Tucson Mortgages Home Loan News 7-1-2019

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of June 24, 2019
  • Economic Calendar – week of July 1, 2019
  • Mortgage Rate Forecast with Chart

Weekly Review

Stock market trading was rather restrained this past week with investors mostly biding time on the sidelines as world leaders met in Osaka, Japan at the G-20 Summit on Friday and Saturday.  Although the S&P 500 Index retreated 0.3% this week it still recorded a 6.9% increase for the month, its best June performance since 1955.

Investors anxiously waited for any news concerning international trade coming out of a scheduled meeting between President Trump and China’s President Xi Jinping during the G-20 after the market’s close on Friday.  Earlier on Wednesday, Treasury Secretary Steven Mnuchin stated he estimated trade negotiators were “90% of the way there” in reaching a trade deal.  Saturday morning, it was reported President Trump and President Xi Jinping had reached an agreement to restart trade negotiations.  President Trump stated the U.S. would not add tariffs on an additional $300 billion worth of Chinese imports and would continue to negotiate with China “for the time being.”  In what is being viewed as a significant concession to break a negotiation impass, Trump revealed he would allow U.S. companies to continue to sell electronics components to Chinese technology giant Huawei “where there’s no great national security problem.”  As a result, we might see the stock market open the week with a rally on Monday.

The week’s economic data was reported mostly lower than consensus forecasts.  Measures of manufacturing activity in the Chicago, Dallas, and Kansas regions unexpectedly fell into contraction with readings below “50,” and overall durable goods orders declined far more than forecast in May. Although personal spending and income data showed solid gains in May, weekly jobless claims climbed more than expected and consumer confidence fell sharply in June, reaching its lowest level in almost two years due to “a less favorable assessment of business and labor market conditions.”

In housing last Tuesday, the Federal Housing Finance Agency released its House Price Index (HPI) for April showing house prices rose 0.4% for the month from March.

The previously reported 0.1% increase for March 2019 remained unchanged.

From April 2018 to April 2019, house prices were up 5.2%.

For the nine census divisions, seasonally adjusted monthly house price changes from March 2019 to April 2019 ranged from -0.6% in the West North Central division to +1.2% in the Mountain division.

The 12-month changes were all positive, ranging from +4.0% in the Middle Atlantic division to +7.8% in the Mountain division.

Also Tuesday, the Commerce Department reported New Home Sales declined 7.8% month-over-month in May to a seasonally adjusted annual rate of 626,000.  This was just below the consensus forecast of 683,000 and lower than an upwardly revised 679,000 in April.  Sales were 3.7% lower from a year ago.

Weaker sales activity in the West region was a major contributing factor for the lower than expected results with sales there down 35.9% month-over-month.

Sales were also down 17.6% in the Northeast region.  However, sales were 6.3% and 4.9% higher in the Midwest and South regions respectively.

The inventory of new homes for sale increased to a 6.4-month supply from a 5.9-month supply in April.  Homes priced below $400,000 accounted for 70% of new homes sold versus 66% in April.  The median new house price declined 2.7% from a year ago to $308,000 in May.  Even though there was a decline in mortgage rates and the median sales price, demand for new homes was relatively soft in May.

Thursday, the National Association of Realtors (NAR) reported their Pending Home Sales Index rose 1.1% to 105.4 in May from 104.3 in April.  However, year-over-year contract signings fell 0.7%, marking the 17th straight month of annual decreases.

Regionally, the pending home sales index in the Northeast increased 3.5% to 92.0 in May and is now 0.5% below a year ago.  In the Midwest, the index rose 3.6% to 100.3 in May, 1.2% lower than May 2018.

Pending home sales in the South edged 0.1% higher to an index of 124.1 in May, which is 0.7% higher than last May.  The index in the West declined 1.8% in May to 91.8 and was 3.1% lower than a year ago.

NAR Chief Economist Lawrence Yun remains optimistic saying “Rates of 4% and, in some cases even lower, create extremely attractive conditions for consumers.  Buyers, for good reason, are anxious to purchase and lock in at these rates.  The Federal Reserve may cut interest rates one more time this year, but there is no guarantee mortgage rates will fall from these already historically low points.  Job creation and a rise in inventory will nonetheless drive more buyers to enter the market.  Home builders have not ramped up construction to the extent that is needed.”

Elsewhere, mortgage data from the Mortgage Bankers Association (MBA) showed the number of mortgage applications increased 1.3% from the prior week.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) rose 1.3% for the week ended June 21, 2019.  The seasonally adjusted Purchase Index declined 1% from a week prior while the Refinance Index increased 3%.  Overall, the refinance portion of mortgage activity increased to 51.5% from 50.2% of total applications from the prior week.  The adjustable-rate mortgage share of activity increased to 6.5% of total applications from 6.1%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance decreased to 4.06% from 4.14% with points increasing to 0.35 from 0.38 for 80 percent loan-to-value ratio (LTV) loans.

For the week, the FNMA 3.5% coupon bond gained 6.3 basis points to close at $102.188 while the 10-year Treasury yield decreased 5.20 basis points to end at 2.007%.  The Dow Jones Industrial Average fell 119.17 points to close at 26,599.96.  The NASDAQ Composite Index dropped 25.47 points to close at 8,006.24.  The S&P 500 Index lost 8.70 points to close at 2,941.76.  Year to date (2019) on a total return basis, the Dow Jones Industrial Average has added 14.03%, the NASDAQ Composite Index has gained 20.66%, and the S&P 500 Index has advanced 17.35%.

This past week, the national average 30-year mortgage rate moved to 3.81% from 3.80%; the 15-year mortgage rate decreased to 3.61% from 3.62%; the 5/1 ARM mortgage rate fell to 3.66% from 3.72%; and the FHA 30-year rate was unchanged at 3.60%.  Jumbo 30-year rates decreased to 3.87% from 3.88%.

Economic Calendar – for the Week of July 1, 2019

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

The FNMA 30-year 3.5% coupon bond ($102.188; +6.3 bp) traded within a narrower 26.5 basis point range between a weekly intraday low of $102.016 on Wednesday and a weekly intraday high of 102.281 on Thursday before closing the week at $102.188 on Friday.

As last week’s technical chart suggested, mortgage bonds traded within a relatively narrow range between nearest support and resistance levels.  The 23.6% Fibonacci retracement level is becoming more formidable as technical resistance while the 25-day moving average serves as support.  As such, we could continue to see the bond trade sideways between these levels.

The bond is currently trading on a weak sell signal generated on Monday, June 24 from a negative crossover in the slow stochastic oscillator.  The week may start out with stocks rallying from news that trade negotiations with China are resuming, and if this happens we could see additional pressure on bond prices early in the week with the bond trading toward support and mortgage rates edging a little higher.  However, on Friday the June Jobs Report will be released.  If the payrolls numbers come in weaker than forecast, we could see a bounce higher in bond prices and slightly lower mortgage rates.  Either way, rates shouldn’t make a significant move in either direction.

 

Tucson Mortgages Home Loan News 6-24-2019

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of June 17, 2019
  • Economic Calendar – week of June 24, 2019
  • Mortgage Rate Forecast with Chart

Weekly Review

Several catalysts during the week powered the stock market higher with the broader S&P 500 Index gaining 2.2%, the technology-laden Nasdaq Composite Index gaining 3.0%, the small-cap Russell 2000 Index adding 1.8%, and the Dow Jones Industrial Average advancing 2.4%.  The most significant catalyst arrived Wednesday when the Federal Reserve strengthened investor expectations for an interest rate cut later on this year by removing the word “patient” from their monetary policy statement referencing interest rate adjustments and stated they “will act as appropriate to sustain the (economic) expansion,” indicating a willingness to cut interest rates if necessary.

The bond market also responded very favorably to the Fed’s new policy language and was also bouyed by European Central Bank (ECB) President Mario Draghi’s statement saying the ECB “could introduce new stimulus measures, possibly including renewed purchases of corporate debt, to lift growth and inflation.”  In response to all of the recent cental bank news citing low inflation levels as a reason for easier monetary policy, the fed funds futures market is now showing a 100% implied probability of an interest rate cut at the Fed’s July 31 FOMC meeting.  The expectations for lower interest rates sent bond yields lower across the globe with the yield on U.S. 10-year treasuries briefly falling below 2.00% for the first time since 2016 before closing the week at 2.059%.

Another catalyst providing a boost to stocks, this time in the energy sector, occurred when Iran decided to shoot down a U.S. Global Hawk surveillance drone over the Strait of Hormuz.  This news pushed crude oil 9.2% higher on Thursday while increasing geopolitical tension in the Middle East.  President Trump initially ordered a retaliatory military strike on Iran, but then cancelled it at the last moment after learning the damage inflicted and estimated loss of 150 Iranian lives wasn’t proportional to the downing of an unmanned drone.

Additional positive investor sentiment happened when news broke there would be “an extended meeting” at the G-20 conference scheduled to be held June 28–29 in Japan between President Trump and Chinese President Xi Jinping.  Investors are hoping progress can be made toward resolving the ongoing trade war between the U.S. and China.

In housing last Tuesday, the U.S. Census Bureau and the Department of Housing and Urban Development released their latest Housing Starts and Building Permits report showing Housing Starts declined 0.9% month-over-month in May to a seasonally adjusted annual rate of 1.269 million.  This was slightly above the consensus forecast of 1.240 million but below April’s upwardly revised 1.281 million in April.

Single-family housing starts declined 6.4% month-over-month to 820,000 and were 12.5% lower year-over-year.  Multi-unit starts increased 10.9% month-over-month in May.  Regionally, single-family starts were 25.8% lower in the Northeast; 5.8% lower in the Midwest; 3.3% higher in the South; and 19.9% lower in the West.

Meanwhile, Housing Permits increased 0.3% month-over-month in May to a seasonally adjusted annual rate of 1.294 million.  This was marginally below the consensus forecast of 1.295 million and just above an upwardly revised 1.290 million in April.  Single-family building permits increased 3.7% month-over-month to 815,000, but were 3.3% lower year-year.  Multi-unit permits declined 5.0% month-over-month in May.  Regionally, single-family permits were 2.0% lower in the Northeast, 0.9% lower in the Midwest, 7.7% higher in the South, and 1.0% lower in the West. Despite the slip in the number of Starts, Permits increased to their best level since January suggesting the housing market is primed to hold steady during the traditionally strong summer months.

Friday, the National Association of Realtors (NAR) released their Existing Home Sales report showing sales increased 2.5% month-over-month in May to a seasonally-adjusted annual rate of 5.34 million.  This was above the consensus forecast of 5.30 million and above an upwardly revised 5.21 million in April.  However, total sales were 1.1% lower year-over-year. Single-family home sales increased 2.6% month-over-month to a seasonally adjusted annual rate of 4.75 million, but were 0.8% lower year-over-year.

Regionally, existing home sales were 4.7% higher in the Northeast; 3.4% higher in the Midwest; and 1.8% higher in both the South and West.

Existing home prices for all housing types continued to rise with the median price increasing 4.8% year-over-year to a record $277,700.  The median existing single-family home price was 4.6% higher year-over-year rising to $280,200.

Home inventory listed for sale at the end of May increased to 1.92 million from 1.83 million in April and was 2.7% greater than a year ago.  At the current sales rate, unsold inventory was at a 4.3-month supply versus 4.2 months in April and remains below the 6.0-months’ supply typically seen in a balanced real estate market.

Elsewhere, mortgage data from the Mortgage Bankers Association (MBA) showed the number of mortgage applications fell 3.4% from the prior week.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) declined 3.4% for the week ended June 14, 2019.  The seasonally adjusted Purchase Index decreased 4% from a week prior while the Refinance Index also decreased 4%.  Overall, the refinance portion of mortgage activity increased to 50.2% from 49.8% of total applications from the prior week.

The adjustable-rate mortgage share of activity decreased to 6.1% of total applications from 7.9%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 4.14% from 4.12% with points increasing to 0.38 from 0.33 for 80 percent loan-to-value ratio (LTV) loans.

For the week, the FNMA 3.5% coupon bond gained 20.3 basis points to close at $102.125 while the 10-year Treasury yield decreased 2.70 basis points to end at 2.059%.  The Dow Jones Industrial Average gained 629.52 points to close at 26,719.13.  The NASDAQ Composite Index added 235.05 points to close at 8,031.71.  The S&P 500 Index advanced 63.48 points to close at 2,950.46.  Year to date (2019) on a total return basis, the Dow Jones Industrial Average has added 14.54%, the NASDAQ Composite Index has gained 21.05%, and the S&P 500 Index has advanced 17.70%.

This past week, the national average 30-year mortgage rate dropped to 3.80% from 3.92%; the 15-year mortgage rate decreased to 3.62% from 3.71%; the 5/1 ARM mortgage rate fell to 3.72% from 3.85%; and the FHA 30-year rate declined to 3.60% from 3.71%.  Jumbo 30-year rates decreased to 3.88% from 3.91%.

Economic Calendar – for the Week of June 24, 2019

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

The FNMA 30-year 3.5% coupon bond ($102.125; +20.3 bp) traded within a much wider 79.7 basis point range between a weekly intraday low of $101.828 on Monday and a weekly intraday high of 102.625 on Friday before closing the week at $102.125 on Friday.

The bond showed an increase in volatility Wednesday through Friday, spiking higher on Wednesday to close just above the 23.6% Fibonacci retracement resistance level.  Thursday, the bond’s price opened higher than Wednesday’s close then traded down to close just above the 23.6% Fibonacci retracement resistance level once again.  Friday was volatile with a 59.4 basis point trading range between the intraday high and low before closing below the aforementioned resistance level.

What to make of all this volatility?  Technically, the slow stochastic indicator shows a buy signal from Wednesday’s trading action but also shows the bond is “overbought” and susceptible to a pull-back in price.  The chart suggests we will likely see the bond trade between nearest support and resistance levels resulting in little movement in mortgage rates this coming week.

 

Tucson Mortgages Home Loan News 6-17-2019

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of June 10, 2019
  • Economic Calendar – week of June 17, 2019
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market recorded a modest advance for the week and got off to a good start last Monday when it was announced U.S. and Mexico had reached an agreement on immigration practices to avoid the levying of a 5% tariff rate on all goods imported from Mexico by the U.S.  However, stocks cooled off as the week progressed as uncertainty weighed on investors concerning what may transpire during the Federal Reserve’s monetary policy meeting this coming Wednesday and the G-20 summit scheduled for June 28-29 in Osaka, Japan.  The G-20 is an international forum for the governments and central bank governors of 19 countries plus the European Union having the largest global economic impact, and whose purpose is to discuss policy pertaining to the promotion of international financial stability.

Expectations circulated that President Donald Trump and Chinese President Xi Jinping may meet during the summit to improve upon trade relations, but President Trump downplayed these expectations on Friday saying “it doesn’t matter” if Xi Jinping attends.  Trump commented “If he shows up, good, if he doesn’t… in the meantime, we’re taking in billions of dollars a month (in tariffs) from China.”  There are also expectations the Fed will cut short-term interest rates and as of Sunday, the fed funds futures market was showing an 87.5% implied probability of a rate cut at the Fed’s July 31 FOMC meeting.

Supporting the prospects for a rate cut, the Consumer Price Index only increased 0.1% in May and was down from a 0.3% increase in April.  This weaker than anticipated inflation data helped send Treasury yields lower, with the yield on the 10-year Treasury note falling to 2.086% during Friday trading.  Treasuries also benefited from building geopolitical tensions in the Middle East as Iran was accused of attacking a pair of oil tankers near the Strait of Hormuz which prompted investors to switch into safe-haven assets.

In Housing last Tuesday, CoreLogic released its Loan Performance Insights Report showing the U.S. had its lowest foreclosure rate for the month of March in at least 20 years.  Also, the overall and serious delinquency rates for a March came in at 13 year lows.

Nationally, 4% of mortgages in March were in some phase of delinquency defined as 30 days or more past due, including those in foreclosure.  This was a 0.3-percentage-point decline in the overall delinquency rate compared with March 2018, when it was 4.3%.

The early-stage delinquencies rate (defined as 30 to 59 days past due) was 2% in March 2019 compared to 1.8% in March 2018.  The share of mortgages 60 to 89 days past due in March 2019 was 0.6%, unchanged from March 2018.  The serious delinquency rate (defined as 90 days or more past due, including loans in foreclosure) was 1.4% in March 2019, down from 1.9% in March 2018.  The serious delinquency rate of 1.4% this March was the lowest for a March since 2006 when it was also 1.4%.  Frank Martell, president and CEO of CoreLogic, remarked

“Delinquency rates and foreclosures continue to drop through March and should decline further in the months ahead barring any serious dislocations from recent flooding in the Mid-West or a severe Atlantic hurricane and/or wildfire season on the coasts.”

Elsewhere, mortgage data from the Mortgage Bankers Association (MBA) showed the number of mortgage applications significantly increased from the prior week.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) rose 26.8% for the week ended June 7, 2019.  The seasonally adjusted Purchase Index increased 10% from a week prior while the Refinance Index increased 47%.  Overall, the refinance portion of mortgage activity increased to 49.8% from 42.2% of total applications from the prior week.

The adjustable-rate mortgage share of activity increased to 7.9% of total applications from 7.1%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance dropped to 4.12% from 4.23% with points remaining unchanged at 0.33 for 80 percent loan-to-value ratio (LTV) loans.

For the week, the FNMA 3.5% coupon bond dropped 26.6 basis points to close at $101.922 while the 10-year Treasury yield increased 0.20 of one basis point to end at 2.086%.  The Dow Jones Industrial Average gained 105.67 points to close at 26,089.61.  The NASDAQ Composite Index added 54.56 points to close at 7,796.66.  The S&P 500 Index advanced 13.64 points to close at 2,886.98.  Year to date (2019) on a total return basis, the Dow Jones Industrial Average has added 11.84%, the NASDAQ Composite Index has gained 15.16%, and the S&P 500 Index has advanced 17.50%.

This past week, the national average 30-year mortgage rate rose to 3.92% from 3.86%; the 15-year mortgage rate increased to 3.71% from 3.68%; the 5/1 ARM mortgage rate remained unchanged at 3.85%; and the FHA 30-year rate climbed to 3.71% from 3.62%.  Jumbo 30-year rates increased to 3.91% from 3.90%.

Economic Calendar – for the Week of June 17, 2019

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

The FNMA 30-year 3.5% coupon bond ($101.922 -26.6 bp) traded within a narrower 28.1 basis point range between a weekly intraday low of $101.844 on Tuesday and a weekly intraday high of 102.125 on Monday before closing the week at $101.922 on Friday.  Mortgage bonds traded lower on Monday and Tuesday and attempted to recover the remainder of the week before slipping lower on Friday.  Same as the pattern last week, there was a weak sell signal generated on Tuesday followed by a weak buy signal on Friday.  The slow stochastic indicator shows the bond is just below the “overbought” level and with the weak buy signal on Friday, we will likely see the bond trade in a sideways direction between closest support and resistance levels.  As a result there should be little movement in mortgage rates in either direction this coming week.

 

Tucson Mortgages Home Loan News 6-10-2019

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of June 3, 2019
  • Economic Calendar – week of June 10, 2019
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market surged higher during the week with the S&P 500 Index showing its best weekly performance of the year, and closing within about 3% of its all-time high.  Investor enthusiasm was stimulated by expectations the Federal Reserve would cut short-term interest rates later this year if needed to keep the economy growing.  Prospects for an interest rate cut originated from comments made last Tuesday by Federal Reserve Chairman Jerome Powell at a central bank conference.

Powell assured conference attendees that Fed policymakers were paying close attention to the impact of trade tensions on the economy and would “act as appropriate to sustain the expansion.”  Following Powell’s comments, the Fed Funds Futures markets began pricing in a strong possibility of an interest rate cut announcement following the Fed’s July 30–31 monetary policy meeting.  In fact, the futures market is currently pricing in an 87% probability for a 25 basis point cut in interest rates on July 31 and 95% probability for a rate cut on September 18 if one doesn’t happen on July 31.

Last Wednesday, evidence of a slowing U.S. economy surfaced when Automatic Data Processing (ADP) reported private sector payrolls had grown by only 27,000 in May, the smallest

monthly payrolls growth seen in over nine years.  Furthermore, the Labor Department reported last Friday that nonfarm payrolls had grown by only 75,000 in May, the weakest jobs number since February.  The unemployment rate was unchanged at a 50 year low of 3.6%, but that was partly due to the labor force participation rate falling to its lowest level in eight months.

Average hourly earnings also rose (+0.2%) less than the forecast of +0.3%.  On an annual basis over the last 12 months, average hourly earnings have risen 3.1%, versus 3.2% for the 12 months ending in April.

The poor jobs report sent the yield on the benchmark 10-year Treasury note to a 20-month low on Friday at 2.084%.

In housing last Tuesday, CoreLogic released its Home Price Index (HPI) and HPI Forecast for April 2019, showing home prices increased both year-over-year and month-over-month.  On an annual basis, home prices have increased 3.6% nationally from April 2018.  On a month-over-month basis, prices increased by 1% in April 2019.

After gazing into their crystal ball, CoreLogic’s HPI Forecast predicts home prices will continue to rise and increase by 4.7% from April 2019 to April 2020.

On a month-over-month basis, home prices are expected to pull back 0.3% from April 2019 to May 2019.

Also Tuesday, the Data & Analytics Division of Black Knight, Inc. released its latest Mortgage Monitor Report showing home prices continued their trend of slowing down in March.  However, lower interest rates during the last quarter have improved home affordability as measured by the monthly Payment to Income Ratio to its best level in more than a year.

Overall, the average front ratio is 22% versus the long-term average ratio of 25%.  Lower interest rates and rising incomes are helping to lower this ratio while home prices continue to gradually appreciate.  As a result, home buyers are seeing stronger gains in income to go along with the benefits from lower interest rates and this bodes well for housing.

As of May, the monthly payment required to purchase the average-priced house with 20% down is $1,173, the lowest such payment in more than a year.

Elsewhere, mortgage data from the Mortgage Bankers Association (MBA) showed the number of mortgage applications increased from the prior week.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) rose 1.5% for the week ended May 31, 2019.  The seasonally adjusted Purchase Index decreased 2% from a week prior while the Refinance Index increased 6%.  Overall, the refinance portion of mortgage activity increased to 42.2% from 39.7% of total applications from the prior week.

The adjustable-rate mortgage share of activity increased to 7.1% of total applications from 6.6%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance dropped to 4.23% from 4.33% with points decreasing to 0.33 from 0.42 for 80 percent loan-to-value ratio (LTV) loans.

For the week, the FNMA 3.5% coupon bond gained 21.9 basis points to close at $102.188 while the 10-year Treasury yield decreased 4.90 basis points to end at 2.084%.  The Dow Jones Industrial Average soared 1,168.90 points to close at 25,983.94.  The NASDAQ Composite Index climbed 288.95 points to close at 7,742.10.  The S&P 500 Index gained 121.28 points to close at 2,873.34.  Year to date (2019) on a total return basis, the Dow Jones Industrial Average has added 11.39%, the NASDAQ Composite Index has gained 16.68%, and the S&P 500 Index has advanced 14.62%.

This past week, the national average 30-year mortgage rate fell to 3.86% from 3.94%; the 15-year mortgage rate decreased to 3.68% from 3.75%; the 5/1 ARM mortgage rate decreased to 3.85% from 3.99%; and the FHA 30-year rate declined to 3.62% from 3.75%.  Jumbo 30-year rates were unchanged at 3.90%.

Economic Calendar – for the Week of June 10, 2019

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

The FNMA 30-year 3.5% coupon bond ($102.188 +21.9 bp) traded within a wider 39.1 basis point range between a weekly intraday low of $101.859 on Thursday and a weekly intraday high of 102.250 on Monday before closing the week at $102.188 on Friday.  Mortgage bonds traded in a “U-shaped” pattern rising on Monday and dipping mid-week before bouncing back on Friday.  A weak sell signal was generated on Tuesday followed by a weak buy signal on Friday.  The bond remains “overbought” but we may see a challenge of overhead technical resistance located at the 23.6% Fibonacci retracement level ($102.274).  A move up to resistance or a break above would result in stable to slightly lower mortgage rates this coming week.

 

Tucson Mortgages Home Loan News 6-3-2019

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of May 27, 2019
  • Economic Calendar – week of June 3, 2019
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market recorded another dismal week to close out the month of May which was also the worst performing month since December.  Investors fled stocks to move money into safer-haven assets such as Treasuries following a sharp escalation in contentious trade talk between the U.S. and China and an announcement of new tariffs on Mexican goods.

During the week President Trump repeated he was “nowhere near ready to make a deal” with China and Vice President Mike Pence said the U.S. “could more than double tariffs on China if needed.”  China countered this past Friday by stating it was assembling an “unreliable entities list” of both companies and individuals that would be restricted from doing business with Chinese companies.   China also said it was planning to restrict the export of rare earth metals to the U.S. that are used in high-end electronics and strategic applications in the aerospace, communications and defense industries.  China produces approximately 80% of the world’s rare earth metals.  China also reportedly postponed May U.S. soybean purchases.

Friday, the stock market was negatively impacted after it was announced there would be a 5% tariff rate on all goods imported from Mexico starting on June 10.  Furthermore, the tariff rate would be incrementally increased during the summer to reach 25% by October 1 unless Mexico takes serious action to prevent the flow of illegal migrants crossing our southern border from Mexico.

In housing, the Federal Housing Finance Agency (FHFA) released last Tuesday their latest House Price Index Report for the first quarter of 2019 ending with March.  U.S. house prices rose 1.1% percent in the first quarter of 2019 and were up 5.1% percent from the first quarter of 2018 to the first quarter of 2019.  The FHFA’s seasonally adjusted monthly index for March was up 0.1% from February.

Home prices increased in all 50 states and the District of Columbia between the first quarters of 2018 and 2019.  The top five areas in annual appreciation were: 1) Idaho 13.4%; 2) Nevada 10.6%; 3) Utah 8.9%; 4) Tennessee 7.7%; and 5) Georgia 7.5%.  The areas showing the smallest annual appreciation were:  1) Maryland 0.5%; 2) Delaware 0.7%; 3) Louisiana 1.0%; 4) Alaska 2.1%; and 5) Wyoming 2.1%.  Of the nine census divisions, the Mountain division experienced the strongest four-quarter appreciation, posting a 7.2% gain between the first quarters of 2018 and 2019 and a 1.7% increase in the first quarter of 2019.  Annual house price appreciation was weakest in the Pacific division, where prices rose by 3.7% between the first quarters of 2018 and 2019.

Also last Tuesday, the S&P/Case-Shiller Home Price Index was released showing the seasonally adjusted home prices for the benchmark 20-city index were up 0.09% month-over-month.  The non-seasonally adjusted index was up 2.7% year-over-year.  Analysts had forecast a 0.2% month-over-month seasonally adjusted increase and 3.1% year-over-year non-seasonally adjusted for the 20-city series.

 

David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, remarked “Home price gains continue to slow.  The patterns seen in the last year or more continue: year-over-year price gains in most cities are consistently shrinking.  Double-digit annual gains have vanished.  The largest annual gain was 8.2% in Las Vegas; one year ago, Seattle had a 13% gain.  In this report, Seattle prices are up only 1.6%. The 20-City Composite dropped from 6.7% to 2.7% annual gains over the last year as well.  The shift to smaller price increases is broad-based and not limited to one or two cities where large price increases collapsed.  Other housing statistics tell a similar story.  Existing single family home sales are flat.  Since 2017, peak sales were in February 2018 at 5.1 million at annual rates; the weakest were 4.36 million in January 2019.  The range was 650,000.”  Blitzer continued, “The difficulty facing housing may be too-high price increases.  At the currently lower pace of home price increases, prices are rising almost twice as fast as inflation: in the last 12 months, the S&P Corelogic Case-Shiller National Index is up 3.7%, double the 1.9% inflation rate.  Measured in real, inflation-adjusted terms, home prices today are rising at a 1.8% annual rate.  This compares to a 1.2% real annual price increases in housing since 1975.”

Last Thursday, the National Association of Realtors (NAR) reported Pending Home Sales declined by a seasonally adjusted 1.5% in April and were 2% lower than a year ago.  The consensus forecast had called for a 0.5% increase.  Sales were 2% lower compared with April 2018, the 16th straight month of annual declines.  Regionally, only the Midwest saw an increase in April, with a 1.3% rise in sales.  Pending sales were down 1.8% in the Northeast, 2.5% lower in the South and 1.8% lower in the West.

Chief NAR economist Lawrence Yun commented “Though the latest monthly figure shows a mild decline in contract signings, mortgage applications and consumer confidence have been steadily rising.  Home price appreciation has been the strongest on the lower-end as inventory conditions have been consistently tight on homes priced under $250,000.  Price conditions are soft on the upper-end, especially in high tax states like Connecticut, New York and Illinois.  It’s inevitable for sales to turn higher in a few months.”  At the current sales pace, there is a 3.3-month supply of homes for sale priced under $250,000 nationally, but an 8.9-month supply of homes priced $1 million and above.

Elsewhere, mortgage data from the Mortgage Bankers Association (MBA) showed the number of mortgage applications decreased from the prior week.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) fell 3.3% for the week ended May 24, 2019.  The seasonally adjusted Purchase Index decreased 1% from a week prior while the Refinance Index increased 6%.  Overall, the refinance portion of mortgage activity increased to 39.7% from 40.5% of total applications from the prior week.

The adjustable-rate mortgage share of activity increased to 6.6% of total applications from 6.8%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance was unchanged at 4.33% with points decreasing to 0.42 from 0.43 for 80 percent loan-to-value ratio (LTV) loans.

For the week, the FNMA 4.0% coupon bond gained 36.0 basis points to close at $103.219 while the 10-year Treasury yield decreased 17.00 basis points to end at 2.133%.  The Dow Jones Industrial Average plunged 770.65 points to close at 24,815.04.  The NASDAQ Composite Index fell 183.86 points to close at 7,453.15.  The S&P 500 Index lost 74.00 points to close at 2,752.06.  Year to date (2019) on a total return basis, the Dow Jones Industrial Average has added 6.38%, the NASDAQ Composite Index has gained 12.33%, and the S&P 500 Index has advanced 9.78%.

This past week, the national average 30-year mortgage rate fell to 3.94% from 4.05%; the 15-year mortgage rate decreased to 3.75% from 3.88%; the 5/1 ARM mortgage rate decreased to 3.99% from 4.03%; and the FHA 30-year rate declined to 3.75% from 4.00%.  Jumbo 30-year rates dropped to 3.90% from 4.00%.

Economic Calendar – for the Week of June 3, 2019

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

The FNMA 30-year 4.0% coupon bond ($103.219 +36.0bp) traded within a wider 37.5 basis point range between a weekly intraday low of $102.859 on Wednesday and a weekly intraday high of 103.234 on Friday before closing the week at $103.219 on Friday.  Mortgage bonds traded flat on Tuesday and Wednesday before moving higher on Thursday and above nearest technical resistance on Friday following a sharp drop in the stock market on international trade concerns.

Former technical resistance at $103.109 becomes closest support followed by support at the 25-day moving average at $102.739.  The next levels of resistance are found at the 38.2% Fibonacci retracement level ($103.379) followed by the 23.6% Fibonacci retracement level ($104.321).

The slow stochastic indicator shows the bond is still trading on a buy signal while extremely “overbought” and susceptible to a reversal lower.  Friday’s strong move higher may be followed by a retracement toward the $103.109 level before resumption in any further upward move.  The current chart pattern of strong upward momentum could continue this week resulting in slightly lower mortgage rates.

 

Tucson Mortgages Home Loan News 5-27-2019

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of May 20, 2019
  • Economic Calendar – week of May 27, 2019
  • Mortgage Rate Forecast with Chart

Weekly Review

Investors switched to defense this past week seeking safe-haven assets such as Treasuries and bonds due to a forecast of weaker manufacturing growth and international trade concerns.  The stock market’s broader indexes suffered their third consecutive weekly decline, and for the narrower Dow Jones Industrial Average it was the fifth consecutive weekly drop.

Thursday, an IHS Markit “flash” survey of U.S. manufacturers plunged to a nine-and-a-half year low of 50.6 in May from 52.6 in April.  Even more alarming, Markit’s survey of U.S. service-oriented companies employing approximately 80% of all U.S. workers fell to a 39-month low of 50.8 from 52.7.  Manufacturing weakness was also seen with Friday’s release from the Commerce Department showing a decline in April durable goods orders, especially the 0.9% drop in core capital goods which exclude aircraft and defense orders.  This data suggests the U.S. economy could continue to slow in the coming months, especially if the trade war with China remains much longer to foster economic uncertainty among U.S. companies.

The result of all this disappointing economic news was a drop in the yield of the benchmark 10-year Treasury note down to around 2.32%, its lowest level since late 2017.  The drop pushed the 10-year yield back below the three-month Treasury bill yield—a yield curve inversion that has historically preceded an economic recession within seven to 24 months.

In housing, the National Association of Realtors reported Existing Home Sales declined 0.4% month-over-month in April to a seasonally-adjusted annual rate of 5.19 million.  This was below the consensus forecast calling for a rate of 5.35 million and was slightly below an unrevised 5.21 million reported for March.  Total sales were 4.4% lower than the same period a year ago.

The median existing home price for all housing types increased 3.6% year-over-year to $267,300, recording the 86th consecutive month of year-over-year gains.  The median existing single-family home price was $269,300, up 3.7% year-over-year.

Regionally, Existing Home Sales were 4.5% lower in the Northeast; unchanged in the Midwest; 0.4% lower in the South; and 1.8% higher in the West.  Meanwhile, median home prices climbed 0.9% higher in the Northeast to $277,700; 5.5% higher in the Midwest to $210,500; 4.4% higher in the South to $236,800; and were 1.3% higher in the West rising to $395,100.

Single-family home sales declined 1.1% month-over-month to a seasonally adjusted annual rate of 4.62 million and were 4.0% lower year-over-year.  The inventories of homes for sale at the end of April increased to 1.83 million from 1.67 million in March, and were 1.7% higher than a year ago.

Unsold inventory reached a 4.2-month supply at the current sales rate compared to 3.8 months in March.  This remains below the 6.0-months’ supply typically associated with a more balanced market.  The data suggests lower than typical inventory coupled with relatively high home prices continues to hinder existing home sales despite a decline in mortgage rates.

Thursday, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly announced New Home Sales fell 6.9% month-over-month in April to a seasonally adjusted annual rate of 673,000.  However, this was above the consensus forecast of 665,000 following a large upwardly revised reading of 723,000 for March.  On a year-over-year basis, new home sales were 7.0% higher.

Regionally, April new home sales were lower in all regions except the Northeast where they were up 11.5%.  Sales were 7.4% lower in the Midwest; 7.3% lower in the South; and 8.3% lower in the West.

The median sales price increased 8.8% year-year to $342,200 while the average sales price increased 2.2% to $393,700.  The inventory of new homes for sale at the April sales rate increased to a 5.9-month supply from a 5.6-month supply in March.

Elsewhere, mortgage data from the Mortgage Bankers Association (MBA) showed the number of mortgage applications increased from the prior week.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) rose 2.4% for the week ended May 17, 2019.  The seasonally adjusted Purchase Index decreased 2% from a week prior while the Refinance Index increased 8%.  Overall, the refinance portion of mortgage activity increased to 40.5% from 37.9% of total applications from the prior week.

The adjustable-rate mortgage share of activity increased to 6.8% of total applications from 6.3%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance decreased to 4.33% from 4.40% with points increasing to 0.43 from 0.40 for 80 percent loan-to-value ratio (LTV) loans.

For the week, the FNMA 4.0% coupon bond gained 7.8 basis points to close at $102.859 while the 10-year Treasury yield decreased 7.00 basis points to end at 2.324%.  The Dow Jones Industrial Average dropped 178.31 points to close at 25,585.69.  The NASDAQ Composite Index fell 179.27 points to close at 7,637.01.  The S&P 500 Index lost 33.47 points to close at 2,826.06.  Year to date (2019) on a total return basis, the Dow Jones Industrial Average has added 9.68%, the NASDAQ Composite Index has gained 15.10%, and the S&P 500 Index has advanced 12.73%.

This past week, the national average 30-year mortgage rate fell to 4.05% from 4.15%; the 15-year mortgage rate decreased to 3.88% from 3.90%; the 5/1 ARM mortgage rate decreased to 4.03% from 4.06%; and the FHA 30-year rate remained unchanged at 4.00%.  Jumbo 30-year rates declined to 4.00% from 4.07%.

Economic Calendar – for the Week of May 27, 2019

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

The FNMA 30-year 4.0% coupon bond ($102.859 +7.8bp) traded within a wider 32.8 basis point range between a weekly intraday low of $102.641 on Tuesday and a weekly intraday high of 102.969 on Thursday before closing the week at $102.859 on Friday.  Mortgage bonds traded up to resistance Wednesday through Friday following a dip lower and bounce off of support on Monday and Tuesday.  The strong triple layer of technical support remains at the 50% Fibonacci retracement level ($102.618), the 25-day moving average ($102.665), and the 50-day moving average ($102.633).  Further support is found at the 100-day moving average at $102.582.  Technical resistance remains at $102.922, the intraday high of May 15 and at $103.109, the intraday high of March 27.  The slow stochastic indicator indicates the bond is re-entering “overbought” status after taking a dip below the “80” trigger line earlier in the week and is currently trading on a buy signal.  The chart suggests a move higher to re-test resistance levels and this may result in slightly lower mortgage rates this coming week.

 

Tucson Mortgages Home Loan News 5-20-2019

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of May 13, 2019
  • Economic Calendar – week of May 20, 2019
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market got off to a weak start suffering its worst day of the year last Monday as China retaliated against the $200 billion in tariffs levied against China by the Trump Administration with $60 billion in additional tariffs against U.S. imported goods.  Consequently, fears of a full-blown trade war between the U.S. and China weighed on investor sentiment all week prompting a “flight to safety trade” benefiting bond prices.  A mid-week rally erased some of Monday’s losses after President Trump tweeted the U.S. would “make a deal when the time is right” and highlighted his friendship with Chinese President Xi Jinping, calling the trade pressures between the two countries a “little squabble.”  Stocks also benefited from news reported by The Wall Street Journal that Treasury Secretary Steven Mnuchin and chief trade negotiator, Robert Lighthizer, were likely to return to China for negotiations later this month.

The week’s economic data was “mixed” with Industrial Production (-0.5% vs. 0.1% forecast) contracting far greater than expected in April due to declining auto manufacturing.  Retail Sales also declined (-0.2% vs. +0.2%) erasing expectations for modest increase.  On a positive note, the University of Michigan’s Consumer Sentiment Index soared (102.4 vs. 96.9 forecast) to a 15-year high, and weekly jobless claims declined to 212,000 from 228,000 the prior week.

There is now a growing perception that if there is an economic slowdown triggered by a tariff war between the U.S. and China, the Federal Reserve will step in to stimulate the economy with a rate cut.  The Fed Funds futures market is currently pricing in a 57.8% chance the Fed will cut rates by October.

In housing, builder confidence increased for newly built single-family homes according to the latest data released last Wednesday by the National Association of Home Builders (NAHB) and Wells Fargo.  Their Housing Market Index (HMI) climbed three points in May to 66, the highest reading since last October and two points higher than forecast.  Any reading over 50 shows improvement.

In May, the sub-index measuring current sales conditions shot three points higher to 72 while the component measuring expectations over the next six months moved one point higher to 72, and the index of buyer traffic increased two points to 49.

NAHB Chairman Greg Ugalde stated “Builders are busy catching up after a wet winter, and many characterize sales as solid, driven by improved demand and ongoing low overall supply.  However, affordability challenges persist and remain a big impediment to stronger sales.”  NAHB Chief Economist Robert Dietz added “Lower mortgage rates hovering around 4 percent in conjunction with ongoing job growth and rising wages have contributed to a gradual improvement in the market place.  At the same time, builders continue to deal with ongoing labor and lot shortages and rising material costs that are holding back supply and harming affordability.”

Thursday, the Commerce Department released their Housing Starts and Building Permits data for April showing Housing Starts increased 5.7% month-over-month to a seasonally adjusted annual rate of 1.235 million.  This was higher than the consensus forecast of 1.200 million and largely due to a 6.2% increase in single-unit starts.  Meanwhile, Building Permits increased 0.6% month-over-month to 1.296 million.  This was higher than the forecast of 1.280 million, although single-unit residential permits fell 4.2%.

Regionally, April housing starts saw large gains in the Northeast (+84.6%) and Midwest (+42.0%) regions.  However, the nation’s two largest regions experienced declines in total starts with the South dropping -5.7% and the West falling -5.5%.

Building permits for single-unit housing were lower in the Northeast (-7.5%), South (-8.8%), and West  (-0.5%) regions.  However, the Midwest saw a gain of +11.8%.

The number of units under construction at the end of April totaled 1.121 million, down 0.9% month-over-month and down 0.4% year-over-year. The data suggests declining mortgage rates were starting to provide some support for the housing market.

Elsewhere, mortgage data from the Mortgage Bankers Association (MBA) showed the number of mortgage applications decreased from the prior week.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) declined 0.6% for the week ended May 10, 2019.  The seasonally adjusted Purchase Index decreased 1% from a week prior while the Refinance Index also decreased 1%.  Overall, the refinance portion of mortgage activity was unchanged at 37.9% of total applications from the prior week.

The adjustable-rate mortgage share of activity decreased to 6.3% of total applications from 6.4%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance decreased to 4.40% from 4.41% with points decreasing to 0.40 from 0.47 for 80 percent loan-to-value ratio (LTV) loans.

For the week, the FNMA 4.0% coupon bond gained 12.5 basis points to close at $102.781 while the 10-year Treasury yield decreased 7.90 basis points to end at 2.394%.  The Dow Jones Industrial Average dropped 178.37 points to close at 25,764.00.  The NASDAQ Composite Index fell 100.66 points to close at 7,816.28.  The S&P 500 Index lost 21.87 points to close at 2,859.53.  Year to date (2019) on a total return basis, the Dow Jones Industrial Average has added 10.44%, the NASDAQ Composite Index has gained 17.80%, and the S&P 500 Index has advanced 14.07%.

This past week, the national average 30-year mortgage rate fell to 4.15% from 4.24%; the 15-year mortgage rate decreased to 3.90% from 3.94%; the 5/1 ARM mortgage rate decreased to 4.06% from 4.14%; and the FHA 30-year rate remained unchanged at 4.00%.  Jumbo 30-year rates declined to 4.07% from 4.14%.

Economic Calendar – for the Week of May 20, 2019

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

The FNMA 30-year 4.0% coupon bond ($102.781, +12.5bp) traded within a slightly wider 20.3 basis point range between a weekly intraday low of $102.719 on Monday and a weekly intraday high of 102.922 on Wednesday before closing the week at $102.781 on Friday.  Mortgage bonds traded higher Monday through Wednesday on a bounce higher from technical support before giving back some gains on Thursday and Friday.  There is a strong triple layer of technical support at the 50% Fibonacci retracement level ($102.618), the 25-day moving average ($102.601), and the 50-day moving average ($102.582).  Technical resistance is found at $102.922, the intraday high of May 15 and $103.109, the intraday high of March 27.  The bond remains “overbought” at a higher level and is trading on a stronger sell signal.  The chart suggests a move lower toward support levels and this may result in slightly higher mortgage rates this coming week.

 

Tucson Mortgages Home Loan News 5-13-2019

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of May 6, 2019
  • Economic Calendar – week of May 13, 2019
  • Mortgage Rate Forecast with Chart

Weekly Review

Escalating U.S. – China trade tensions prompted a stock market selloff for much of the week although a major reversal Friday afternoon helped soften losses.  The Nasdaq Composite lost 3.0%, the Russell 2000 lost 2.5%, the S&P 500 lost 2.2%; and the Dow Jones Industrial Average lost 2.1%.  Last Monday, the stock market began the week near all-time highs before President Trump decided to play some “hard ball” with China in order to persuade the Chinese to agree to a trade deal after China slowed negotiations and defaulted on its prior commitments.

As a negotiating tactic, President Trump “tweeted” the tariff rate on Chinese imports would go up to 25% at midnight last Thursday.  Sure enough, at 12:01 a.m. on Friday, the tariff rate on an additional $200 billion in Chinese goods was increased from 10% to 25%.  This is in addition to $50 billion in Chinese products that are already taxed at the 25% rate.  China sent its chief trade negotiator, Vice Premier Liu He, to Washington to continue trade talks and the U.S. is purportedly giving China up to four more weeks to reach an agreement.  Depending on the outcome, President Trump stated the tariffs may or may not be removed, but said he is also prepared to impose the 25% tariff rate on an additional $325 billion of Chinese imports if necessary.  That ought to get China’s attention and prompt them to bargain in good faith.

In housing, mortgage data from the Mortgage Bankers Association (MBA) showed the number of mortgage applications increased from the prior week.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) advanced 2.7% for the week ended May 3, 2019.  The seasonally adjusted Purchase Index increased 4% from a week prior while the Refinance Index increased 1%.  Overall, the refinance portion of mortgage activity decreased to 37.9% from 38.8% of total applications from the prior week.

The adjustable-rate mortgage share of activity increased to 6.4% of total applications from 6.2%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance decreased to 4.41% from 4.42% with points increasing to 0.47 from 0.46 for 80 percent loan-to-value ratio (LTV) loans.

For the week, the FNMA 4.0% coupon bond was unchanged closing at $102.656 while the 10-year Treasury yield decreased 5.70 basis points to end at 2.473%.  The Dow Jones Industrial Average dropped 562.58 points to close at 25,942.37.  The NASDAQ Composite Index fell 247.06 points to close at 7,916.94.  The S&P 500 Index lost 64.24 points to close at 2,881.40.  Year to date (2019) on a total return basis, the Dow Jones Industrial Average has added 11.21%, the NASDAQ Composite Index has gained 19.32%, and the S&P 500 Index has advanced 14.94%.

This past week, the national average 30-year mortgage rate fell to 4.24% from 4.29%; the 15-year mortgage rate decreased to 3.94% from 3.97%; the 5/1 ARM mortgage rate increased to 4.14% from 4.05%; and the FHA 30-year rate remained unchanged at 4.00%.  Jumbo 30-year rates declined to 4.14% from 4.16%.

Economic Calendar – for the Week of May 13, 2019

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

The FNMA 30-year 4.0% coupon bond ($102.656, unchanged) traded within a narrower 18.8 basis point range between a weekly intraday low of $102.609 on Wednesday and a weekly intraday high of 102.797 also on Wednesday before closing the week at $102.656 on Friday.  Mortgage bonds traded “sideways” during the week between technical support at the 50% Fibonacci retracement level and resistance at $102.844, the intraday high of May 1.  The bond is now “overbought” and trading on a weak sell signal from a negative stochastic crossover on Friday.  This may result in further price weakness resulting in a slight deterioration in mortgage rates this coming week.  On the other hand, if the bond manages to bounce higher off of support and remains “overbought,” we could see stable mortgage rates during the week.

 

Tucson Mortgages Home Loan News 5-6-2019

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of April 29, 2019
  • Economic Calendar – week of May 6, 2019
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market traded fairly flat and “mixed” with the Dow Jones Industrial Average lagging the NASDAQ Composite and S&P 500 Indexes as corporate earnings reports flooded in during the week.  It was the busiest earnings week so far with 163 of the S&P 500 companies reporting earnings.  Although more earnings reports than usual have exceeded analysts’ estimates, overall earnings growth for the S&P 500 looks to be roughly flat versus 2018 when earnings growth came in about 20% higher than in 2017.

Furthermore, investors continued to focus their attention on trade negotiations with China and the Federal Reserve’s monetary policy.  Trade talks with China began again last Tuesday in Beijing, but may be bogged down if a report in the Wall Street Journal is to be believed that the U.S. was insisting on maintaining some its tariffs on Chinese goods as an enforcement mechanism.

Wednesday, the Federal Reserve’s Open Market Committee left the fed funds rate unchanged at 2.25-2.50% as widely expected.  The Committee also stated overall and core inflation numbers have weakened, remaining below its 2% target.  This prompted some investors to believe the Fed was setting the stage for a rate cut if inflation continues to remain consistently below target. However, Fed Chair Jerome Powell threw a wet blanket on that notion during his post-meeting news conference when he said he believed the recent deceleration in inflation is being caused by transitory factors.  U.S. Treasuries prices pulled back following Powell’s press conference to send yields slightly higher.

Friday’s release of the April Employment Situation Summary (Jobs Report) revealed continuing strong growth in job formation with restrained inflationary pressure coming from wage growth. Nonfarm payrolls increased by 263,000, well above the consensus forecast of 200,000, while average hourly earnings only climbed by 0.2% for the month leaving them up 3.2% year-over-year and unchanged from the March report.  The April Jobs Report should lend support for the Fed’s current monetary policy.

In housing, the National Association of Realtors (NAR) reported Pending Home Sales for March increased 3.8% but were down 1.2% from a year earlier, the 15th straight month of annual declines.  Buyers had added motivation in March, as mortgage rates plunged to the lowest level in more than a year.

Regionally, three of the four regions had lower sales from a year ago with the exception of the South recording a modest sales gain of 0.7%.

The Northeast had the smallest drop in annual sales of 0.4% followed by the West with a decline of 1.6%.  The Midwest showed the largest drop in contract signings of 5.0%.  Month-over-month, the West region had the largest increase in sales of 8.7%.  The South realized a 4.4% gain while the Midwest had a gain of 2.3%.  The Northeast was the only region to have a decline in sales, falling 1.7%.

NAR chief economist Lawrence Yun remarked, “We are seeing a positive sentiment from consumers about home buying, as mortgage applications have been steadily increasing and mortgage rates are extremely favorable.  Despite some affordability issues in the West, the numbers indicate that there is a reason for optimism.  Inventory has increased, too.  These are great conditions for the region.”

Last Tuesday, the S&P/Case-Shiller Home Price Index for February was released showing the seasonally adjusted home prices for the benchmark 20-city index were up 0.20% month-over-month.  The non-seasonally adjusted national index was up 4.0% year-over-year and continues to slow from the 4.2% to 6.7% range it has hovered between for the last two-plus years.

Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, David M. Blitzer, commented “The pace of increases for home prices continues to slow. Homes began their climb in 2012 and accelerated until late 2013 when annual increases reached double digits.

Subsequently, increases slowed until now when the National Index is up 4% in the last 12 months.  Sales of existing single family homes have recovered since 2010 and reached their peak one year ago in February 2018.  Home sales drifted down over the last year except for a one-month pop in February 2019.  Sales of new homes, housing starts, and residential investment had similar weak trajectories over the last year.  Mortgage rates are down one-half to three-quarters of a percentage point since late 2018.”

Elsewhere, mortgage data from the Mortgage Bankers Association (MBA) showed the number of mortgage applications declined from the prior week.

The MBA reported their overall seasonally adjusted Market Composite Index (application volume) fell 4.3% for the week ended April 26, 2019.  The seasonally adjusted Purchase Index decreased 4% from a week prior while the Refinance Index decreased 5%.  Overall, the refinance portion of mortgage activity decreased to 38.8% from 39.4% of total applications from the prior week.

The adjustable-rate mortgage share of activity decreased to 6.2% of total applications from 6.4%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 4.42% from 4.46% with points increasing to 0.46 from 0.44 for 80 percent loan-to-value ratio (LTV) loans.

For the week, the FNMA 4.0% coupon bond declined 3.2 basis points to close at $102.656 while the 10-year Treasury yield increased 2.80 basis points to end at 2.530%.  The Dow Jones Industrial Average dropped 38.38 points to close at 26,504.95.  The NASDAQ Composite Index gained 17.60 points to close at 8,164.00.  The S&P 500 Index added 5.76 points to close at 2,945.64.  Year to date (2019) on a total return basis, the Dow Jones Industrial Average has added 13.79%, the NASDAQ Composite Index has gained 22.77%, and the S&P 500 Index has advanced 17.27%.

This past week, the national average 30-year mortgage rate fell to 4.27% from 4.34%; the 15-year mortgage rate decreased to 3.96% from 4.04%; the 5/1 ARM mortgage rate dropped to 4.05% from 4.10%; and the FHA 30-year rate remained unchanged at 4.00%.  Jumbo 30-year rates declined to 4.15% from 4.25%.

Economic Calendar – for the Week of May 6, 2019

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

The FNMA 30-year 4.0% coupon bond ($102.656, -3.2bp) traded within a narrower 34.4 basis point range between a weekly intraday low of $102.50 on Thursday and Friday and a weekly intraday high of 102.844 on Wednesday before closing the week at $102.656 on Friday.  Mortgage bonds traded “sideways” during the week along the 50% Fibonacci retracement level and the 25-day moving average.  These levels represent nearest resistance that will revert to technical support if the bond can manage to carry upward from Friday’s move higher.  The bond continues to trade on a buy signal and is not yet “overbought” so we could see a move higher with a corresponding slight improvement in mortgage rates this coming week.

 

Tucson Mortgages Home Loan News 4-29-2019

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of April 22, 2019
  • Economic Calendar – week of April 29, 2019
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market ended the week “mixed” with the Dow Jones Industrial Average stumbling a bit in comparison to the NASDAQ Composite and S&P 500 Indexes after either disappointing earnings results or guidance from Exxon Mobil, 3M, and Intel.  Bonds posted modest gains with yields moving lower.

Economic news was generally favorable during the week showing strong data for March in new home sales and durable goods orders.  Friday, the Commerce Department reported the advance estimate for first quarter GDP growth also exceeding analysts’ forecasts by increasing 3.2% versus consensus expectations of 1.9%.  Inflation was tame with the GDP Price Deflator showing a modest gain of 0.9% versus a consensus forecast of 1.4% and a prior reading of 1.7%.  However, the GDP report also showed a slowing in the pace of consumer spending with an increase of 1.2% which was down considerably from the 2.5% rate seen during the fourth quarter of 2018.

In housing, the Census Bureau reported Existing Home Sales for March declined 4.9% month-over-month to a seasonally-adjusted annual rate of 5.21 million.  This was below the consensus forecast of 5.37 million and lower than a downwardly revised 5.48 million for February.  Total sales were 5.4% lower than the same period a year ago.

Housing prices continued to rise with the median existing home price for all housing types increasing 3.8% year-over-year to $259,400. The median existing single-family home price rose 3.8% higher year-over-year to $261,100.

Regionally, existing home sales were down 2.9% in the Northeast; 7.9% lower in the Midwest; down 3.4% in the South; and 6.0% lower in the West.  Median home prices rose 2.5% in the Northeast to $277,500; prices increased 4.6% in the Midwest $200,500); prices rose 2.4% in the South to $277,400; and they increased 3.1% in the West to $389,300.

The March inventory of homes for sale increased to 1.68 million units from 1.63 million units in February and inventory was 2.4% higher on an annual basis.  At the current sales rate, unsold home inventory is at a 3.9-month supply, up from a 3.6 month supply in February.  The data continues to suggest overall home sales activity will be hindered by rising prices and lower home inventory with affordable price points.

The Census Bureau also released their latest New Home Sales report showing sales increased in March by 4.5% month-over-month to a seasonally adjusted annual rate of 692,000.  This easily exceeded the consensus forecast of 646,000 and was the strongest sales rate since November 2017.  Year-over-year sales were 3.0% higher.

The average sales price increased 1.8% in March to $376,000 although the median sales price fell 9.8% year-over-year to $302,700.

Regionally, new home sales were 22.2% lower in the Northeast; 3.6% higher in the South; 17.6% higher in the Midwest; and 6.7% higher in the West.

Homes priced below $400,000 accounted for 71% of total homes sold in March versus 70% in February.  New home inventory for sale declined to a 6.0-month supply in March from a 6.3-month supply in February.  This data reveals new home sales activity was boosted by the 9.8% decline in the median home sales price and lower mortgage rates – a potent combination releasing pent-up demand for affordable housing.

Furthermore, the Federal Housing Finance Agency (FHFA) reported that its latest seasonally adjusted monthly House Price Index (HPI) was 0.3% higher in February while the previously reported 0.6% gain in January 2019 remained unchanged.  On an annual basis, house prices were 4.9% higher.  For the nine census divisions, seasonally adjusted monthly house price changes from January 2019 to February 2019 ranged from -1.2% in the Middle Atlantic division to +1.4% in the East South Central division.

The 12-month changes were all positive, ranging from +3.5% in the West South Central division to +6.5% in the Mountain division.

Elsewhere, mortgage data from the Mortgage Bankers Association (MBA) showed the number of mortgage applications declined from the prior week.

The MBA reported their overall seasonally adjusted Market Composite Index (application volume) fell 7.3% for the week ended April 19, 2019.  The seasonally adjusted Purchase Index decreased 4% from a week prior while the Refinance Index decreased 11%.  Overall, the refinance portion of mortgage activity decreased to 39.4% from 41.5% of total applications from the prior week.

The adjustable-rate mortgage share of activity decreased to 6.4% of total applications from 6.6%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 4.46% from 4.44% with points increasing to 0.44 from 0.42 for 80 percent loan-to-value ratio (LTV) loans.

For the week, the FNMA 4.0% coupon bond gained 21.9 basis points to close at $102.688 while the 10-year Treasury yield decreased 5.80 basis points to end at 2.502%.  The Dow Jones Industrial Average dropped 16.21 points to close at 26,543.33.  The NASDAQ Composite Index gained 148.34 points to close at 8,146.40.  The S&P 500 Index added 34.85 points to close at 2,939.88.  Year to date (2019) on a total return basis, the Dow Jones Industrial Average has added 13.79%, the NASDAQ Composite Index has gained 22.77%, and the S&P 500 Index has advanced 17.27%.

This past week, the national average 30-year mortgage rate fell to 4.27% from 4.34%; the 15-year mortgage rate decreased to 3.96% from 4.04%; the 5/1 ARM mortgage rate dropped to 4.05% from 4.10%; and the FHA 30-year rate remained unchanged at 4.00%.  Jumbo 30-year rates declined to 4.15% from 4.25%.

Economic Calendar – for the Week of April 29, 2019

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

The FNMA 30-year 4.0% coupon bond ($102.688, +21.9bp) traded within a wider 40.6 basis point range between a weekly intraday low of $102.328 on Tuesday and a weekly intraday high of 102.734 on Friday before closing the week at $102.688 on Friday.  Mortgage bonds traded down to the 50-day moving average support level on Monday and Tuesday before bouncing higher off of support and moving just above the 50% Fibonacci retracement resistance level on Friday.

Mortgage bonds received a buy signal from a positive crossover in the slow stochastic oscillator last Tuesday and should continue to move higher toward the next resistance level and toward technically “overbought” status.  Therefore, from a technical perspective, we should continue to see some upward movement in bond prices with a corresponding slight improvement in mortgage rates this coming week.