But BTIG/Homesphere‘s latest survey from small- and mid-sized homebuilders casts a light shadow on this bright overview. The monthly BTIG Survey indicates that building activity among smaller homebuilders cooled slightly from April to May, though sentiment remains much higher than last year.
The survey solicits the perspective of approximately 75-125 small- and mid-sized tract homebuilders nationally about sales, customer traffic, and pricing trends (117 responses this month).
Sales and traffic trends were a mixed bag in May. After big jumps in sales trends since the winter slump, the number of builders reporting year-over-year growth was 34% in May, up from 31% in April 2023. Traffic was down slightly, with 30% of builders reporting higher community traffic year-over-year compared to 34% in April 2023. Both metrics are considerably better than May 2022. Meanwhile, 39% saw a drop in orders vs. 34% in April and 53% in May 2022.
“Our survey suggests new home demand momentum slowed in May. We had expected stronger results this month given easing comparisons and positive anecdotal public builder commentary…the May uptick in 30-year mortgage rates may have also impacted trends,” commented Carl Reichardt, an analyst at BTIG.
Sales and traffic relative to expectations weakened a bit as well, with 37% of respondents seeing sales as better than expected vs. 38% last month. Meanwhile 26% saw sales as worse than expected, vs. 20% last month. On traffic, 35% saw better-than-expected traffic, with 23% reporting worse-than-expected traffic (compared to 42% and 15%, respectively, last month).
Builder pricing activity remained mixed. One-third of builders reported raising either “most/all” or “some” base prices, up from 30% in April. And 19% of builders lowered “most/all” or “some” base prices compared to 17% in April. Per the survey, 27% of respondents reported increasing “most/all” or “some” incentives, versus 22% in April. Only 3% reported decreasing “most/all” or “some” incentives compared to 7% in April. No builder reported decreasing “most/all” incentives in May.
“We believe builders have likely kept a careful eye on prices and incentives as they tracked traffic and buyer interest during the key spring selling season (typically February through May),” Reichstadt wrote. “We believe this is likely particularly true for private builders with more focus on mid level price points as opposed to low-end, volume-oriented public builders, who we believe have generally been very aggressive on pricing/incentives.”
Here we go with another week. Mortgage rates are holding steady as we kick things off, which is a trend that could persist for the entirety of the week as there’s very little significant economic data out to stir up the pot. Read on for more details.
Where are mortgage rates going?
Rates poised to stay near current levels for now
If you’re getting a little tired of hearing about the escalating trade tensions between the U.S. and China, you’re forgiven.
It seems that for the past month this story has ebbed and flowed in and out of the news headlines, and it’s somewhat difficult to muster up the same excitement for it as the first time it appeared.
However, we did get a hard development on Friday when President Donald Trump approved tariffs of 25% on nearly $50 billion of Chinese goods. This caused officials in Beijing to take retaliatory measures against the U.S. equaling the same value.
Financial market participants reacted by moving money more into the perceived safety of government bonds, pushing Treasury yields lower.
The yield on the 10-year Treasury note, which is the best market indicator of where mortgage rates are going, is currently at 2.91%.
There have been some slight adjustments here and there but overall that yield has remained around 2.90% for all of June. Mortgage rates typically move in the same direction as the 10-year yield, and while we’ve seen mortgage rates bounce around a little more than the 10-year yield, they’ve still remained in a fairly tight range this spring.
Looking at the economic calendar for this week, there’s really no major economic reports that could send rates sprawling up or down. It’s more likely than not that the political realm will play more of an influence.
There are also several speaking engagements from Federal Reserve officials, and it will be interesting to hear what they have to say after last week’s FOMC decision to raise the nation’s benchmark interest rate by a quarter-point.
So what does all of this mean for mortgage rates this week? In all likelihood, mortgage rates will continue to hover around current levels over the next five days.
Rate/Float Recommendation
Lock before rates rise
Mortgage rates have been hanging around a fairly tight range for the past few weeks and could very well continue to do so over the next several trading sessions.
However, the Federal Reserve did raise the federal funds rate last week and could potentially follow through with two more increases this year. That sets the stage for mortgage rates to finish out the year at levels that are much higher than where they are now.
For this reason, we are recommending that anyone looking to purchase a new home or refinance their current mortgage should try to lock in a rate sooner rather than later.
Learn what you can do to get the best interest rate possible.
Today’s economic data:
Fedspeak
Atlanta Fed President Raphael Bostic at 1:00pm
San Francisco Fed President John Williams at 4:00pm
Notable events this week:
Monday:
Tuesday:
Fedspeak
Housing Starts
Wednesday:
Existing Home Sales
EIA Petroleum Status Report
Thursday:
Jobless Claims
Philadelphia Fed Business Outlook Survey
FHFA House Price Index
Friday:
PMI Composite Flash
*Terms and conditions apply.
Carter Wessman
Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.
The existing home sales market is a face on a milk carton, and homebuilders are salivating at the opportunity to meet strong consumer demand. So why aren’t they?
New data from the U.S. Census Bureau speaks to the growing strength of the new home market, which stands in stark contrast to the moribund re-sale market. May’s housing starts rate was actually the highest since April 2022, which was then the highest since 2006.
Let’s dive in a little deeper. Get a load of these figures:
Privately‐owned housing starts in May were at a seasonally adjusted annual rate of 1.63 million, 21.7% above the revised April estimate of 1.34 million and 5.7% above the May 2022 rate of 1.54 million. The 291,000-unit monthly increase in starts was the most since January 1990, and the 21.7% rise was the largest percentage gain since October 2016.
Single‐family housing starts in May were at a rate of 997,000; 18.5% above the revised April figure of 841,000. The May rate for units in buildings with five units or more was 624,000. Interestingly, the share of single-family housing starts dropped to 61.5% of total housing starts over the past 12 months through May, the lowest share since 1986. The share of multifamily starts in buildings of 5+ units rose to 38.7%, the highest share since 1974.
Privately‐owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 1.491 million. This is 5.2% above the revised April rate of 1.41 million but is 12.7% below the May 2022 rate of 1.7 million. Single‐family authorizations in May were at a rate of 897,000; this is 4.8% above the revised April figure of 856,000. Authorizations of units in buildings with five units or more were at a rate of 542,000 in May.
Currently there are 695,000 single-family units under construction, which is actually 136,000 units below the peak in May 2022. And there are currently 994,000 multifamily units under construction, the highest level since 1973.
Homebuilders are now completing more single-family homes than they are starting, but starting more multifamily units than they are completing. The latter is likely due in part to construction delays and stalled projects, but the permitting data suggests builders in single-family and multifamily see different levels of opportunity.
The industry probably won’t hit the extreme highs of 2022 in terms of housing starts, but multifamily is still booming. We’ll likely see a lot of units delivered later this year and into next year, though I would keep an eye on banks pulling back on construction financing, which could sharply reduce completions.
Single-family construction deliveries, meanwhile, will likely be more muted. That’s despite various housing economists projecting existing home sales to fall about 20% in May. (We’ll know more when the existing home sales report is released on Thursday and new home sales next week.)
In other words, the multifamily deliveries will likely relieve pressure in the form of rents and help with overall supply, but the inventory deliveries likely won’t do much for the sales market. And we still have a long way to go in meeting overall housing demand.
Homebuilders today have a big advantage. Their products now comprise about 30% of the sales market — nearly three times the normal rate — and that’s because there’s so few total homes. Cancellation rates among national homebuilders are now down to about 9% (you may recall that KB Homes reported a cancellation rate of 68% in Q4 2022) and the vast majority of them can throw major incentives like mortgage rate buydowns at choice-restricted homebuyers. The few existing homeowner sellers aren’t incentivized to negotiate much, and there’s no reason to think they will for a long while.
So why aren’t builders going even harder, particularly with single-family homes? The answer won’t shock you: beyond their own specific profit incentives, in much of America, it is simply way too hard to build a home, and way too expensive. Zoning restrictions, inane building code regulations/restrictions, NIMBYs and the weaponization of environmental laws have resulted in housing death by a thousand cuts. A nation doesn’t end up with a shortage of 6 million-plus homes by accident.
We’ve talked before about the regional disparities in inventory – the demographic trends for housing look strong through at least 2030, but also look at where we are building, courtesy of John Burns Research & Consulting.
State legislatures and governors on the coasts have failed to address their respective housing crises, particularly by allowing suburban towns to block housing. They desperately need to institute reforms and override local control.
It will certainly be an uphill battle. While homebuilders stick shovels in the suburbs and exurbs of the Sunbelt, few new homes are being built in the Northeast or on the West Coast.
New York Gov. Kathy Hochul failed to get her YIMBY-friendly housing package through the legislature, though the sought reforms — which include mandating housing in the suburbs by overriding local zoning rules — are hopefully a future reference point for housing policy changes. And in California, Gov. Gavin Newsom in late September signed into law a major reform to homebuilding in the state, which will override local zoning codes to allow more affordable housing units to be built on commercially zoned land. He’s also looking to limit the procedural scope of the environmental law known as CEQA, which has been used to kill all sorts of projects in California. But under Newsom, California has built roughly 500,000 total housing units in six years. In a healthier market with fewer constraints, that figure would be closer to 2 million.
With arguably fewer incentives than ever for existing homeowners to sell, homebuilders must be able to maximize their productivity and build where demand is strong. Permit reform and policy changes alone won’t be enough to create millions of new housing units, but you gotta start somewhere.
Share your thoughts on permit reform and housing policies that would result in more housing by emailing me at [email protected].
In our weeklyDataDigest newsletter, HW Media Managing Editor James Kleimann breaks down the biggest stories in housing through a data lens. Sign up here! Have a subject in mind? Email him at [email protected]
It’s back to work after the holiday but mortgage rates aren’t really moving around much. The big economic event of the week will happen tomorrow morning when the monthly jobs data for June gets released. We could certainly see mortgage rates move around when that happens so keep an eye out for any market adjustments. Read on for more details.
Where are mortgage rates going?
Rates decline in Freddie Mac PMMS
After being closed on Wednesday for July 4th, the markets are open again. As one would expect, it’s a fairly quiet day, keeping mortgage rates basically unchanged.
Current mortgage rates have bounced around a little this week but are still staying in a narrow range. It was good news for anyone looking to purchase or refinance today as the Freddie Mac Primary Mortgage Market Survey (PMMS) showed that rates declined again. Here are the numbers:
The average rate on a 30-year fixed rate mortgage fell three basis points to 4.52% (0.5 points)
The average rate on a 15-year fixed rate mortgage sunk five basis points to 3.99% (0.4 points)
The average rate on a 5-year adjustable rate mortgage dropped thirteen basis points to 3.74% (0.3 points)
Here is what the Freddie Mac Economic and Housing Research Group had to say about rates this week:
“After a rapid increase throughout most of the spring, mortgage rates have now declined in five of the past six weeks.
The run-up in mortgage rates earlier this year represented not just a rise in risk-free borrowing costs, but for investors, the mortgage spread also rose back to more normal levels by about 20 basis points. What that means for buyers is good news. Mortgage rates may have a little more room to decline over the very short term.
Although the current economic expansion is in its 10th year, residential single-family real estate was initially slow to recover. Now, backed by the demographic tailwind provided by millennials reaching the peak age to buy their first home, the housing market should have some room to grow going forward.”
Rate/Float Recommendation
Lock while rates are down
Mortgage rates have stayed in a tight range these past couple of months but are still expected to move higher later this year as the Fed brings the nation’s benchmark interest rate up.
If you are thinking about buying a home or refinancing your current mortgage, we strongly recommend that you take advantage of today’s environment and lock in a rate.
Learn what you can do to get the best interest rate possible.
Today’s economic data:
ADP Employment Report
The ADP Employment Report showed that 177,000 jobs were added to the U.S. economy in June. That’s slightly below the 190,000 that analysts had projected. The ADP report is the precursor to the more influence jobs report that will be released tomorrow morning. The two reports don’t always sync up, so it’s hard to make any assumptions about tomorrow’s numbers.
Jobless Claims
Applications filed for U.S. unemployment benefits for the week of 6/30/18 came in at 231,000. That puts the four-week moving average at 224,500. Claims have been getting higher recently, but analysts are still expecting a strong jobs report tomorrow.
PMI Services Index
The PMI Services Index came in exactly as expected at 56.5.
ISM Non-Mfg Index
The ISM Non-Mfg Index struck a 59.1 in June. That’s basically right in line with what was expected.
FOMC Minutes
The FOMC Minutes from the Fed’s meeting a few weeks ago will be released this afternoon at 2pm. It’s always possible that investors will make some trades based on the details that are revealed.
EIA Petroleum Status Report
For the week of 6/29/18:
Crude oil: 1.2 M barrels
Gasoline: -1.5 M barrels
Distillates: 0.1 M barrels
Notable events this week:
Monday:
PMI Manufacturing Index
ISM Mfg Index
Construction Spending
Tuesday:
Wednesday:
Markets Closed: July 4th
Thursday:
ADP Employment Report
Jobless Claims
PMI Services Index
ISM Non-Mfg Index
FOMC Minutes
EIA Petroleum Status Report
Friday:
Employment Situation
International Trade
*Terms and conditions apply.
Carter Wessman
Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.
In the charming Sonoma County town of Sebastopol, roughly 50 miles north of San Francisco, amidst picturesque landscapes, rolling hills, vineyards, and apple orchards, sits an enchanting two-parcel, 8.82-acre property with a very unique claim to fame.
The larger parcel, spanning 7.32 acres, was once owned by Charles M. Schulz, the creator of the beloved comic strip Peanuts, and still houses the cartoonist’s former studio, which has been carefully preserved — and turned into an inviting one-bedroom home.
It’s now being brought to market for the very first time in 47 years. Asking $3,950,000, the former studio and the land that surrounds it is listed with Mark Stevens and Gail Gijzen, affiliated with the Sebastopol office of Coldwell Banker Realty.
Schulz had the studio built in 1966 and used it as a creative space where he penned the adventures of beloved characters like Charlie Brown, Snoopy, and the rest of the “Peanuts” gang. His house at the time sat on an adjacent lot that was part of the same property, which was later broken down into several lots due to its massive size.
“The main house where the Schulz family lived was initially part of the same property as the art studio,” says one of the property’s current owners, Eric Rogers, whose grandparents bought the property 47 years ago.
His father, Timothy Rogers, chimes in to provide a little more background on just how massive the Schulz estate was back in the day: “Schulz’s property encompassed roughly 27 acres with the main house, the grandmother’s house and other structures including a large pond, baseball field, miniature golf course, large swimming pool and an enclosed entertainment pavilion.”
“The studio was the last structure built at the western end of the property, isolated on a dead-end road with surrounding vineyards and apple orchards and a tight-knit group of neighbors.”
Charles Schulz’s art studio lives on as a one-bedroom home
The midcentury modern home was built by Steele & Van Dyk, the same architecture firm that built the Redwood Empire Ice Arena (more commonly known as “Snoopy’s Home Ice,” now part of the Charles M. Schulz Museum in Santa Rosa, CA) where Schulz held annual hockey tournaments and hosted tennis exhibitions.
“My grandparents, Don & Helen Rogers, bought the property in 1976,” Eric Rogers tells us.
“My grandfather was intrigued when he saw an ad in the paper about a property belonging to a famous celebrity for sale in Sebastopol. Out of curiosity, he made an 80-mile trip from where they lived and discovered it was owned by Charles Schulz. The original property was divided into three sections: the main house, recreational area, and art studio. My grandparents ended up buying the art studio parcel which included the golf course.”
SEE ALSO: You can rent Walt Disney’s storybook house in Los Angeles – but it won’t be cheap
The original 7+ acre property has been in their family ever since, and there have been many discussions over the years about whether or not to enlarge the existing structure. But in the end, their love for the history behind the studio surpassed any desire to change the home.
Instead, they made minor enhancements meant to make the small house more livable.
Changes to the home include the addition of a stove/oven and custom-matched cabinetry in the kitchen on the opposite wall of the sink, Velux skylights installed in the kitchen, living room, bathrooms, and bedroom. All windows and sliding exterior doors were replaced with double-pane insulated glass but the Rogers made sure not to alter the nature of the design and had them all custom-made to match the unique originals.
In what was the original art studio space, some of the shelves and drawers were removed to accommodate a recessed king-size bed.
The end result is an inviting one-bedroom home with one full bath and a powder room, a stone fireplace, and 1,176 square feet of living space. Since the owners weren’t living on the property, they turned it into a licensed vacation rental for a few years.
“We started renting out the property in April 2016 and have had a growing number of people stay year after year. We ended up booking more people than we imagined — mostly couples looking for a romantic getaway to the wine country,” Eric says. “We stopped renting in 2022.”
While they always wanted to enjoy the property as it was originally designed, the family has long considered building an additional structure. They purchased an adjoining lot that can be developed but decided to keep it as an open space instead, and they’re now including that vacant parcel of land (spanning 1.5 acres) in the sale.
The 8.82-acre property is now hitting the market for $3.95M
While Charles M. Schulz’s former studio may be the centerpiece, the entire property is a semi-secluded paradise.
“The grounds are a combination of a four-hole golf course, Redwoods groves, walking trails surrounded by numerous rhododendrons, azaleas, camellias, dogwoods, numerous varieties of ferns, fruit trees and a vast variety of flowers,” Timothy Rogers tells us.
“After I retired as a helicopter pilot over two decades ago, I have developed and taken care of the landscaping as a labor of love. I will miss all those moments of sheer beauty that I have experienced at the passing of each season and sharing all that time with the wildlife that has shared it with me.”
And Timothy’s labor of love is showcased throughout the sprawling property, whose beautifully landscaped grounds are accented by walking trails with wood-carved benches and statues.
There’s also a massive deck (approximately 1,340 square feet) and a 4-hole, par-3 golf course that dates back to Schulz’s ownership — one that the Rogers family has revamped after it was left in disrepair.
It wasn’t uncommon for them to find golf balls owned by Schulz’s many famous friends. They found golf balls with names like Bob Hope, Bing Crosby, and Robert Mitchum inscribed on them, hinting at the many star-studded charity tournaments that once took place on the property.
The Peanuts creator’s ties to his former art studio haven’t been fully severed over the years. Schulz’s two sons would occasionally stop by to visit and reminisce.
“The sons have come by the property at different times to take trips down memory lane. It sounded like the childhood we all dream of — living on a large property amongst beautiful redwoods and surrounded by animals and livestock,” Eric shares.
“They would tell hilarious stories about driving their dirt bikes up and down the property and riding horses. It is rumored that the family hosted charity events on the golf course that drew in celebrity friends. Their love and effort went into building this amazing and magical place that we got to share as a family for decades.”
Now, it’s time for a new family to create memories here.
After 47 years and three generations of ownership, Eric and Timothy Rogers are selling the property for $3,950,000, and have enlisted the help of Mark Stevens and Gail Gijzen, affiliated with the Sebastopol office of Coldwell Banker Realty, to find the right buyer.
“We have built memories here that we’ll cherish forever. It is the perfect place to find serenity without being too far from civilization,” Eric tells us. “But the time has come for someone new to find a home here. We know they’ll love it as much as we have, and hopefully, continue the legacy that was left to us by the Schulz family when they created this loving place that we were fortunate to help build upon.“
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We’re expecting mortgage rates to remain in a tight range this week but we could see some slight movement as the economic reports roll out. The most important report for investors will be the monthly jobs report on Friday morning. That report always has the potential to influence where mortgage rates go. Read on for more details.
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Market Outlook 7.2.18 from Total Mortgage on Vimeo.
Where are mortgage rates going?
Rates inch lower to start holiday shortened week
Here we go with another week. U.S. financial markets are closed for July 4th on Wednesday, but we still have several economic reports out that could influence mortgage rates, including the monthly jobs report for June on Friday morning.
That report is always one of the biggest market moving pieces of economic data each month, and there’s no reason to believe that this time around will be different. Analysts are calling for an increase of 191,000 jobs to the U.S. economy.
That’s a solid reading that would likely put some upward pressure on mortgage rates. Typically, positive economic data signals to investors that they can take on more risk, pushing money out of bonds and into stocks.
Mortgage rates are largely tied to long-term government bond yields, such as the 10-year Treasury yield. When demand for these bonds lessens, yields rise and bring mortgage rates with them.
Rate/Float Recommendation
Lock before rates rise
What happens this week largely depends on the monthly jobs report on Friday. If the numbers come in as expected, it would signal to the Fed that the U.S. economy is strong enough to follow through with the two more rate increase projected for this year.
That would likely cause investors to move out of bonds and into stocks, bringing mortgage rates higher.
Learn what you can do to get the best interest rate possible.
Today’s economic data:
PMI Manufacturing Index
The PMI Manufacturing Index hit a 55.4 in June. That’s slightly above the level that analysts had predicted.
ISM Mfg Index
The ISM Mfg Index came in at a 60.2 for June. That’s just above the mark that analysts had expected.
Construction Spending
Construction spending for May rose by 0.4%, putting it at 4.5% year over year.
Notable events this week:
Monday:
PMI Manufacturing Index
ISM Mfg Index
Construction Spending
Tuesday:
Wednesday:
Markets Closed: July 4th
Thursday:
ADP Employment Report
Jobless Claims
PMI Services Index
ISM Non-Mfg Index
FOMC Minutes
EIA Petroleum Status Report
Friday:
Employment Situation
International Trade
*Terms and conditions apply.
Carter Wessman
Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.
What I am hoping for is that higher rates create more days on the market, cool price growth down, and at some point this year, we stop being negative and be positive on a year-over-year basis. We started the year out at all-time lows and it got worse as the year went on. Seasonal inventory is about to rise, so let’s hope for the best.
HousingWire: Do you think more reports, like the one from the Dallas Fed, will start to use the word bubble?
Logan Mohtashami: Whenever home prices are rising, and then rates rise, people look up the term Housing Bubble; it’s the nature of the beast. I liked the Dallas Fed’s article; I thought they were much calmer about the housing market than I am. However, the demand curve of what we have in housing too doesn’t resemble the speculation demand curve of what we saw from 2002-to 2005. So the type of massive decline in sales in such a short term isn’t going to happen.
A good example is last week’s purchase application data was up 1% week to week, which was down 3% week to week. Even today, we aren’t even at 2002 levels in the MBA index. So the type of boom and bust we would need to see to reflect bubble speculation demand isn’t in this market like we saw from 2002-to 2005. Housing peaked in 2005 and then declined for many years.
Also, the LTV data lines are much different:
Mortgage credit can’t get too tight in relation to where the demand is currently.
HousingWire: The 3rd recession red flag is raised, what should be looked at now going ahead?
Logan Mohtashami: Yes, the 3rd recession red flag was raised. The Inverted Yield curve, which I was on watch for since Thanksgiving of 2021.
My first three recession red flags are more about the progression of an economic expansion that has matured. The next 3 are much more important. Leading Economic Index, typically falls 4-6 months into every recession, barring a shock-like COVID-19. We are still okay here.
These are the components of this index:
HousingWire: Why do you believe higher rates are a good thing for housing?
Logan Mohtashami: New home sales and housing starts typically fall in a recession. We do have risk toward this sector now with rising rates, so this sector needs a close eye on.
Higher rates are a must because the way we were heading, we would have easily had 40% home price growth in 3 years with inventory looking to start a fresh new all-time low in 2023. This is not a positive for the housing market but a real net negative.
The only thing we have that can cool down housing is higher rates. So, since I lost my five-year growth 23% cumulative price growth model in two years, I need to see inventory rise and prices cool off. We need balance, and we don’t have any in our housing market.
Sub 4% rates weren’t creating any balance; they made things worse, and so sticking to my 2020, then what can cool down housing? A 10-year yield over 1.94% will, we got there, and for me, it’s a good thing.
HousingWire: To end, are homebuilders at risk in this higher rate world?
Logan Mohtashami: Yes, the builders have many homes that haven’t been finished yet, and rates have gone up 1.50% – 2% on these people. We need to keep an eye out on the cancelation data in the upcoming months.
Higher rates are alarming for the builders; their stocks are down big, much like in 2018. This is a risk to housing construction because 5% mortgage rates paused construction for 30 months back then.
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Here we go with another week. The Federal Reserve announcement on Wednesday is the big even over the next few days so it’s important to keep an eye out for that. Overall, we think that mortgage rates will move slightly higher, so borrowers should take action soon. Read on for more details.
Where are mortgage rates going?
Fed Meeting in Focus
It’s a slow start to the week today with no significant economic data out of release. We will see the news-feed pick up as we move through the week, though, as the Federal Open Market Committee will convene for a two-day meeting starting on Tuesday.
The event will wrap up on Wednesday with a written statement at 2:00pm and a press conference with Fed Chair Jerome Powell at approximately 2:30pm.
Financial market participants are largely anticipating a quarter-point increase to the nation’s benchmark interest rate, the federal funds rate, bringing the target range up to 1.75%-2.00%.
Given this expectation, market participants have already priced in the change, so we aren’t expecting any major market reactions on Wednesday when the formal decision gets announced. In general, the Fed is projected to signal a calming message of gradual rate hikes.
It’s really a matter of what actually happens at this point. If the Fed comes out and does exactly what everyone thinks they will do, then we should get a fairly smooth day with rates making a little push higher, but no major swings.
However, all it takes is one word in the written statement or a slightly provocative remark from Fed Chair Powell during his Q & A to stir up some fuss in the markets.
If I had to bet on it, I would say that things will go as planned, but that certainly won’t stop me from tuning in to find out if there are any surprises.
Rate/Float Recommendation
Lock before rates rise
Mortgage rates have been fairly flat over the past couple of weeks, but we do anticipate that they will finish out the year higher than where they are now. For this reason, we strongly recommend that anyone looking to purchase a new home or refinance their current mortgage does so sooner rather than later.
Learn what you can do to get the best interest rate possible.
Today’s economic data:
Notable events this week:
Monday:
Tuesday:
FOMC Meeting Begins
NFIB Small Business Optimism Index
Consumer Price Index
Wednesday:
PPI-FD
EIA Petroleum Status Report
FOMC Meeting Announcement
Thursday:
Jobless Claims
Retail Sales Import and Export Prices
Business Inventories
Friday:
Empire State Mfg Survey
Industrial Production
Consumer Sentiment
*Terms and conditions apply.
Carter Wessman
Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.
Unlike a typical spring homebuying season in which sellers are also looking to buy a home, people trying to relocate into a bigger or smaller home in the Mid-Atlantic region made up a relatively small share of the housing market.
Move-up buyers made up just 11% of sellers in May, while those looking for a smaller home accounted for 12% of all sellers. In comparison, 32.4% of sales were rental or investment properties or second homes, according to a survey of 1,063 listing agents.
“With inventory so low and many homeowners reluctant to give up their extremely low mortgage rates, everyone is wondering where new listings are going to come from. We’re starting to see more sellers who are listing second homes and investment properties,” said Lisa Sturtevant, the chief economist of Bright MLS, which conducted the survey.
Sturtevant noted that as workers are being called back to the office, fewer people are able to take advantage of those vacation getaways that were acquired during the pandemic, at a time when remote work was ubiquitous. Simultaneously, the short-term rental market has also slowed down, prompting some sellers to offload homes they had purchased specifically for that market.
According to Bright MLS, 56.5% of buyers in the region paid above the seller’s original list price. On average, these buyers paid 5.6% above the asking price and the most competitive segment of the market was among homes priced in the $500,000 to $699,999 range, where nearly two-thirds (62.9%) of all homes sold for more than the original asking price.
With limited inventory, it’s difficult to find a home: 45.8% of first-time homebuyers said they had a “very” or “somewhat” difficult time finding the right home. Lastly, buyers will outnumber sellers for the foreseeable future in the Mid-Atlantic region, according to Bright MLS. This month, 41% of survey respondents indicated that buyer activity would be “high to very high” in the next three months, down from 47.2% a month ago.
It’s been a good week for borrowers as mortgage rates have improved slightly thanks to easing political tensions in Italy. Rates are expected to rise over the coming weeks and months so if you’re looking to buy or refinance, you should do it soon. Read on for more details.
Where are mortgage rates going?
Mortgage fall in Freddie Mac PMMS
It’s good news for anyone looking to buy a home or refinance their current mortgage as mortgage rates fell for the second consecutive week in this week’s Freddie Mac Primary Mortgage Market Survey. This now puts the average rate on a 30-year fixed rate at a 7-week low. Here are the numbers:
The average rate on a 30-year fixed rate mortgage fell two basis points down to 4.54% (0.5 points)
The average rate on a 15-year fixed rate mortgage slid five basis points to 4.01% (0.4 points)
The average rate on a 5/1-year adjustable rate mortgage dropped six basis points to 3.74% (0.4 points)
Here is what the Economic and Housing Research Group at Freddie Mac had to say about rates this week:
“Mortgage rates dipped for the second consecutive week.
Homebuyers have taken advantage of the recent moderation in rates, which led to a 4 percent increase in purchase applications last week.
Although demand has remained steadfast against the backdrop of this year’s higher borrowing costs, it’s important to note that the growth rate of purchase loan balances has moderated so far this year – and particularly since March. This slowdown indicates that buyers are having difficulty stretching to keep up with the pace of home-price growth.
While the very healthy job market continues to fuel interest in buying a home, the supply shortages in most markets are pushing prices higher and currently keeping sales at a standstill. Listings for new and existing homes need to increase in the months ahead to moderate price growth and reignite sales activity.”
Rate/Float Recommendation
Lock before rates rise
Mortgage rates are down to levels that haven’t been seen for almost two months. This is clearly great news for anyone who is about to buy a new home or refinance their current mortgage. However, mortgage rates are expected to tick back up in the coming weeks and months so you’ll want to take action soon to avoid the risk of locking in a higher rate.
Learn what you can do to get the best interest rate possible.
Today’s economic data:
Jobless Claims
Applications filed for U.S. unemployment benefits fell 1,000 from the prior week putting them at 222,000.
Notable events this week:
Monday:
Factory Orders
Tuesday:
PMI Services Index
ISM Non-Mfg Index
JOLTS
Wednesday:
International Trade
Productivity and Costs
EIA Petroleum Status Report
Thursday:
Jobless Claims
Friday:
Wholesale Trade
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Carter Wessman
Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.