to include them in our decision-making or our discussions,” and "we are going to act as appropriate to sustain the expansion.” He also said “Our obligation is to use our tools to support the economy, and that’s what we’ll continue to do,” and that "we are clearly at a time where there is a range of views”
The Fed's Beige Book hit Wednesday. You can read their official release HERE.
Here are some key takeaways:
Employment grew at a modest pace, on par with the previous reporting period.
Services: Representing more than 2/3 of our economic output, the August ISM Non-Manufacturing Index hit 56.4 vs est of 54.0
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
Bloomberg has completed an analysis of U.S. Census and other data and has determined that people are fleeing the New York City area in droves. New York City leads all US metro areas as the largest net loser with an estimated 277 people moving out of the area every single day. This is more than twice the 132 people who left the metropolis one year ago. Los Angeles and Chicago have also seen a triple digit net loss of 201 and 161 residents leaving in 2019, respectively.
These numbers were sourced from 2018 census data on migration flows to (and from) the largest 100 US metropolitan areas.
On the other side of the coin, cities like Dallas, Phoenix, Tampa, Orlando, Atlanta, Las Vegas and Austin all saw substantial inflows as a result of both domestic and international migration. Houston and Miami also saw enough inflows to rank them eighth and ninth, while Seattle rounded out the top 10 and was the only cold weather destination on the list.
Phoenix was the greatest beneficiary of domestic migration, passing Dallas and adding more than 62,000 residents between July 1, 2017 and July 1, 2018. Dallas saw an influx of 46,000 domestic migrants while Las Vegas, Tampa and Austin rounded out the top five.
Why is this important to housing? Housing bubbles start in areas where demand slumps, causing prices to fall. In the cities with net losses of residents, there is clearly less demand and those cities are the most likely to face a downturn in the housing market.
What Happened to Rates Last Week?
Mortgage backed securities (FNMA 3.500 MBS) gained just +7 basis points (BPS) from last Friday's close which caused fixed mortgage rates to remain at their best (lowest) levels of 2019 for the fifth week in a row.
Overview: We had another week of positive economic data with better than expected manufacturing data and a very strong consumer with high Consumer Confidence and strong Personal Income and Personal Spending data. This would normally caused mortgage rates to rise but the strong economic data was offset by concern and uncertainty over the trade war and a fast approaching Fed meeting.
Consumer Confidence: Another fantastic reading! The block-buster July reading was revised even higher from 135.7 to 135.8 and the August reading beat out expectations (135.1 vs est of 130.0).
Personal Consumption: July Personal Income increased by 0.1% which at first glance looks a lot lighter than the consensus estimates of 0.3%. However June was revised upward from 0.4% to 0.5% which is quite strong. Personal Spending continues to show major strength with a monthly gain of 0.6%. The headline PCE YOY came in at 1.4% vs est of 1.3% and the closely watched Core PCE YOY data was tame at 1.6% vs est of 1.6%.
Manufacturing: The Bell Weather Chicago PMI showed a big rebound from 44.4 in July to 50.4 in August and right back into expansionary territory. The market was expecting a contractionary reading in the 47 range.
Taking it to the House: July Pending Home Sales Index fell by -2.5%, the market was expecting -0.3%. Weekly Mortgage Applications dropped by -6.2%,led by Refinances which plunged by -8.0%. The Case-Shiller 20 city metro Home Price Index showed a YOY gain of 2.1% in June. The May pace was 2.4%. The FHFA June Housing Price Index (takes into account every Fannie, Freddie and Ginnie mortgage) showed a national MOM gain of 0.2% which matched the pace in May.
GDP: The previously released 2nd QTR GDP was revised from 2.1% to 2.0% which is exactly what the market expected.
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
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 2.5% from June to a seasonally adjusted annual rate of 5.42 million in July. Overall sales are up 0.6% from a year ago (5.39 million in July 2018).
The median existing-home price for all housing types in July was $280,800, up 4.3% from July 2018 ($269,300). July’s price increase marks the 89th straight month of year-over-year gains.
Total housing inventory at the end of July decreased to 1.89 million, down from 1.92 million existing-homes available for sale in June, and a 1.6% decrease from 1.92 million one year ago. Unsold inventory is at a 4.2-month supply at the current sales pace, down from the 4.4 month-supply recorded in June and down from the 4.3-month supply recorded in July of 2018.
Properties typically remained on the market for 29 days in July, up from 27 days in June and up from 27 days in July of 2018. Fifty-one percent of homes sold in July were on the market for less than a month.
Source: National Association of Realtors
What Happened to Rates Last Week?
Mortgage backed securities (FNMA 3.500 MBS) lost -15 basis points (BPS) from last Friday's close which caused fixed mortgage rates to remain at their best (lowest) levels of 2019 for the fourth week in a row.
Overview: We had a very limited amount of economic data that hit, but what did get released was strong. The markets focused on our Federal Reserve and the continued soap opera that is the trade negotiations between the U.S. and China. On the Federal Reserve front, both the Minutes from the last Fed meeting and live speeches from Fed Chair Powell and numerous district Fed Presidents made it clear that the Fed is not on a predefined path to lower their Fed Fund Rate (which are NOT mortgage rates).
The Talking Fed: Fed Chair Jerome Powell spoke at the Fed's Jackson Hole WY Economic Symposium. You can read the official release HERE
Here are few key highlights from his speech:
We also got the Minutes from the last FOMC meeting where the Fed cut their interest rate by 1/4 point but saw 2 dissenting votes which is rare. You can read the official release HERE.
Here are a few key observations from reading the Minutes:
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
Vacant properties in the United States totaled 1,530,563, according to the results of ATTOM Data Solutions’ Vacant Property and Zombie Foreclosure Report. The figure represents 1.6% of all homes.
Meanwhile, more than 304,000 homes faced foreclosure in Q3 2019, and 3.2% of these properties were in the process of "zombie" foreclosures. Owners have abandoned over 9,600 zombie homes nationwide.
"The blight of vacant, decaying properties facing foreclosure has declined dramatically across the United States – another good-news offshoot of the housing boom that's gone on for eight years," said ATTOM Chief Product Officer Todd Teta.
Washington, D.C., had the highest share of zombie foreclosures (12.5%). Maine (8.5%), Kansas (7.6%), and New Mexico (7%) rounded out the list of the states with the greatest number of homes facing foreclosure.
New York still had the highest number of vacant properties at 2,428, followed by Florida (1,634), Illinois (985), Ohio (891), and New Jersey (463).
"A handful of areas still face notable problems with homes abandoned by owners after they get hit with foreclosure claims," Teta said. "But with the economy improving and the housing market still hot, an expanding number of neighborhoods across the country face little or no problem with these so-called zombie properties."
Source: ATTOM Data Solutions
What Happened to Rates Last Week?
Mortgage backed securities (FNMA 3.500 MBS) gained +16 basis points (BPS) from last Friday's close which caused fixed mortgage rates to remain at their best (lowest) levels of 2019.
Overview: The major economic reports for the week are actually quite positive and therefore negative for rates with much stronger than expected Retail Sales data and an uptick in inflation (CPI). However, this was more that offset with concern over the trade war between the U.S. and China. Which continued to make U.S. bonds very desirable as a safe-haven during this uncertain time. This strong need for safety (preservation of capital) keep demand high for our bonds which in turn, kept our rates low for yet another week.
Retail Sales: The July data set was a block-buster at more than double the market expectations. Headline Retail Sales hit 0.7% vs est of 0.3%. Ex-Autos, Retail Sales were up 1.0% vs est of 0.3%. The Control Group saw a 1.0% MOM increase vs est of 0.3%. Very strong data.
Inflation Nation: The July Consumer Price Index was a little hotter than expected. The headline CPI YOY hit 1.8% vs est of 1.7% and when you strip out food and energy, the Core CPI YOY was 2.2% vs est of 2.1%
Taking it to the House: New Housing Starts were lighter than expected (1.191M vs est of 1.257M) but the good news is that Single Family Residences actually increased by 1.9% to an annualized pace of 876K. Building Permits were higher than expected (1.336M vs est of 1.270M). Again, the bright spot is the SFR sector with a solid rise to 838K on an annualized basis. The August NAHB Home Builders Market Index came in at 66 vs est of 65. A very robust reading. Weekly Mortgage Applications shot up by a whopping 21.7%. Refinance Applications led the way with an increase of 37.0%. Purchase Applications increased by 2.0%
Consumer Sentiment: The University of Michigan's Consumer Sentiment Index Survey was very low for their preliminary August reading (92.1). However, what is interesting is that inflation expectations among consumers moved higher to 2.7% over the next 12 months.
Inflation Nation: The Headline Producer Price Index matched market expectations with a 1.7% pace. But the Core (ex food and energy) was lighter than expectations with a 2.1% vs 2.4% reading. It was still above 2% though.
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
Baby boomers, ages 55-75, have long been migrating to Southern states as they enter retirement years. Now a new study shows wealthy Generation X, ages 40-54, are doing much of the same.
SmartAsset.com, published a new study reveals how wealthy Gen X-ers are moving to Southern states.
According to the study, six of the top ten states where wealthy Gen X-ers are moving to are in the South, with Washington as the outlier.
Northeast has become widely unpopular with wealthy Gen X-ers. Most of the outflow is coming from Northeast states, four of which are New Jersey, Massachusetts, Pennsylvania, and New York.
To determine the relocation of rich Gen X-ers, SmartAsset examined inflow and outflow data of people ages 35 to 54 with adjusted gross incomes of at least $100,000.
SmartAsset didn't discuss the cause behind the Gen-Xer exodus from the Northeast. But one of the factors could have something to do with the removal of state and local tax (SALT) deductions, disproportionately affecting high-tax, or Democrat, states (in the Northeast).
This has direct implications on regional housing dynamics as property tax also falls under the cap. Capping the deduction will mean reduced tax incentives for home-ownership. Indirectly, households will want to live in lower-income tax states (in the South) as they approach or enter their retirement years to hang on to more of their savings.
What Happened to Rates Last Week?
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Mortgage backed securities (FNMA 3.500 MBS) gained lost -22 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slightly higher from the prior week, but we are still at the second best (lowest) levels of the year for rates. Central Bank Palooza: The Reserve Bank of New Zealand lowered their key interest rate from 1.50% down to 1.00%. The market was expecting a decrease down to 1.25%. The Reserve Bank of Australia kept their key interest rate at 1% which was expected.
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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
Consumers can be picky when it comes to every day shopping, often times buying something online or from a different store just to save a few dollars. But when it comes to comparing and shopping for mortgage rates, consumers appear to be less picky.
According to a new Fannie Mae survey, around a third of homeowners are not taking the time to look around for the best mortgage loans on the market.
In the first quarter of 2019, only 28% of buyers measured three mortgage quotes, Fannie Mae’s survey said. And the numbers drop dramatically for those who compared four loans (7%) and five loans (2%).
The report’s data reinforced Fannie Mae’s prior findings, which showed that many consumers “lack knowledge about mortgage basics.” A 2018 survey revealed that many consumers overestimated the minimum credit score and down payment needed to qualify for a mortgage.
According to Fannie Mae, two thirds of home-buyers sought multiple mortgage quotes in the first quarter. Breaking down those numbers showed how rate-shopping helped a significant portion of consumers to get more favorable outcomes.
Of that number, 47% of homeowners were able to negotiate their interest rates—and 36% were successful in that regard. Mortgage loan searchers also found success in negotiating discount points, with 20% engaging in negotiations while 13% successful.
What Happened to Rates Last Week?
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Mortgage backed securities (FNMA 3.500 MBS) gained just +47 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move lower from the prior week and hit their lowest levels of the year. The Talking Fed: The much awaited Fed action finally happened. You can read their official policy statement here. Here is a summary:
Here is the tale of the tape: Jobs: July Non Farm Payrolls 164K vs est of 164K June Non Farm Payrolls revised from 224K down to 193K May Non Farm Payrolls revised from 72K down to 62K This makes the more closely watched rolling three month average 140K Wages: The Average Hourly Rate moved upward by 8 cents to $27.98. The MOM change is 0.3% vs est of 0.2% The YOY change is 3.2% vs est of 3.2% Unemployment: The U3 Unemployment Rate remained at 3.7% which was expected The Participation Rate moved from 62.9% to 63.0% The number of long-term unemployed dropped by 248K The U6 Unemployment Rate dropped to 7.0% which is very low. Overall, this was a very solid report.
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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
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By Taff Weinstein at
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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:
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%. What Happened to Rates Last Week?
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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. 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. Among the various indicators suggesting a solid, stable, expanding economy, the Beige Book notes that:
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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. |
