And who could blame them…what with their entire financial system in complete disarray.
The Greek situation is a mess, as you’ve probably heard. The government has fallen behind on its payments to creditors and citizens have made a run on the banks.
There’s apparently no money left to lend (probably no new mortgages) and maybe very little to withdraw.
In fact, the government limited cash withdrawals at ATM machines to 60 Euros per day for Greek residents.
Tourists aren’t limited, but with lines around the block and tapped out cash machines, they’re effectively in the same boat. Can’t wait to visit soon!
Greeks aren’t allowed to transfer money to foreign accounts either, and there are widespread reports of credit and debit transactions being declined.
A Greek once told me (true story) that they didn’t realize you actually had to pay credit cards back, which might explain why they’re in their current dire situation.
In a word, it’s a mess and it doesn’t appear to be getting any better unless a deal is made. Given all the chaos, you might be wondering how Greek homeowners are handling the turmoil.
Greek Mortgage Defaults Rising
As you might expect, more and more Greek homeowners are falling into arrears.
Kind of makes sense right? If your country isn’t even making timely payments, why should you?
Per a new report from Fitch Ratings, 17.3% of Greek mortgages were at least one month behind as of May.
That number is up from 16.9% in February and around 16% in January. And it’s expected to get worse.
Fitch painted a bleak picture, stating that, “a deteriorating economy and almost total absence of bank credit may have combined with retail borrowers withholding loan repayments during the extended period of uncertainty.”
Additionally, the agency noted that some mortgagors “may already be strategically entering early-stage arrears.” In other words, strategic default, similar to what took place here in the U.S. when borrowers fell deeply underwater on their mortgages.
Apparently they’re choosing to make payments on other types of debt because they don’t believe the banks will come after them for their homes.
Heck, the banks may not be around in another year, just like the many U.S. financial institutions that got swallowed up during our housing crisis.
Fitch believes the number of late mortgages will rise and that the possibility of negotiating a third bailout program for Greece will be “challenging.”
It’s unclear what would happen to these borrower’s mortgages if Greece were to exit the European Union and return to the drachma, their original currency before the Euro.
Or what would happen if the banks holding the mortgages fail. But there’s clearly no urgency to keep making payments while uncertainty looms.
Greek Crisis Lowering Mortgage Rates in the USA
The good news, for us at least, is that the Greek crisis has pushed mortgage rates lower. Not significantly lower, but back below 2015 highs.
As I always say, bad economic news generally leads to lower interest rates. And that seems to have been the case this week as the Greek crisis continues to be front-page news.
Unfortunately, it also sent the stock market crashing, so the savings might be awash for some.
And the relief might be short-lived if there’s a strong jobs report released tomorrow (early due to the July 4th holiday).
Still, a mortgage rate an eight or a quarter of a percent lower will be welcome news to those looking to buy or do a rate and term refinance.
With the July 4th weekend nearly upon us, it’s time to reflect on all that we have been through in the past year and how, as a country, we have overcome so many daunting obstacles, including what we have been through in the housing market.
The first thing that pops into my shriveled brain is how the housing market looked in February of 2020. Data from that month showed that housing was breaking out — but because we received this data in March of 2020, we were all too busy trying to survive to take notice.
Once the fear of the virus calmed down, we began a truly remarkable economic comeback, perhaps the fastest economic comeback from a significant economic downturn in the history of the U.S., with the housing market leading the way.
But for every silver lining there is a cloud.
The solid demographics for home purchasing and historically low mortgage rates — which have been in a downtrend for four decades — have created a housing market where prices are rising too fast. Even though we have good demographics for housing, we are not seeing a growth in sales that would account for the rate of growth in prices.
Before COVID-19 was even a whisper in our minds, I thought that in the years 2022 and 2023, price pressures for housing could be the big story. But I expected that higher mortgage rates of over 4% would keep prices from escalating out of control.
Instead, demand picked up early and because of the effects of COVID-19 on the world economies, mortgage rates are down to all-time lows. Rates haven’t even gotten to 3.5% recently — forget getting above 4%. These low mortgage rates are being sustained in a climate of some of the best economic growth in the 21st century and hotter-than-normal inflation data.
In this first year of economic expansion, we continue to have a good savings rate and healthy household formation demographics.
I anticipate that by September 2022, we will have all the jobs back that were lost due to COVID-19. When one considers that we currently have the most job openings ever recorded in U.S. history, (9.3 million) this date does not seem to be a stretch. Note, too, that all this good economic mojo is going on before we have even started fiscal spending on infrastructure.
With this recipe of excellent national economics, good demographics for housing, an improving employment picture and low mortgage rates, it makes sense that home prices would be hotter than normal. But as I have said before, the high rates of growth in home prices have been more a function of low housing inventory than extreme credit growth in demand.
But all is not hopeless: There are several reasons why housing inventory should pick up in the next several months and going into 2022.
First, the higher prices we are seeing in the current market are making it difficult for some buyers to compete. Clearly not all buyers, but enough to keep the extreme low housing inventory levels hard to maintain. This is a key point, but because we got to all-time lows in housing inventory, a move higher from these extreme low levels isn’t saying too much.
From the NAR:
Second, forbearance programs and the eviction moratorium will be ending soon. Because loan holders started their forbearance programs at different times they will exit the programs at different times, too, so don’t expect a flood of housing inventory to appear at once. Forbearance programs have gone from near 5million loans to a tad over 2 million. A lot of primary-residence households on forbearance programs have already exited the program and housing inventory remains chronically low.
Nevertheless we can expect some of these homes to come on to the market. These homes might be mom and pop landlords who were unable to collect rent during COVID-19 and want out of the rental game or some investors looking to cash in on high home prices. In any case, to think that we would have zero housing inventory created from this crisis is highly unlikely.
Third, while demand is solid in 2021, and we should have slightly more total home sales than we had in 2020, we are not seeing growth in credit (number of mortgages taken out). To think that we would have double-digit price growth with essentially slight home sales growth is the essence of bad inflation. As you can see below, what we experienced from 2018 to 2021 looks nothing like the credit growth we saw from 2002-2005.
We got to all-time lows in housing inventory recently so any increase is going to be a high percentage increase and that is going to fool some folks that the housing inventory picture has changed dramatically. The actual number of homes making up that increase is not going to be much, however, so don’t look at it like that. Instead look to see if total housing inventory gets back to the levels we saw in early 2020.
Getting back to 2020 levels with days on market going past the teens is the No. 1 priority for the housing market. We need more than the typical rise due to seasonality that happens every spring. We want total inventory levels to go above 1,520,000 at minimum.
In 2018-2019, total housing inventory was in the range between1,520,000 – 1,920,000and that level of inventory helped to drive real home-price growth in 2019 into negative territory briefly. Existing home sales during those years stayed in the monthly sale range of 4,980,000 to 5,610,000 homes. More importantly, the days on market were higher than what we see today — and as such we had fewer bidding wars and less price growth.
The effect of higher mortgage rates, which in late 2018 got to 5%, also contributed to more stability in housing prices. 2018 and 2019 were more balanced markets, so in my view it was a healthier housing market compared to what we have today.
Once the 10-year yield gets above 1.94%, which should bring mortgage rates above 3.75%, then things should cool down enough to stabilize the unhealthy price gains we are currently experiencing. The 10-year at 1.94% is not a very high bar, but even so, that is higher than what I have forecasted for 2021.
If housing demand is better than I thought going into the demographic sweet spot years of 2022 and 2023, then housing inventory may not improve much. I still believe in my replacement buyer premise rather than a credit boom housing market. However, if I am wrong, then we will see it for sure in years 2022 and 2023. The price gains in 2020 and 2021 have already met the target that I anticipated to be cumulative for the five-year period of 2020 to 2024. This pathway explains my concern over what has happened recently.
During the years 2020 to 2024, I anticipated total sales (new and existing homes combined) to stay at 6.2 million or higher. The only way I saw this not happening was if home prices got out of hand early on, and guess what, that has happened. While we won’t break lower than 6.2 million in 2021, I am mindful of these recent price gains in both exiting and the new home sales market. Demand for existing homes will come from first-time homebuyers, cash buyers, investors, move-up and move-down buyers. The bump in demographics in the years 2020-2024 has already showed itself to be a powerful economic force for the United States of America.
All these buyer types will create steady replacement demand for the existing home market. The new home sales market, on the other hand, is driven by wealthier older buyers with mortgages. For this reason, new home sales are more dependent on mortgage rates. I recently expressed some concern in this market here.
More than anything, I am hoping that what happened in 2013-2014 and 2018-2019 happens again. During those periods, interest rates went up, which increased housing inventory and days on the market. The additional supply cooled the rate of growth of home prices and stopped the bidding wars. Unless we get an increase in housing inventory from softening demand or end-of-forbearance selling, only an interest rate increase will get us above 1,520,000 total housing inventory and out of the low housing inventory/high price quagmire we have been in since the summer of 2020, which has been most unhealthy housing market post-2008. Still, these are first world problems. I mean, come on, it’s not like we are having a bubble crash like some bros wanted to see.
Mortgage applications decreased 4% for the week ending July 16, just one week after applications jumped 16% on the strength of falling mortgage rates.
The 10-year Treasury yield dropped sharply last week, in part due to investors becoming more concerned about the spread of COVID variants and their impact on global economic growth, according to the latest survey from the Mortgage Bankers Association. This, in turn, led to mixed changes in mortgage rates.
“The 30-year fixed rate increased slightly to 3.11% after two weeks of declines, and other surveyed rates moved lower, with the 15-year fixed rate loan — used by around 20% of refinance borrowers — decreasing to 2.46%,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “That’s the lowest level since January 2021.”
Kan added that, on a seasonally adjusted basis compared to the July 4th holiday week, purchase applications dipped back to near their lowest levels since May 2020.
“Limited inventory and higher prices are keeping some prospective homebuyers out of the market,” Kan said. “Refinance activity fell over the week, but because rates have stayed relatively low, the pace of applications was close to its highest level since early May 2021.”
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The refinance share of activity of total mortgage applications increased to 64.9% from 64.1% the previous week. On an unadjusted basis, the market composite index decreased 4% compared with the previous week. The seasonally adjusted purchase index decreased 6% from one week earlier, as well.
The FHA share of total mortgage applications increased to 9.6% from 9.5% the week prior, and the VA share of total mortgage applications increased to 10.5% from 10.3%.
Here is a more detailed breakdown of this week’s mortgage applications data:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.11% from 3.09%
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) decreased to 3.13% from 3.16%
The average contract interest rate for 30-year fixed-rate mortgages decreased to 3.08% from 3.15%
The average contract interest rate for 15-year fixed-rate mortgages also decreased to 2.46% from 2.48%
The average contract interest rate for 5/1 ARMs increased to 2.72% from 3.02%, with points decreasing to 0.19 (including the origination fee) for 80% LTV loans
It’s Monday morning in New York City and I’m curious about what President Joe Biden’s lunchbox looks like.
While he’s no Donald Trump when it comes to odd White House habits, Biden does have some quirks at the President’s Palace. Among them: subjecting the vice president to a travel-photo slideshow, a hidden Oval Office TV and peanut butter and jelly sandwiches to go.
Here’s what else is happening:
A spike in pet surrenders this summer have left some NYC animal shelters overwhelmed and at capacity, struggling to stay afloat.
Elton John’s last touring show after 52 years happened over the weekend and while it marked the end of the 76-year-old singer traveling the world for concerts, you may be able to catch him performing in other capacities.
A car parked too close to rail tracks near Yankee Stadium was hit by a Metro-North train Saturday. Luckily, no one was inside of the vehicle at the time.
Your home might not make it to HGTV, but it sure can feel like it’s being criticized all the same, which, according to a study, is making our living spaces less unique.
Perhaps we can take some unique decor inspo from this New Jersey town that’s now home to a giant troll sculpture made from recycled materials.
Speaking of renovations, why haven’t we converted all of those unused office buildings in NYC to apartments yet? Well, it’s harder than it seems.
A beloved Chinatown bookstore was badly damaged by a fire that erupted on July 4th in an apartment above the shop, but community members, writers and other supporters have raised more than $300,000 to help the store recover.
Following a one-week downturn, mortgage application volumes inched higher to start July despite surging interest rates, the Mortgage Bankers Association said.
The MBA’s Market Composite Index, which measures weekly application volumes based on surveys of the trade group’s members, rose a seasonally adjusted 0.9% for the seven-day period ending July 7. A week earlier, the index had fallen 4.4%, while compared with the same week in 2022, volume was 30.5% lower. The week’s data included an adjustment for the July 4th holiday.
Application activity rose despite a 22 basis-point leap in the average rates for the conforming (balances under $726,000) 30-year fixed mortgage to 7.07% among MBA lenders. One week earlier, the 30-year FRM averaged at 6.85%. Points increased to 0.74 from 0.65 for 80% loan-to-value ratio loans.
The weekly average rate hit its highest mark since last November, as investors tried to gauge the current health of spending and production and its impact on potential policy moves.
“Incoming economic data continue to send mixed signals about the economy, with the overall impact leaving Treasury yields higher last week, as markets expect that the Federal Reserve will need to hold rates higher for longer to slow inflation. All mortgage rates in our survey followed suit,” said Joel Kan, MBA vice president and deputy chief economist, in a press release.
But inflation numbers released on Wednesday showed further deceleration in June with a 3% annual rise, the smallest increase in over two years. On a monthly basis, consumer prices went up by 0.2%. Both numbers came in lower than consensus estimates, and the data could influence the Fed’s near-term policymaking. Central bank officials are scheduled to announce a decision on whether to hike or hold interest rates on July 26.
With the MBA reporting a reduction in credit availability for larger-sized loans for June earlier this week, the average jumbo rate also shot up to 7.04%, a record high for the series, which dates back to 2011, Kan added. Seven days earlier, the average for jumbo loans above the conforming limit had risen to 6.95%. Borrower points decreased to 0.59 from 0.64
The rise in purchase volume was offset by a drop in refinances last week, according to the survey. The seasonally adjusted Purchase Index climbed higher by 1.8%, but still landed 26.3% under its level from a year ago. Federally backed home buying activity provided an upward push, with a more-than-7% rise in government-guaranteed applications from the previous survey.
But average purchase amounts recorded on applications still clocked in higher despite the increased volume of government loans, which are commonly used for entry-level properties. Mean purchase sizes edged up 0.6% to $426,100 from $423,500. The upward movement comes as other data released last week also showed homes now consistently selling at or above their asking price, a noticeable reversal from late 2022 trends.
Meanwhile, the average refinance size slipped 2.2% to $254,900 from $260,700. The overall average across all new applications came in at $380,200, up 0.4% from $378,800 one week prior.
The Refinance Index, likewise, dropped 4.1% from the previous week and 26.6% on a year-over-year basis as well to come in at its lowest since early June, Kan said. “Demand for rate/term and cash-out refinances remains extremely low with mortgage rates over 7%.”
At the same time, the refinance share of mortgage activity slid down to a 26.8% share relative to all applications, falling from 27.4% a week earlier.
Government-guaranteed loan applications jumped up at a more rapid pace than conventional mortgages, with refinances increasing alongside purchases, leading them to grab a larger share of overall activity. Applications backed by the Federal Housing Administration garnered 13.3% of volume compared to 13% in the previous survey, while Department of Veterans Affairs-guaranteed loans accounted for a 12.6% share, up from 11.7%. The small slice of activity coming from U.S. Department of Agriculture programs remained at 0.4% week over week.
Like other 30-year rates, the contract fixed average for a FHA-sponsored mortgage headed up steeply and finished 18 basis points higher at 6.86% compared to 6.68% one week prior. Points increased to 1.23 from 0.98 for 80% LTV loans.
The 15-year contract rate accelerated 12 basis points to an average of 6.42% from 6.3% seven days earlier. Points for the 15-year mortgage also surged to 1.22 from 0.91.
The 5/1 adjustable-rate mortgage, which starts fixed before becoming variable after 60 months, leaped to 6.24% from 6%. Points increased to 1.42 from 1.23. Adjustable-rate loans, whose popularity tends to rise and fall in tandem with the direction of interest rates, also increased to a 6.6% share of total volume compared to 6.2% one week earlier.
The slow zombie crawl of housing inventory went lower last week as inventory was negative week to week. In addition, mortgage rates rose to a yearly high as labor data stayed firm and purchase apps had their first negative week after three straight weeks of positive growth.
Weekly Active listings fell by 866 homes
Mortgage rates rose to a year-to-date high of 7.22%
Purchase apps were down 5% week to week
Weekly housing inventory
We had a hat trick in housing last week: weekly active listings were negative week to week, new listings were negative week to week, and active listing + new listing data is negative year over year. This is truly a savagely unhealthy housing market as we have too many people chasing too few homes.
The weekly active listing data had a rare week-to-week decline. Part of this can be attributed to the July 4th holiday, but the trends this year versus last year have been so different that it’s not 100% based on a holiday week.
Weekly inventory change (June 30-July 7): Inventory fell from 465,755 to 464,889
Same week last year (July 1-July 8): Inventory rose from 472,046 to 487,319
The inventory bottom for 2022 was 240,194
The inventory peak for 2023 so far is 472,688
For context, active listings for this week in 2015 were 1,197,641
The housing inventory growth is so slow this year that the active listings data today in July isn’t even higher than our January levels, which is typically when we see the seasonal bottom for the year’s first half. As we can see in the chart below, it’s been so slow that year-over-year inventory is now negative versus 2022.
The other big story in housing has been that new listing data has been trending at the lowest levels recorded in history for 12 months. We have had four straight weeks of declines and we are about to run into the seasonal decline in this data line. As we can see below, there is a big difference between 2023 data for this week versus 2022 data.
2023: 58,813
2022: 90,336
2021: 68,328
The 10-year yield and mortgage rates
Mortgage rates started the week at 7.03% and ended at 7.14%. The 10-year yield is close to yearly highs as the U.S. bond market doesn’t see a job-loss recession happening soon. As you can see below, bond yields rose noticeably during jobs week.
In my 2023 forecast, I said: If the economy stays firm, the 10-year yield range should be between 3.21% and 4.25%, equating to mortgage rates between 5.75% and 7.25%. The labor market remains healthy as long as jobless claims trend below 323,000 on the four-week moving average. As we can see below, the 10-year yield has stayed in this channel 100% of the time in 2023, but mortgage rates are on the verge of breaking over 7.25%.
As the spreads between the 10-year yield and mortgage rates have worsened since the banking crisis, this has added more pressure on rates to be higher than I would have anticipated in 2023. The chart below shows the spreads rising after the SVB banking crisis started.
Purchase application data
Purchase application data was down 5% weekly, making the count for the year-to-date data 13 positive and 12 negative prints. If we start from Nov. 9, 2022, it’s been 20 positive prints versus 12 negative prints. Considering mortgage rates have been near 7% and above the last month, having three out of the last four weeks being positive shows that the collapsing market in 2022 did change after Nov. 9.
But remember: The bar is so low with purchase apps that we can trip over it. As long as we know that the data has just stabilized from a waterfall dive, we are all in the same boat with the data this year.
The week ahead: Inflation week!
Inflation week is here again, and we have two inflationary reports to work with. Between the critical CPI data and the PPI data, we should see the same story: the headline inflation data is falling noticeably, but the core inflation data is a bit more sticky. Still, the shelter aspect of inflation will kick in more here, with used car prices falling over the next few months. Below is the year-over-year core CPI data.
Considering where we are with the 10-year yield and mortgage rates, a lighter-than-expected CPI inflation print this week would be just what the housing market needs to bring mortgage rates lower.
Housing inventory finally broke under 2022 levels last week. To give you an idea how different this year is from last year, last week in 2022, active listings grew 30,940 while this year they only grew 5,848. Mortgage rates rose last week after the better-than-anticipated jobless claims data but even with higher rates, we also had a third week of positive purchase application data.
Here’s a quick rundown of last week:
Active inventory grew by a disappointing 5,848 weekly
Mortgage rates went above 7% again after better labor data
Purchase application data showed 3% growth week to week
Weekly housing inventory
On May 15, I went on CNBC and talked about how inventory growth in 2023 resembled a zombie from the show The Walking Dead, slowly trying to rise from the grave. Since May 15, that trend has continued to the point that inventory in America is now negative year over year.
We have often discussed that the housing market dynamics changed starting Nov. 9, 2022, and today you can see the final result of that dynamic shift as inventory is now negative versus the 2022 data — all before July 4th. I recently recapped this crazy period on the HousingWire Daily podcast, going into detail about what happened in housing over the last year.
Weekly inventory change (June 23-30): Inventory rose from 459,907-465,755
Same week last year (June 24-July 1): Inventory rose from 441,106 to 472,046
The inventory bottom for 2022 was 240,194
The inventory peak for 2023 so far is 472,688
For context, active listings for this week in 2015 were 1,183,390
Seeing negative year-over-year inventory before July 4 would be a big deal if last year wasn’t so crazy. However, I need to put some context into what happened in 2022. In March of 2022 we had the lowest inventory levels ever recorded in history. Then in a short amount time, we had the biggest and fastest mortgage rate spike in history, which facilitated the biggest one-year crash in home sales in history, which helped inventory grow faster than normal in 2022.
So the fact that housing demand stabilized and inventory is now negative year over year needs the context that 2022 was a once-in-a-lifetime event. As you can see in the chart below, 2023 inventory growth is very slow compared to 2022.
The other big story with housing inventory is that new listing data has been trending negative year over year since the end of June 2022. A traditional seller is also a traditional buyer, and certain homeowners have refused to buy their next home with mortgage rates above 6%.
We had new listings growth from 2021 to 2022, but that’s not the case this year. This is another variable contributing to slow inventory growth, which has now turned negative in the weekly listings.
Compare the new listings data last week to the same week in recent years:
2023: 62,466
2022: 91,530
2021: 80,289
My concern lately is that we have seen four straight weeks of mild declines and are about to head into the seasonal decline period of new listings. This is one data line I will track like a hawk because it will be a negative for the housing market if this data line makes a noticeable year-over-year decline trend in the second half of 2023.
The 10-year yield and mortgage rates
For those who have followed the weekly Housing Market Tracker articles, I always focus on jobless claims data as it’s the critical data line at this point of the economic cycle for me and my forecast in 2023 for mortgage rates.
Last week we had a big move in the 10-year yield because jobless claims came in better than anticipated, and bond traders were caught off guard selling bonds on the news and sending mortgage rates above 7% again. As you can see in the chart below, that big spike was really about jobless claims getting better.
The following day, the PCE inflation data showed a cooling down in headline inflation year over year. Core PCE inflation is a bit more sticky than headline inflation, however, bond yields fell after that report and bounced back at the end of the day.
In my 2023 forecast, I wrote that if the economy stays firm, the 10-year yield range should be between 3.21% and 4.25%, equating tomortgage rates between 5.75% and 7.25%. As long as jobless claims trend below 323,000 on the four-week moving average, the labor market stays firm, which means the economy remains healthy. Jobless claims have stayed below this range all year, and job openings are still at 10 million.
I have also stressed that the 10-year level between 3.37% and 3.42% would be hard to break lower. I call it theGandalf line in the sand: You shall not pass. The setup for the 10-year yield to stay in the range is intact.
The counter to my 10-year yield range would be if the economy here or worldwide starts to accelerate higher; that would be a valid premise to get the 10-year yield above 4.25%. Considering our economy this year, the 10-year yield and mortgage rates look about right to me.
Now the one thing that has changed in 2023 is that since the banking crisis, the spreads between the 10-year and mortgage rates have worsened, making mortgage rates higher than I anticipated versus the 10-year yield, which is not a positive for the housing market.
We haven’t seen anything in the data showing that it’s been improving recently. This is a big deal as we have seen housing inventory not get much traction with higher rates and hopefully in the future, lower rates can entice some sellers to move.
On jobless claims data, I always stress using the four-week moving average with this data line because we do have times when this data line can get hectic week to week. Therefore, I only believe the low jobless claims print once I see weeks of this data line improving. So, it will be critical over the next two weeks to see if this decline was a one-time blip in the data, which we have seen from time to time. As you can see below, that was a significant drop week to week, which looks abnormal to me.
Purchase application data
Purchase application data has surprised people with three weeks in a row of growth, while mortgage rates have been near 7% during this period. This now makes the positive count since Nov. 9, 2022, 20 positive prints vs. 11 negative prints. The year-to-date numbers are 13 positive vs. 11 negatives after making some holiday adjustments to the data line.
What do these numbers mean? They just mean that housing data has stabilized; nothing in the data shows decent growth after that first good move from November to February. However, the fact that housing demand has stabilized is a big deal because last year, we did have a waterfall collapse in the data, as shown in the chart below. The only downside to this is that we haven’t had the housing inventory growth I would like.
Now the year-over-year decline was down to -21%, which was the lowest since Aug. 24, 2022. However, we all have to remember that the second half of 2023 will have much easier comps, so even if demand stayed the same the rest of the year we will have some positive year-over-year data at some point.
Be careful in reading too much into the better year-over-year data we will see in the future. The most recent pending home sales print came in as a miss from estimates, but the existing home sales data is still trending in the range I thought it would be in since I believed that first big print we had a few months ago was going to be the peak for year. When demand is coming back in a big way, purchase apps will be positive for a majority of the weeks as we are working from such low levels today historically.
The week ahead: Jobs, jobs and jobs data
Yes, it’s jobs week once again and with four labor reports coming up on this short holiday week, we’ll be able to see if the Federal Reserve is getting what it wants — a softer labor market. Recently, Fed Chair Powell once again stressed that the labor market is too tight and that softer labor is the way to get inflation down to the Fed’s 2% core PCE target.
Well, we have four reports this week: the job openings data (JOLTS), the ADP jobs report, jobless claims and the big one on Friday — the BLS job report — so we’ll see what happens.
So much of my COVID-19 recovery model was based on the labor dynamics being much different now, since I was the only person talking about job openings getting to 10 million in this recovery. Today as I write this, we are still at 10 million job openings, as the chart below shows.
I have a firm belief that the Fed doesn’t fear a big job-loss recession as long as job openings are this high. What they have enjoyed seeing is wage growth cooling down, as shown in the BLS job reports for 18 months now. So, for this week, we always focus on jobless claims data over everything else, but be mindful of the job openings data since the Fed wants to see this go down, and the wage growth in the BLS jobs report data.
One of the most popular retail powerhouses just opened two new locations in New Jersey to spread more joy to your home décor.
Homegoods is everyone’s favorite place to shop when it comes to decorating their house, but there’s so much more to the place.
Need a rug? How about new bath towels or bed sheets? Looking for a new mirror to replace your old one? Does your kid want to redecorate their room to a Spiderman theme? All of these things can be found at Homegoods.
You can even find a new bed for your pet or buy a bag of homemade pasta to cook for dinner that night.
One of my go-to items to buy at Homegoods is bags of Joffrey’s coffee. I’ve never seen them sold in any other store so I make sure to stock up.
The fun part about Homegoods is their front display of items depending on the season. If you were to walk into one of their stores right now, you would be smothered in July 4th and BBQ essentials.
There are 45 Homegoods locations in New Jersey and the latest two to open are in:
Flanders
50 International Dr. S.
Edgewater
489 River Rd.
Homegoods can be hit or miss so if you’re looking for something in particular, make sure you visit a different location if your nearest one doesn’t carry it.
How to pronounce these 20 town names in NJ
How many of these New Jersey municipalities and neighborhoods have you been pronouncing wrong?
The post above reflects the thoughts and observations of New Jersey 101.5’s Morning Show Producer Kristen. Any opinions expressed are her own.
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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.
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.