Tucson Mortgages Home Loan News 3-1-2021

By Todd Abelson NMLS #180858 on .

Week of February 22, 2021 in Review

Initial Jobless Claims declined by 111,000 in the latest week, as another 730,000 people filed for unemployment benefits for the first time. Unfortunately, this decline is likely due to the inclement weather conditions across the US, and especially in Texas, and not to any real improvement in the labor sector. In fact, there were 19 million weekly claims filed for benefits in all programs for the week ending February 6, an increase of 700,000 from the previous week. By comparison, there were just 2.1 million weekly claims filed for benefits in all programs in the comparable week in 2020.

The housing sector continues to lead our economic recovery, as sales of new homes were up 4.3% in January, which was double market estimates. This is especially impressive given that inventory of new homes was down 6%. Pending Home Sales, which measure signed contracts on existing homes, did fall 2.8% in January but sales were still 13% higher than the same time last year. Again, given that inventory of existing homes was down 24% annually, the level of sales certainly speaks to the high demand for homes nationwide.

This high demand has helped home prices continue to appreciate. The Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, reported its biggest annual national gain in seven years, with prices up 10.4% in December. The Federal Housing Finance Agency (FHFA) also released their House Price Index, which measures home price appreciation on single-family homes with conforming loan amounts. And the FHFA data came in even stronger, with home prices up 11.4% year over year in December.

Fed Chair Jerome Powell spoke in front of Congress and noted, “The economy is a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved.” He also reiterated that the Fed is not fearful of inflation.

Speaking of inflation, the Fed’s favored inflation measure, Personal Consumption Expenditures, showed inflation remained tame in January. Read on to learn why rising inflation (or even the fear of it) can have such an impact on Mortgage Bonds and home loan rates, which are tied to them.

 

Looking Past the Headlines on Initial Jobless Claims

Another 730,000 people filed for unemployment benefits for the first time in the latest week, which was a decrease of 111,000. However, this drop is likely due to the weather conditions across the US, and especially the crisis in Texas last week, and needs to be taken with a grain of salt.

Continuing Claims, which measures people who continue to receive benefits, decreased by 101,000 to 4.4 million. Pandemic Unemployment Assistance Claims (which gives individuals benefits who would not usually qualify) decreased by 167,000, while Pandemic Emergency Claims (which extends claims by 13 weeks after regular benefits expire) increased by 1 million to the highest level since the pandemic began.

The total number of continued benefits in all programs for the week ending February 6 was 19 million, an increase of 700,000 from the previous week. By comparison, there were 2.1 million weekly claims filed for benefits in all programs in the comparable week in 2020.

The bottom line is that, despite the headline drop in Initial Jobless Claims, unfortunately the unemployment picture has not really improved because that drop was likely due to bad weather and power outages preventing people from filing. In addition, the total amount of people receiving benefits worsened and increased. We still have a long way to go to return to pre-pandemic levels of unemployment.

 

New Home Sales Beat Expectations

New Home Sales, which measure signed contracts on new homes, were up 4.3% in January, which was double market estimates. But that doesn’t tell the whole story. December’s sales figure was revised much higher and factoring in this revision, sales are up 10% in January. Sales are also up over 19.3% when compared to January of last year.

The strong level of sales is especially impressive, given that inventory is down 6% with just 307,000 new homes for sale at the end of January, which represents a 4-month supply at the current sales pace.

The median home price was reported at $346,400, up 5.3% year over year. Remember this is not the same as appreciation. It simply means half the homes sold were above this price and half were below it.

 

Low Inventory Impacts Pending Home Sales

Pending Home Sales, which measure signed contracts on existing homes, fell 2.8% in January. However, they are up 13% compared to January of last year. This is pretty amazing in the face of record-low inventory levels of existing homes, which are down 24% annually.

Lawrence Yun, Chief Economist for the National Association of REALTORS®, noted that, “Pending home sales fell in January because there are simply not enough homes to match the demand on the market.” But he added, “That said, there has been an increase in permits and requests to build new homes.”

 

Appreciation Shows Housing Remains Hot

The Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, reported its biggest national gain in seven years. There was a 10.4% annual gain in home prices nationwide in December, up from an already strong reading of 9.5% in November.

The 20-city index rose from 9.2% to 10.1% year over year, with all of the cities showing strong gains. Phoenix (+14.4%), Seattle (+13.6%), and San Diego (+13%) reported the highest annual gains among the 20 cities.

The Federal Housing Finance Agency (FHFA) also released their House Price Index, which measures home price appreciation on single-family homes with conforming loan amounts. Note that while you can have a million-dollar home with a conforming loan amount, the report most likely represents lower-priced homes, where supply is tightest, and demand is strongest.

As such, it should be no surprise that the FHFA House Price Index came in even stronger than the Case-Shiller Report. Home prices rose 1.1% from November to December and are up 11.4% year over year, higher than the 11.0% annual gain FHFA reported in November.

 

Inflation Tame in January

The Fed’s favored measure of inflation, Personal Consumption Expenditures (PCE), showed that headline inflation was up 0.3% in January, which was in line with expectations. Year over year, the index increased from 1.3% to 1.5%, as expected.

Core PCE, which strips out volatile food and energy prices and is the Fed’s real focus, was up 0.3% in January, which was hotter than the 0.1% rise anticipated. Year over year, Core PCE increased from 1.4% to 1.5%, which was slightly higher than market expectations of 1.4%.

Even with the Core rate coming in a bit hotter than expected, these levels show that inflation remains tame.

Why is tame inflation significant?

The massive stimulus plans have been causing fears of inflationary pressure. Even the hint or fear of inflation can cause Mortgage Bonds to worsen, which we’ve seen recently as they have fallen precipitously.

Remember, inflation is the arch enemy of Mortgage Bonds and home loan rates, which are tied to them. This is because inflation reduces the value of fixed investments, like Mortgage Bonds. Rising inflation (or even the fear of rising inflation) can cause Mortgage Bonds to worsen or move lower. Home loan rates are inversely tied to Mortgage Bonds, so when Bonds worsen home loan rates can rise, which has been the dynamic we’ve seen in the markets recently.

Though many factors influence the markets, it’s especially important to monitor all the latest inflation news and data and its impact on the markets.

 

Home Hack of the Week

Recent frigid temperatures across the country are an important reminder for all of us to double check our emergency kits in both our home and cars. Ready.gov provides this easy checklist.

For the basics, your kit should include batteries, flashlights, dust masks, whistle (to signal for help), moist towelettes, wrench or pliers, cell phone with chargers and a backup battery, first aid kit, one gallon of water per person per day for a minimum of three days, and a three-day supply of non-perishable food. Don’t forget a manual can opener!

Additional supplies that may be helpful include prescription medicines, glass and contact lens solution, infant formula, pet food and supplies, cash, important family documents (i.e. insurance and bank information), sleeping bags and blankets, extra clothes, fire extinguisher, matches, personal hygiene items, paper towels and plates, paper and pencil, and games and other activities for children.

And with the pandemic still ongoing, don’t forget to add masks, extra soap, hand sanitizer and disinfecting wipes.

Reminder to store your kit in a cool, dry place and make a note to check your kit twice a year so you can replace expired items as needed.

 

What to Look for This Week

Manufacturing news kicks off the week on Monday with the ISM Index for February. Then labor sector data will dominate the rest of the week, beginning Wednesday with the ADP Employment Report, which will give us an update on private payrolls for February. On Thursday, the latest weekly Jobless Claims figures will be reported as usual. Friday brings the highly anticipated Bureau of Labor Statistics Jobs Report for February, which includes Non-farm Payrolls and the Unemployment Rate.

 

Technical Picture

Mortgage Bonds were able to climb back above the 100.133 Fibonacci Level after tame inflation data. Mortgage Bonds may have found a bottom, as the candle pattern that formed after a big downtrend is a bullish engulfing pattern and portends higher Mortgage Bond prices ahead. In addition, Bonds have been oversold and now it appears there is a positive Stochastic crossover, which is also a good sign for Bond prices. The 10-year held at 1.60% and is remaining below 1.50%.

Todd Abelson - Tucson Mortgages

Tucson Mortgages Home Loan News 2-22-2021

By Todd Abelson NMLS #180858 on .

Week of February 15th, 2021 in Review

The pandemic’s grip on unemployment remains tight, unfortunately, as another 861,000 people filed for unemployment benefits for the first time in the latest week. There were also upward revisions of 55,000 initial claims to the previous week. The total number of continued benefits in all programs for the week ending January 30 was 18.3 million, versus just 2.1 million weekly claims in the comparable week in 2020.

Housing remains a bright spot in our economy, as record low inventory and high demand for homes continue to spark sales. Existing Home Sales, which measures closings on existing homes, were up 0.6% from December to January and nearly 24% compared to January of last year.

Meanwhile, builder confidence also remains near record highs despite rising lumber prices thanks to the high demand for homes. The National Association of Home Builders Housing Market Index, which is a real-time read on builder confidence rose 1 point to 84 in February. Any reading over 50 on this index that ranges from 1 to 100 signals expansion.

There was a bit of a slowdown in construction in January, however, as Housing Starts (which measure the start of construction on homes) were down 6% from December, with starts on single-family homes falling 12.2%. On the positive side, Building Permits (which are a sign of future construction) were up 10.4% from December to January. Permits for single-family homes also moved higher, rising 3.8% from December and nearly 30% compared to January of last year.

Wholesale inflation was also in the news, and it was hotter than expected in January, as the Producer Price Index rose by 1.3% – three times more than market expectations. And speaking of inflation, there was some important news from the manufacturing sector and what it might mean for inflation – and home loan rates – as detailed below.

Lastly, investors were closely watching Wednesday’s 20-year Bond Auction, which ended up having weak demand. Read on to learn more about why this matters.

 

Initial Jobless Claims Move in Wrong Direction

Another 861,000 people filed for unemployment benefits for the first time in the latest week, up 13,000 from the previous week’s revised total that also added 55,000 claims. Ohio (+140K), California (+137K) and New York (+59K) reported the largest gains.

Continuing Claims, which measure people continuing to receive benefits, decreased by 64,000 to 4.5 million. Pandemic Unemployment Assistance Claims (which gives individuals benefits who would not usually qualify) and Pandemic Emergency Claims (which extends claims by 13 weeks after regular benefits expire) dropped by 258,000 and 718,000, respectively.

The total number of continued benefits in all programs for the week ending January 30 was 18.3 million, a decrease of 1.3 million from the previous week. By comparison, there were just 2.1 million weekly claims filed for benefits in all programs in the comparable week in 2020.

The bottom line is that the unemployment picture is not getting any better overall, and actually worsened in terms of new claims in the latest week.

 

Record Low Housing Inventory Remains

Existing Home Sales, which measures closings on existing homes, were up 0.6% in January, which was stronger than the slight drop expected. Sales are up nearly 24% compared to January of last year.

This is especially impressive, as there were only 1.04 million homes for sale at the end of January, which equates to a record low of just a 1.9 months’ supply. Inventory dropped from the 1.07 million homes available at the end of December and it is also 26% lower year over year. Given the stiff competition and record-low inventory, it’s understandable that homes were only on the market for 21 days on average.

The median home price was $303,900, up 14% year over year. Note, this is not the same as appreciation. It simply means half the homes sold were above that price and half were below it. Sales on the low end were down 15%, while sales on homes above $1 million were up 77%. This dragged the median home price higher.

First-time homebuyers increased from 31% in December to 33% in January, even with the stiff competition for homes on the lower end, while cash buyers remained stable at 19%.

 

High Demand Keeps Home Builders Confident

Builder confidence remains strong, due in part to the high demand for houses, per the National Association of Home Builders Housing Market Index. This real-time read on builder confidence rose 1 point to 84 in February, which was a bit stronger than expectations.

Any reading above 50 on this index that runs from 1 to 100 signals expansion. Builder sentiment remains well above that level and also near the highest levels on record.

Breaking down the three components of the index, current sales conditions was stable at 90, future sales expectations fell 3 points to 80, and buyer traffic rose 4 points to 72.

 

Housing Starts Reverse Course in January

After a strong showing in December, Housing Starts (which measure the start of construction on homes) were down 6% in January and they were also 2.3% lower when compared to January of last year. Starts on single-family homes, which are in such high demand from buyers, fell 12.2% from December to January but they were up 17.5% year over year. Inclement weather across the country likely played a role in the monthly declines.

On a positive side, Building Permits (which are a sign of future construction) were up 10.4% from December to January and 22.5% year over year. Permits for single-family homes also moved higher, rising 3.8% from December and nearly 30% compared to January of last year. Hopefully building will continue to expand as we head into the warmer months, to help with the record low levels of homes that are available for sale.

 

Wholesale Inflation Comes in Hot

The Producer Price Index (PPI), which measures wholesale inflation, rose by 1.3% in January, which was three times more than market expectations of 0.4%. On a year over year basis, headline PPI increased from 0.8% to 1.7%.

Core PPI, which strips out volatile food and energy prices, was up 1.2% for the month and increased from 1.2% to 2.0% year over year.

While this is a volatile report and there were some factors that contributed to the rise (for e.g., brokerage fees were up 9.4% and energy prices were much higher), inflation is always something we need to monitor because it reduces the value of fixed investments like Mortgage Bonds. And since home loan rates are inversely tied to Mortgage Bonds, when Bonds worsen or move lower, home loan rates can rise. Though many factors influence the markets, hints of inflation are crucial to keep an eye on.

 

Manufacturing Hinting at Inflation Risk?

The Empire State Index, which measures the health of the manufacturing sector in the New York region, was reported at 12.1 in February, up from 3.5 in January and twice the estimate. Prices received rose 8 pts to 23.4, which is the highest since May 2011 and shows some inflationary pressures.

We know that inflation on the goods side of the economy is occurring due to supply chain issues related to the pandemic, but the services sector is keeping inflation in check for now. However, once the COVID-19 vaccine distribution is more widespread and more businesses and activities open and resume, we could see services inflation return. But at the same time supply chain issues may be resolved, bringing down inflation on goods.

The bottom line is that we will need to closely monitor for any inflation risk later in the year, as rising inflation could impact both Mortgage Bonds and the home loan rates tied to them, as explained above.

 

Weak Demand for 20-Year Bond Auction

All eyes were on Wednesday’s 20-year Bond Auction, with investors looking to see the level of demand. High demand, which is reflected in the purchasing of Bonds and Treasuries, can push prices higher and yields or rates lower.

Weak demand, on the other hand, can signal that investors think yields will continue to move higher, which can have a negative effect on rates.

And last week’s auction had very weak demand, with the bid to cover (which measures demand) of 2.15, well below the average since the 20-year auctions began last May.

 

Home Hack of the Week

Mason jars are always handy to have around because of the multitude of ways they can help with organizing, recipes and more. Here are just a few ways you can make the most of your Mason jars, courtesy of our friends at Real Simple.

For organizing: Store paper or binder clips, rubber bands and pens in separate jars for a stylish way to have easy access to supplies on your desktop. Mason jars are also a great option for storing crayons and other art and craft supplies, or even sewing items.

For the kitchen: Use Mason jars to preserve fresh basil. Simply trim the ends of the basil and keep on your counter in a Mason jar filled with water. Or, use a Mason jar for a quick and healthy breakfast on the go by layering yogurt, fruit, granola, pumpkin seeds, and maple syrup.

For gifting: Mason jars are a great way to swap or give cookies with flair. Stack your cookies on alternating layers of colorful waxed paper and tie a ribbon around the jar for a perfect presentation.

 

What to Look for This Week

Housing news will once again make headlines, beginning on Tuesday with news on appreciation via the S&P Case-Shiller Home Price Index and the Federal Housing Finance Agency House Price Index for December. Data on January’s New Home Sales and Pending Home Sales follows on Wednesday and Thursday, respectively.

Also on Thursday, we’ll get an update on Gross Domestic Product for the 4th quarter of 2020, Durable Goods Orders for January and the latest weekly Jobless Claims figures.

Ending the week on Friday, the Fed’s favored inflation measure, Personal Consumption Expenditures, will be released along with Personal Income and Spending for January.

 

Technical Picture

After testing support and bouncing higher, Mortgage Bonds are trading in a wide range between two Fibonacci levels, with resistance at 102.047 and support at 101.597. The 10-year came very close to testing resistance at the 38.2% Fibonacci level before moving lower.

 

Todd Abelson - Tucson Mortgages

Tucson Mortgages Home Loan News 2-16-2021

By Todd Abelson NMLS #180858 on .

Week of February 8th, 2021 in Review

The economic calendar may have been quiet, but the reports that were released continue to show the impact of the pandemic on our economy. Plus, two important auctions made headlines.

Another 793,000 people filed for unemployment benefits for the first time in the latest week. Though this was a decline of 19,000, there were upward revisions to the prior week’s data which added 33,000 claims, unfortunately. Continuing Claims, Pandemic Unemployment Assistance Claims, and Pandemic Emergency Claims all remain in the millions. The total number of continued benefits in all programs for the week ending January 23 was 20 million, versus just 2.2 million weekly claims filed for benefits in all programs in the comparable week in 2020.

Small businesses are certainly feeling the pressure as well, which has had an impact on confidence. The National Federation of Independent Business (NFIB) Small Business Optimism Index dropped 0.9 points in December to 95, which is a 9-month low. The Index is now at the lowest level since May, right in the heat of the pandemic. In addition, owners expecting better business conditions over the next six months also reached its lowest level in over seven years, as that reading fell seven points to a net negative 23%.

Consumer inflation remains tame per the latest Consumer Price Index (CPI) report, with Core CPI (which strips out volatile food and energy prices) flat in January and down from 1.6% to 1.4% year over year. Both of these readings were below expectations. Inflation is important to monitor when it comes to Mortgage Bonds and home loan rates, which are tied to them.

Last but certainly not least, all eyes were on the 10-year Treasury and 30-year Bond Auctions on Wednesday and Thursday, respectively. More on their significance below.

 

Jobless Claims Still Staggeringly High

The number of people filing for unemployment benefits for the first time fell by 19,000 in the latest week, as Initial Jobless Claims totaled 793,000. However, there were revisions to the prior week’s data, which added 33,000 claims.

 

Continuing Claims, which measure people continuing to receive benefits, decreased by 145,000 to 4.5 million.

Pandemic Unemployment Assistance Claims, which provide benefits to people who would not usually qualify, and Pandemic Emergency Claims, which extend claims by 13 weeks after regular benefits expire, increased by 1.5 million and 1.2 million respectively.

The total number of continued benefits in all programs for the week ending January 23 was 20 million, an increase of 2.6 million from the previous week. By comparison, there were 2.2 million weekly claims filed for benefits in all programs in the comparable week in 2020.

The bottom line is the unemployment situation remains dire and this was reiterated in remarks by Fed Chair Jerome Powell last week. Powell cited the misclassification errors that have plagued the Labor Department’s reporting since the pandemic began last March and noted that without these errors the unemployment rate would be closer to 10%. Powell also made it clear that the Fed is willing to sacrifice increasing debt to help the economy and that now is not the time to stop their purchases of Mortgage Backed Securities and Treasuries, which have helped stabilize the economy.

 

Consumer Inflation Remains Tame

Consumer inflation rose by 0.3% in January per the latest Consumer Price Index (CPI) report. The year over year reading remained stable at 1.4%, which was less than the 1.5% expected.

Core CPI, which strips out volatile food and energy prices, was flat in January and fell from 1.6% to 1.4% year over year. Both the monthly and yearly figures were 0.2% beneath expectations and show that inflation is really nowhere to be seen.

Why is tame inflation noteworthy?

Remember inflation erodes a Bond’s fixed rate of return. In other words, rising inflation can cause Bonds to worsen or lose value. This includes Mortgage Bonds, to which home loan rates are inversely tied. When Mortgage Bonds move lower, be it due to rising inflation or other reasons, home loan rates move higher. Though many factors influence the markets, keeping an eye on inflation is always important.

Also of note, the CPI report showed that rents are rising 2.1% across the US, which is down from 2.3% in the previous report. However, the slowdown is really only happening in big cities like New York, San Francisco and Boston where, according to RealPage, rents are down 16%, 22% and 9% respectively. Of the 150 large metro areas they study, rent gains were seen in 119 markets, including Phoenix, Memphis, Detroit, and Cleveland.

 

All Eyes on Auctions

Investors were closely watching the 10-year Treasury and 30-year Bond Auctions that were held last week on Wednesday and Thursday, respectively. With 10-year yields near their highest level since March and 30-year yields at the highest level since February, investors were looking to see if there would be more demand for Treasuries and Bonds at auction.

Why is this significant?

Demand, which is reflected in the purchasing of Bonds and Treasuries, can push prices higher and yields or rates lower. Weak demand can signal that investors think yields will continue to move higher, which can have a negative effect on rates.

While the 10-year Note Auction had below average demand, there was strong foreign demand (which is shown by direct and indirect bidders taking down 80% of the auction vs the 12-month average of 75%). As a result, it did not have much of an impact on Mortgage Bond prices, but yields did move a little lower on the 10-year after the release.

The 30-year Bond Auction was also met with below average demand, which caused Mortgage Bonds to move a bit lower afterwards.

 

Home Hack of the Week

With dining out decreasing over the last year, your dishwasher has likely been working overtime. If you’ve been noticing residue on your dishes as you unload them, these simple dishwasher maintenance steps from This Old House can help them sparkle again.

Remove the racks and scrub with mild detergent to clean any soap scum buildup. Soak the silverware holder as well. Use white vinegar to wipe out any detergent fragments in the dispenser, and to wipe off any residue on the sides, bottom and top of your dishwasher.

Check the sprayer arm for any clogs and use a toothpick or cotton swab to remove any food particles blocking the holes. Also, make sure the nozzle where the arm screws in is free of any buildup. And check the drain beneath the lower rack to make sure there aren’t any stuck particles.

Lastly, place a bowl of white vinegar on the lower rack and run the dishwasher to remove any remaining residue. You can also sprinkle baking soda on the bottom of the dishwasher and run a cycle to help with any stains or odors.

 

What to Look for This Week

After the market closures Monday for the Presidents Day holiday, the rest of the week is filled with key reports on housing, manufacturing and more.

Kicking off the week on Tuesday, we’ll get an update on manufacturing in the New York region for February with the Empire State Index, while the Philadelphia Fed Index follows Thursday.

On Wednesday we’ll get a real-time read on builder confidence with the National Association of Home Builders Housing Market Index. Thursday brings data on Housing Starts and Building Permits for January, with January’s Existing Home Sales being reported on Friday.

In addition, we’ll get an update on how retailers fared in January when the latest Retail Sales figures are reported on Tuesday, while Wednesday brings news on wholesale inflation with the Producer Price Index and the minutes from the Fed’s January 26-27 meeting. And on Thursday, the latest Jobless Claims figures remain critical to monitor when they’re reported at their usual time.

 

Technical Picture

The Fed continues to provide stability to the markets with its ongoing purchases of Mortgage Backed Securities. Mortgage Bonds accelerated their losses after breaking beneath the 200-day Moving Average and almost touched right on the next floor of support at 102.497, which did hold the last time it was tested on January 12th. The 10-year broke above 1.19% and has room to move higher until testing 1.25%.

 

Todd Abelson - Tucson Mortgages

Tucson Mortgages Home Loan News 2-8-2021

By Todd Abelson NMLS #180858 on .

Week of February 1st, 2021 in Review

The latest employment reports show that the pandemic continues to take its toll on families and businesses around the country, as we are still down 10 million jobs compared to before the pandemic began.

The closely watched Bureau of Labor Statistics report showed that there were 49,000 job gains in January, which was in line with market expectations. The Unemployment Rate did decrease from 6.7% to 6.3% and while that sounds like great news, there is much more to that story, as explained below. The ADP Employment Report for November showed a gain of 174,000 jobs in the private sector, higher than expected, though just a fraction of the job gains we need to be seeing.

The latest Weekly Jobless Claims report showed that the number of people filing for unemployment benefits for the first time did decrease in the latest week, as did the number of people continuing to receive benefits. However, these figures remain so much higher than a year ago, underscoring that our recovery still has a long way to go.

Despite the employment struggles many people are facing, the housing market remains a bright spot in our economic recovery as home prices continue to show strong appreciation gains. Home prices increased 1% from November to December and 9.2% compared to December 2019, per CoreLogic’s Home Price Index report. Within the report, the hottest markets were Phoenix (+13.7%), San Diego (+10.4%) and Washington (+8.8%).

 

Looking Deeper Into the Jobs Report Headlines

The Bureau of Labor Statistics reported that there were just 49,000 jobs created in January, which was in line with expectations. However, there were negative revisions to the data for both November and December, amounting to a loss of an additional 159,000 jobs in those months.

Looking more closely at the numbers, there are two reports within the Jobs Report and there is a fundamental difference between them. The Business Survey is where the headline job number comes from and it’s based predominately on modeling.

The Household Survey, where the Unemployment Rate comes from, is done by actual phone calls to 60,000 homes. The Household Survey also has a job loss or creation component, which showed that there were 201,000 job creations, while the labor force decreased by 406,000. In addition, the number of unemployed people decreased by 586,000 but for the wrong reasons, unfortunately, as more people are leaving the labor force.

The Unemployment Rate improved from 6.7% to 6.3%, which is a sizable move lower. While this sounds like good news on the surface, it’s important to dig deeper, as you may be wondering how the unemployment rate is 6.3% when we are still 10 million jobs lower compared to where our economy was before the pandemic.

The reason is that people who are unable to look for work due to pandemic reasons, who are still unemployed, are not counted. That number equates to 4.7 million people. When you add them back into the calculations, the real unemployment number is 9.3%.

In addition, there has been a lingering misclassification error where people were classified as absent from work for other reasons and not marked as unemployed on temporary layoff when they should have been. Without this error, the headline unemployment rate would have been 0.6% higher or 6.9%, while the real unemployment rate counting those who are unable to look for work due to pandemic reasons would be at 9.9%.

The all in U6 Unemployment Rate, which includes total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, decreased from 11.7% to 11.1%.

Average hourly earnings increased from 5.1% to 5.4% year over year. Average weekly earnings, which we focus on more, rose 6.4% to 7.5%. Weekly earnings measure what people actually take home and this latest data shows that this level of income can support much greater levels of appreciation than we are currently seeing without homes being unaffordable. People don’t use their entire income for their mortgage payment, so the weekly earnings figure does not have to rise at the same pace as appreciation.

 

Private Payrolls Rise in January

The ADP Employment Report, which measures private sector payrolls, showed that 174,000 jobs were created in January, which was stronger than the 49,000 job gains that were expected. December’s report was also revised higher by 45,000 jobs, decreasing the job losses in that month from 123,000 to 78,000 losses.

Breaking down the numbers, there were job gains across all sizes of businesses. Small businesses (1-49 employees) gained 51,000 jobs, mid-sized businesses (50-499 employees) gained 84,000 jobs, and large businesses (500 or more employees) gained 39,000 jobs.

While January’s job gains are certainly a step in the right direction, we need to make a much bigger dent in regaining the millions of jobs that have been lost throughout the pandemic.

 

Jobless Claims Remain Elevated

Initial Jobless Claims remain extremely elevated, unfortunately, as another 779,000 people filed for unemployment benefits for the first time in the latest week. This was a slight improvement, however, with a decline of 33,000 claims from the previous week.

Continuing Claims, which measures people who continue to receive benefits, also decreased by 193,000 to 4.6 million. Note that Continuing Claims data runs a week behind Initial Jobless Claims.

Pandemic Unemployment Assistance Claims, which provide benefits to people who would not usually qualify, and Pandemic Emergency Claims, which extend claims by 13 weeks after regular benefits expire, also improved slightly. However, the number of people receiving these benefits remains in the millions, at 7.2 million and 3.6 million, respectively.

The total number of continued benefits in all programs for the week ending January 16 was 17.8 million, a decrease of 486,405 from the previous week. But putting this into perspective, there were just 2.1 million weekly claims filed for benefits in all programs in the comparable week in 2020.

 

Strong Home Price Appreciation Continues

The latest CoreLogic Home Price Index report showed that home prices increased 1.0% from November to December and 9.2% on a year over year basis. This annual increase is a significant gain from the 8.2% year over year gain reported for November and the highest annual home price gain for this index since February 2014.

Within the report, the hottest markets were Phoenix (+13.7%), San Diego (+10.4%) and Washington (+8.8%).

CoreLogic forecasts that home prices will rise 0.2% in January and 2.9% in the year going forward, which is better than the 2.5% annual forecast in the previous report (though still much lower than most forecasts). Remember, not that long ago they were expecting a 6.6% decline in home prices.

 

Family Hack of the Week

Everyone loves pancakes, and on Valentine’s Day who can say no to heart-shaped ones! Surprise your family with this extra-special and delicious breakfast treat, courtesy of Martha Stewart.

Heat a griddle pan over medium-high heat or preheat a griddle to 375 degrees Fahrenheit. Whisk 1 cup all-purpose flour, 2 tablespoons sugar, 2 teaspoons baking powder, and 1/2 teaspoon salt in a medium bowl. Lightly beat 1 egg and add it to the bowl, along with 1 cup whole milk and 2 tablespoons unsalted, melted butter. Whisk to combine so that the batter has small to medium lumps.

Preheat oven to 175 degrees Fahrenheit. Test the griddle or pan by sprinkling with a few drops of water. If water bounces and spatters, it is hot enough. Use a paper towel to brush 1/2 teaspoon of butter onto the griddle, wiping off the excess.

Add batter to a pastry bag fitted with a 1/4-inch plain round tip, twisting the end of the bag and securing it with a rubber band. Working in batches, pipe heart shapes onto the heated griddle, drawing a “V” of batter in the center of the hearts to fill them. When pancakes have bubbles on top and are slightly dry around the edges, flip over (approximately 2 minutes). Cook until golden on the bottom, about 1 additional minute.

Repeat with the remaining batter, using 1/2 teaspoon butter on the griddle for each batch. Keep finished pancakes on a heat-proof plate in the oven until ready to serve with your favorite syrup.

 

What to Look for This Week

This week’s calendar is relatively quiet with just a handful of reports scheduled throughout the week. On Tuesday, we’ll get an update on how confident small businesses were feeling in January with the National Federation of Independent Business Small Business Optimism Index.

Wednesday brings news on consumer inflation with January’s Consumer Price Index. And on Thursday, the latest jobless claims figures will be reported, as usual.

 

Technical Picture

The Fed continues to provide stability to the markets with its ongoing purchases of Mortgage Backed Securities. Mortgage Bonds have been clinging to the 103.053 Fibonacci level, which is above strong support at their 200-day Moving Average. Meanwhile, the 10-Year is right at a solid ceiling that has held the last few times it was tested and should prevent yields from moving higher.

Todd Abelson - Tucson Mortgages

Tucson Mortgages Home Loan News 2-1-2021

By Todd Abelson NMLS #180858 on .

Week of January 25th, 2021 in Review

Jobless claims remain at elevated levels, unfortunately, as another 847,000 people filed for unemployment benefits for the first time during the week ending January 23. Meanwhile, 4.7 million people continue to receive benefits. There was a sliver of good news, however, as the recent extension of pandemic benefits has kicked in for many families across the country who are relying on this assistance.

The housing market remains red hot nationwide, as home prices continue to appreciate. The Case-Shiller Home Price Index reported a 9.5% annual gain in home prices nationwide in November, up from an already strong reading of 8.4% in October. The Federal Housing Finance Agency (FHFA) House Price Index, which measures home price appreciation on single-family homes with conforming loan amounts, showed that home prices were up 11% annually in November. Again, this was even higher than the 10.2% annual reading for October.

Meanwhile, sales of new homes notched up 1.6% from November to December. Though this was a bit below expectations, sales are still up over 15% year over year, which is especially impressive given the inventory challenges that have persisted around the country. Pending Home Sales were essentially flat in December, though they equaled the highest December reading ever, which again speaks to the high demand for homes.

In other news, the first look at GDP for the first quarter of 2020 came in at 4%, which was lower than expectations of 4.2%. For all of 2020 GDP declined 3.5%, marking the worst year since at least the end of World War II. Meanwhile, the Fed’s favorite inflation measure, Personal Consumption Expenditures, showed that inflation was hotter than expected in December but still tame overall.

Speaking of the Fed, they held the first Federal Open Market Committee meeting of the year. While the Monetary Policy Statement didn’t really contain many surprises, of note the Fed said they will continue to buy at least $120 billion of Mortgage Backed Securities and Treasuries per month, which has helped stabilize the markets. The Fed also said that economic growth has “moderated in recent months” and that the pace of the recovery depends on the path of the virus and the vaccine distribution.

 

Important Jobless Benefit Extensions Kick In

Initial Jobless Claims, which measures people filing for unemployment benefits for the first time, equaled 847,000 in the latest week, though this was a decline of 67,000 from the previous week.

The number of people continuing to receive benefits also declined by 203,000, though this remains extremely elevated at 4.7 million.

Pandemic Unemployment Assistance Claims, which provide benefits to people who would not usually qualify, increased by 1.6 million after falling by 1.7 million in the previous week. This is likely due to the extension of benefits seen in the recent stimulus legislation, where people are receiving this much-needed assistance again after falling off for a time.

Similarly, Pandemic Emergency Claims, which extend claims by 13 weeks after regular benefits expire, increased by 836,000 after falling in the previous report. Again, this likely reflects people once more receiving this help due to the extension.

 

December’s Home Sales Impressive Given Inventory Challenges

New Home Sales, which measure signed contracts on new homes, were up 1.6% from November to December. Though this was slightly lower than expectations, sales are still up over 15% year over year, which is especially impressive given that supply has been so much lower than demand. In fact, homes that have been sold but not started are up 33% year over year, which speaks to the high demand.

Though there was some good news in that regard, as inventory went from being down 13% annually to down 6%, which is likely due to some of the new supply we have seen in recent Housing Starts reports.

The median home price was reported at $355,900, up 8% year over year. Remember, this figure is not the same as appreciation. It simply means that half the homes sold were above that price and half were below it.

Pending Home Sales, which measure signed contracts on existing homes, were essentially flat in December, ticking down 0.3% from November. But they reached the highest December reading ever and given that normally there is a slowdown in the housing market around the holidays, this is another sign of the high demand for housing. In addition, sales were up 21.4% annually, which again is amazing in the face of record low inventory levels that are down 23% over that same period.

 

Home Price Appreciation Remains Red Hot

The Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, showed that there was a 9.5% annual gain in home prices nationwide in November. This was up from an already strong reading of 8.4% in October.

The 20-city Index rose at the quickest pace in 6 years, rising from 7.9% to 9.1% year over year, with all of the cities showing strong gains. Phoenix (+13.8%), Seattle (+12.7%) and San Diego (+12.3%) reported the highest annual gains among the 20 cities.

The Federal Housing Finance Agency also released their House Price Index, which measures home price appreciation on single-family homes with conforming loan amounts. Note that while you can have a million-dollar home with a conforming loan amount, the report most likely represents lower-priced homes where supply is tightest and demand is strongest.

As such, it should be no surprise that the report was even stronger than Case-Shiller’s.  Home prices rose 1% in November and are up 11% compared to November of 2019, which is much higher than the 10.2% annual reading in the previous report.

 

Inflation Hotter Than Expected But Still Tame

The Fed’s favored inflation measure, Personal Consumption Expenditures (PCE), showed that inflation was up 0.4% from November to December, which was hotter than expectations of 0.3%. Year over year, inflation increased from 1.1% to 1.3%, as expected.

Core PCE, which strips out volatile food and energy prices and is the Fed’s real focus, was up 0.3% in December. Again, this was hotter than the 0.1% rise anticipated. On an annual basis, Core PCE increased from 1.4% to 1.5%; market expectations were for a 1.3% reading.

Even with the slightly hotter readings, inflation is still at very tame levels. Why does tame inflation matter?

Inflation reduces the value of fixed investments, like Mortgage Bonds, meaning rising inflation can cause Bonds to worsen or move lower. Home loan rates are inversely tied to Mortgage Bonds, so when Bonds worsen, home loan rates can rise. Though many factors influence the markets, tame inflation can benefit Mortgage Bonds and help home loan rates remain low.

 

Family Hack of the Week

The Super Bowl is this Sunday and this easy guacamole recipe from Delish is the perfect gameday (or any day) treat!

Cut open three avocados and remove the pits. In a large bowl, combine them with the juice of two limes, 1/4 cup freshly chopped cilantro, 1/2 of a finely chopped small white onion, 1 small minced jalapeno and 1/2 teaspoon of Kosher salt.

If you like some spice in your guacamole, keep the seeds in the jalapeno. Otherwise remove the seeds before adding it to the bowl.

Stir, slowly turning the bowl while running a fork through the avocados so they stay chunky. Add additional salt if needed, garnish with cilantro, and enjoy with your favorite chips and hopefully an exciting game!

 

What to Look for This Week

Manufacturing news kicks off the week on Monday when the ISM Index for January is reported.

Then, reports from the labor sector dominate the rest of the week. On Wednesday, January’s ADP Employment Report will give us the latest data on private payrolls while the latest weekly Jobless Claims figures will be released as usual on Thursday.

Ending the week on Friday, the highly anticipated Bureau of Labor Statistics Jobs Report for January will be released, which includes Non-farm Payrolls and the Unemployment Rate.

 

Technical Picture

The Fed continues to provide stability to the markets with its ongoing purchases of Mortgage Backed Securities. Mortgage Bonds are trading in a range between a ceiling of resistance at their 25-day and 100-day Moving Averages and a floor of support at the 103.053 Fibonacci level.

 

Todd Abelson - Tucson Mortgages

Tucson Mortgages Home Loan News 1-25-2021

By Todd Abelson NMLS #180858 on .

Week of January 18th, 2021 in Review

Nearly a year into the pandemic, the number of people filing for unemployment benefits for the first time remains elevated, unfortunately, as Initial Jobless Claims were reported at 900,000 in the latest week. While the number of people continuing to receive regular benefits, Pandemic Emergency benefits or Pandemic Unemployment Assistance benefits did each decline, the drops were likely due to benefits expiring rather than people finding employment.

The housing market continues to be a bright spot in our economy, with homes in high demand around the country. Existing Home Sales, which measures closings on existing homes, were up 0.7% from November to December and 22% year over year. Sales would be even higher if there was more inventory, which currently sits at a record-low of just a 1.9 months’ supply. Typically, a 6-months’ supply is reflective of a healthy housing market.

However, there was some good news for homebuyers on the inventory front. Housing Starts, which measure the start of construction on homes, were up 5.8% in December, much stronger than expected. Perhaps even more importantly, starts on single-family homes (which are in especially high demand) were up 12% from November to December and nearly 28% year over year. Building Permits, which are a good future indicator of Housing Starts, were also up in December.

While builder confidence fell in January due in part to concerns about a changing regulatory environment, sentiment remains at a strong level. The National Association of Home Builders Housing Market Index, which is a real-time read on builder confidence, fell 3 points from December’s revised figure of 86 to 83 in January. However, any number over 50 signals expansion so this is still a positive reading.

Lastly, there was some good news from the manufacturing sector, as the Philadelphia Fed Index was reported at 26.5 for January, which was much higher than expected.

 

Initial Jobless Claims Remain Elevated

Another 900,000 people filed for unemployment benefits for the first time during the week ending January 16. While this was a decline of 26,000 from the previous week, Initial Jobless Claims remain extremely elevated nearly a year into the pandemic.

Continuing Claims, which are delayed a week and which measure people who continue to receive benefits, also declined by 127,000 to 5.1 million.

Pandemic Unemployment Assistance Claims, which provides benefits to people who would not usually qualify, dropped by 1.7 million after falling 941,000 in the previous week. That figure now stands at 5.7 million. Pandemic Emergency Claims, which extends claims by 13 weeks after regular benefits expire, decreased by 1.4 million to 3 million.

Unfortunately, with the surge in COVID cases around the country, the declines are likely due to benefits expiring. However, it’s unclear if people will be able to reapply as some of these benefits have been extended in the latest stimulus package. It will be important to monitor if these declines are temporary in upcoming Jobless Claims reports in the weeks ahead.

 

Inventory of Existing Homes Hits Record Low

 Existing Home Sales, which measures closings on existing homes, were up 0.7% from November to December, which was stronger than expectations of a 2% drop. Sales were also up 22% year over year.

Low inventory remains the biggest challenge for homebuyers, as there were only 1.07 million homes for sale at the end of December, equaling a record low of just a 1.9-months’ supply. This lack of supply helped homes sell fast in December, as they averaged just 21 days on the market, while foot traffic was up 24% year over year.

First-time buyers accounted for 31% of sales in December, down slightly from 32% in November. All-cash sales decreased from 20% in November to 19% in December, but still remain at a high level.

The median home price was $309,800, up 12.9% from December 2019. Note, this is not the same as appreciation. It simply means half the homes sold were above that price and half were below it. In December, sales of lower-priced homes were down 15%, while sales of homes above $1 million were up 90%. This dragged the median home price higher.

 

Strong Housing Starts a Good Sign for Low Inventory

Housing Starts, which measure the start of construction on homes, were up 5.8% from November to December, much stronger than the 0.8% gain expected. Starts were also up 5.2% compared to December of last year.

Perhaps even more importantly, starts on single-family homes were up 12% from November to December and nearly 28% year over year. This rise in starts will certainly help with the many homes that have been contracted but not built yet. And while more building is needed, the increase in starts is a positive step in the right direction to help with the low inventory challenges that persist around the county.

Building Permits, which are a good future indicator of Housing Starts, were also on the rise, up 4.5% from November to December and 17.3% year over year. Again, there was good news when it comes to permits for single-family homes, as they rose nearly 8% from November to December and 30.4% year over year.

 

Homebuilder Confidence Declines But Remains Strong

The National Association of Home Builders Housing Market Index, which is a real-time read on builder confidence, fell 3 points from December’s revised figure of 86 to 83 in January.

However, when we look at this number in context, it’s important to note that any reading above 50 signals expansion so confidence remains at extremely high levels overall. In addition, there are only three other readings higher over the past year, 85 in October, 90 in November and 86 in December. The reason for the drop in January is that builders are concerned about a changing regulatory environment.

All three components of the index declined in January, but they remain over 50 and in expansion territory. Current sales conditions fell two points to 90, sales expectations in the next six months dropped two points to 83, and prospective buyer traffic declined five points to 68.

 

Family Hack of the Week

If you’re looking for a fun and unique activity to do with your kids this winter, this easy to make ice lantern from Parents.com is sure to be a hit!

First, help your kids attach a balloon to a faucet and slowly fill it with water. Tie the balloon once it’s mostly filled. If you don’t have any balloons on hand, a bowl or bucket can work as well.

Next, place the balloon in your freezer, or outside if temperatures are below freezing. Set a timer and check the balloon with your kids ever two hours until the outer shell is frozen but a cavity of water remains in the middle. Depending on the temperature this may take six to eight hours, so a countdown clock could also be fun to watch during the day.

Once the outer shell is frozen, place the balloon in the sink and then cut it away. Help your kids turn the globe over to pour out the water.

After it gets dark, place an LED light or candle in the cavity of the globe and then put the globe outside on your porch. The globe should last several hours, depending how cold it is outside.

 

What to Look for This Week

More housing news is ahead this week, beginning Tuesday with November’s home price appreciation data from both the Case-Shiller Home Price Index and the Federal Housing Finance Agency House Price Index. December’s New Home Sales data follows on Thursday and Pending Home Sales will be reported on Friday.

The first Federal Open Market Committee meeting of the year begins Tuesday, with the policy statement to follow on Wednesday, which always has the potential to move the markets. Wednesday also brings news on Durable Goods Orders for December.

On Thursday, the latest Jobless Claims figures remain crucial to monitor while we’ll also get a look at fourth quarter Gross Domestic Product.

Inflation news ends the week on Friday when December’s Personal Consumption Expenditures is released, along with data on Personal Income and Personal Spending. We’ll also get an update on regional manufacturing with the Chicago PMI for January.

 

Technical Picture

The Fed continues to provide stability to the markets with its ongoing purchases of Mortgage Backed Securities. Mortgage Bonds remain in a range between support at the 103.053 Fibonacci level and a ceiling of resistance at the 100-day Moving Average.

Todd Abelson - Tucson Mortgages

Tucson Mortgages Home Loan News 1-18-2021

By Todd Abelson NMLS #180858 on .

Week of January 11th, 2021 in Review

Jobless Claims continue to move in the wrong direction, as another 965,000 people filed for unemployment benefits for the first time during the week ending January 9. This was well above estimates and, unfortunately, around five times the number of Initial Jobless Claims that were being filed each week before the pandemic began.

Inflation also made headlines, as it remained tame overall at both the wholesale and consumer levels in December per the latest Producer and Consumer Price Index reports. At the consumer level, Core CPI, which strips out volatile food and energy prices, was up only 0.1% from November to December while the year over year reading remained stable at 1.6%. Read on to learn why inflation data is critical to monitor when it comes to home loan rates.

The pandemic continues to impact manufacturers and retailers around the country. The Empire State Index (which shows the health of the manufacturing sector in the New York region) came in below expectations in January while December Retail Sales fell by 0.7% versus expectations of a 0.1% loss. Retail Sales in November were also revised lower by 0.3% to a loss of 1.4%.

Following suit, the National Federation of Independent Business Small Business Optimism Index dropped 5.5 points in December to 95.9, which is a 7-month low. Most of the categories were lower, with those who expect a better economy falling 24 points to -16.

NFIB Chief Economist Bill Dunkelberg said, “Small businesses are concerned about potential new economic policy in the new administration and the increased spread of COVID-19 that is causing renewed government-mandated business closures across the nation.”

Plans for more stimulus are on the horizon, however. President-elect Biden released details for the American Rescue Plan, which are highlighted below.

 

Initial Jobless Claims Well Above Estimates

Another 965,000 people filed for unemployment benefits for the first time during the week ending January 9, which was well above estimates of 765,000 claims and an increase of 181,000 from the previous week. California (+161K), New York (+56K) and Illinois (+45K) reported the largest increases.

Putting this into perspective, Initial Jobless Claims were around 200,000 a week pre-COVID, meaning claims are almost five times that amount nearly a year into the pandemic

Continuing Claims, which are delayed a week and which measure people continuing to receive benefits, increased by 199,000 to 5.3 million.

Pandemic Unemployment Assistance Claims, which give benefits to people who would not usually qualify, dropped by 941,000 to 7.4 million. Pandemic Emergency Claims, which extends claims by 13 weeks after regular benefits expire, also decreased by 325,000. Unfortunately, these decreases are likely due to benefits expiring rather than people finding employment.

 

Inflation Tame Overall in December

The Producer Price Index (PPI), which measures wholesale inflation, rose by 0.3% in December, which was lower than market expectations of 0.4%. On a year over year basis, headline PPI remained stable at 0.8%. Core PPI, which strips out volatile food and energy prices, was up 0.1% for the month and decreased from 1.4% to 1.2% year over year.

On the consumer side, inflation was up 0.4% from November to December per the Consumer Price Index report. The year over year reading increased from 1.2% to 1.4%. About 60% of the rise was due to gasoline prices.

The Core Reading, which again strips out volatile food and energy prices, was up only 0.1% from November to December while the year over year reading remained stable at 1.6%. The services sector has been hit especially hard by the pandemic, and when we take service inflation out of the picture, goods prices were up 1.7% year over year – the fastest pace since April 2012. This is because of supply chain issues companies are having, which is causing the cost of goods to rise.

Also of note, rents are rising 2.3% across the US, which is down from 2.4% from the previous month. While many markets are seeing rents rise at a faster pace, some of the major cities are seeing sharp declines, which is dragging down the overall figure.

Inflation is always important to monitor because it erodes the buying power of a Bond’s fixed coupon over time. This means that rising inflation can cause Bonds to worsen or move lower. Home loan rates are inversely tied to Mortgage Bonds, so when Bonds worsen, home loan rates can rise. Though many factors influence the markets, tame inflation can benefit Mortgage Bonds and help home loan rates remain low.

 

Highlights of Proposed Stimulus Plan

President-elect Biden released details for the American Rescue Plan. Among the highlights, his plan includes direct payments of $1,400. This would give many recipients a total of $2,000 when the amount is added to the $600 direct payments that were included in the bill which recently passed.

The boost to unemployment benefits would increase $400 (up from $300) through September. Pandemic Unemployment Assistance and Emergency claims would also be extended through September, after being previously extended to March in December’s package.

Minimum wage would also be increased to $15 per hour.

The proposal also includes another $25 billion to help renters (which is in addition to the $25 billion provided in December) and an extension of the eviction and foreclosure moratorium through September. People would also be able to apply for forbearance through the end of September.

Lastly, the proposal would expand the Child Tax Credit as well as make it refundable for the year.

 

Family Hack of the Week

Winter is the perfect season for baking. This easy homemade banana bread recipe is sure to become a family favorite.

Preheat oven to 350 degrees Fahrenheit. Flour and butter a 9×5-inch loaf pan.

In a medium bowl, whisk 1 1/2 cups all-purpose flour, 1 teaspoon baking soda, 1 teaspoon baking powder and 1/4 teaspoon salt. In a small bowl, combine 1 cup dried cranberries, 1 cup walnuts and 1 tablespoon of the flour mixture, and toss to coat.

Beat 1/2 cup unsalted butter in a stand mixer on medium until butter is fluffy. Slowly add 1 cup sugar and beat until well blended. Beat in 2 eggs, one at a time. Mash 2 ripe bananas in a small bowl and add 2 tablespoons lemon juice and 1 1/2 teaspoons vanilla. Beat banana mixture into butter, sugar and eggs. Slowly add the flour mixture into the wet ingredients until just blended. Be careful not to overmix.

Pour 1/3 of the batter into the loaf pan. Sprinkle in half of the nut mixture. Add another 1/3 of the batter. Add the remaining nut mixture and then cover with remaining batter. Run a fork through the mixture to combine, and then across the top to flatten it.

Bake for one hour or until toothpick inserted into loaf comes out clean. Turn out on to a rack, and cool for 30 minutes. Slice and enjoy!

 

What to Look for This Week

After the market closures Monday in observance of the Martin Luther King Jr. holiday, housing news dominates the second half of the week.

On Wednesday, we’ll get a real-time read on builder confidence with the National Association of Home Builders Housing Market Index for January, while Thursday brings news on Housing Starts and Building Permits for December. Ending the week on Friday, we’ll get the details on December’s Existing Home Sales.

Also of note, the latest Jobless Claims figures will be important to evaluate when they’re released on Thursday. Plus, Thursday also brings an update on regional manufacturing with the Philadelphia Fed Index.

 

Technical Picture

The Fed’s ongoing purchases of Mortgage Backed Securities continues to provide stability to the markets. After the morning star pattern and positive stochastic crossover, Mortgage Bonds remain in a range between a floor of support at the 200-day Moving Average and resistance at the 103.053 Fibonacci ceiling.

 

Todd Abelson - Tucson Mortgages

Tucson Mortgages Home Loan News 1-11-2021

By Todd Abelson NMLS #180858 on .

Week of January 4th, 2021 in Review

The spike in COVID cases continues to impact people and businesses around the country, causing job losses nationwide in December.

The closely watched Bureau of Labor Statistics report showed that there were 140,000 job losses in December, which was a lot lower than the 65,000 job gains that were expected. The Unemployment Rate remained unchanged at 6.7%, but there has been a lingering misclassification error that’s important to note, as explained below. The news wasn’t any better for private payrolls, as the ADP Employment Report for December showed a loss of 123,000 jobs in the private sector, which was below estimates.

Initial Jobless Claims declined by 3,000 in the latest week, as another 787,000 people filed for unemployment benefits for the first time. However, the decline may have been due in part to people not filing for benefits during the New Year’s holiday week. Continuing and Pandemic Claims declined as well, but unfortunately these declines are most likely due to benefits expiring rather than people finding employment.

The housing market remains a bright spot in our economy, as home prices continue to show strong appreciation gains. Home prices increased 1.1% from October to November and 8.2% compared to November of last year per CoreLogic’s Home Price Index report. Within the report, the hottest markets were Phoenix (+12.6%), San Diego (+9.5%), and Washington DC (+8.2%).

Lastly, the minutes from the Fed’s December meeting were released. Of note, the Fed left open the possibility of additional Mortgage Bond and Treasury purchases. They also noted that whenever they do cut back on their purchases, they would follow what they did in 2013 and 2014 and taper them slowly to not shock the market.

 

December Saw Job Losses Versus Expected Gains

The Bureau of Labor Statistics (BLS) reported a loss of 140,000 jobs in December, below expectations of 65,000 job gains. Understandably, the leisure and hospitality sector was hit hard due to closures and tightening pandemic restrictions.

Note that there are two reports within the Jobs Report and there is a fundamental difference between them. The Business Survey is where the headline job number comes from and it’s based predominately on modeling.

The Household Survey, where the Unemployment Rate comes from, is done by actual phone calls to 60,000 homes. It showed that the Unemployment Rate remained unchanged at 6.7%, but there has been a lingering misclassification error where people were classified as absent from work for other reasons and not marked as unemployed on temporary layoff when they should have been. Without this error, the unemployment rate would have been 0.6% higher or 7.3%.

The all in U6 Unemployment Rate, which includes total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, decreased from 12% to 11.7%.

Average hourly earnings increased from 4.4% to 5.1% year over year. Average weekly earnings, which we focus on more, rose from 5.9% to 6.3%.

Why do we focus on weekly earnings more?

Weekly earnings measure what people actually take home. The current data shows that this level of income can support much greater levels of appreciation than we are currently seeing without homes being unaffordable. Think of it this way. People don’t use their entire income for their mortgage payment, so the weekly earnings figure does not have to rise at the same pace as appreciation, which is currently around 8% nationwide as noted below.

 

Private Payrolls Decline in December

The ADP Employment Report, which measures private sector payrolls, showed that there was a loss of 123,000 jobs in December, which was below expectations. In addition, November’s report was revised slightly lower by 3,000 jobs, decreasing November’s job gains from 307,000 to 304,000.

Breaking down the numbers, small businesses (1-49 employees) lost 13,000 jobs, mid-sized businesses (50-499 employees) gained 37,000 jobs, and large businesses (500 or more employees) lost 147,0000 jobs.

 

Jobless Claims Decline For Wrong Reason

Another 787,000 people filed for unemployment benefits for the first time during the week ending January 2, which is a decline of 3,000 claims from the previous week. However, it’s important to note that this data encompasses New Year’s week, so many people may not have been filing for claims.

Continuing Claims, which are delayed a week and which measure people continuing to receive benefits, declined by 126,000 to 5.072 million. Pandemic Unemployment Assistance Claims (which gives individuals benefits who would not usually qualify for them) also dropped by 70,553 to 8.383 million while Pandemic Emergency Claims, (which extends claims by 13 weeks after regular benefits expire) decreased by 293,000.

Unfortunately, these declines are most likely due to benefits expiring rather than people finding work, as the spike in COVID cases continues to impact businesses and people across the country.

 

Strong Home Price Gains Continue

CoreLogic’s Home Price Index report showed that home prices increased 1.1% from October to November and 8.2% compared to November of last year. This is a significant gain from the 7.3% annual number reported for October. Within the report, the hottest markets were Phoenix (+12.6%), San Diego (+9.5%), and Washington DC (+8.2%).

In addition, lower-priced home values increased by about one and a half times faster than higher-priced home values, as that’s where the greatest level of demand is.

CoreLogic forecasts that home prices will rise 0.2% in December and 2.5% in the year going forward, which is better than the 1.9% annual forecast in the previous report. Remember, not that long ago they were expecting a 6.6% decline in home prices

 

Home Hack of the Week

The new year is the perfect time to declutter and start fresh. If you’re wondering how and where to begin, here’s an easy system from our friends at the Spruce that can help you get started and stay focused.

First, create a schedule and plan to tackle one room or area of a room at a time. You can even list 15-minute, 30-minute, 60-minute and longer projects, so you can handle things as you’re able.

Next, gather three boxes and label them as follows:

Donate. This is where you’ll place anything you plan to give away. Tape a piece of paper on the box and note any additional items that are too large to fit inside.

Repair. If you find items that need to be mended or fixed, store them here until you have time to take care of them. This will help you stay focused on the room at hand.

Put Away. As you’re sorting through items in one room, you’re bound to find things that belong elsewhere. Save yourself repeated trips around the house. Place those items in this box and wait to put everything away until you’ve completed the project you’re working on.

This time-saving process can help you quickly organize your home and make the most of your space.

 

What to Look for This Week

On Tuesday, we’ll get an update on how confident small businesses were feeling in December with the National Federation of Independent Business Small Business Optimism Index.

Wednesday brings the first of two key inflation reports as the Consumer Price Index for December will be reported. The Producer Price Index, which measures wholesale inflation, follows on Friday.

On Thursday, the latest Jobless Claims figures remain crucial to monitor. Then Friday brings the latest news on how retailers fared with December’s Retail Sales. We’ll also get a manufacturing update for the New York region with January’s Empire State Index.

 

Technical Picture

The Fed’s ongoing purchases of Mortgage Backed Securities continues to provide stability to the markets. After testing all-time highs, Mortgage Bonds broke through key floors of support at their 25-day, 50-day and 100-day Moving Averages. They remain in a range between a ceiling of resistance at their 100-day Moving Average and the 103.05 Fibonacci floor.

 

Todd Abelson - Tucson Mortgages

Tucson Mortgages Home Loan News 1-4-2021

By Todd Abelson NMLS #180858 on .

Week of December 28th, 2020 in Review

The economic calendar was relatively quiet during the last week of 2020, but there was important data from the housing and labor sectors before we rang in the New Year.

Initial Jobless Claims declined by 19,000 in the latest week, with 787,000 people filing for unemployment benefits for the first time. Continuing and Pandemic Unemployment Assistance Claims also declined but unfortunately, the declines may be for the wrong reason as noted below.

Home prices continue to appreciate nationwide, per the Case-Shiller Home Price Index, which showed that home prices rose 8.4% on an annual basis in October. This was up from an already strong reading of 7.0% in September. Phoenix (+12.7%), Seattle (+11.7%) and San Diego (+11.6%) reported the highest annual gains among the 20 cities.

Home prices have appreciated in part due to low inventory and this lack of supply has also impacted sales. Pending Home Sales, which measures signed contracts on existing homes, came in below expectations, falling 2.6% from October to November. Perhaps more significantly, sales were 16.42% higher than November of last year – even though the supply of existing homes is down 22% over that same period.

Quite simply, if more homes were available, there would be more signed contracts and more sales.

Lastly, the government began sending the second round of stimulus payments to qualified recipients as part of the latest COVID relief package that was signed into law.

 

Jobless Claims Decline in Latest Week … But Why?

Another 787,000 people filed for unemployment benefits for the first time during the week ending December 26, which is a decrease of 19,000 from the previous week.

Continuing Claims, which are delayed a week, also decreased, falling by 103,000 to 5.2 million. Pandemic Unemployment Assistance Claims declined as well, dropping by 811,000 to 8.5 million. Remember that when regular benefits expire, people can file for pandemic unemployment assistance, which extends their benefits for another 13 weeks.

Unfortunately, the decrease in these claims is likely due to benefits expiring rather than people finding employment.

 

Home Prices Continue to Appreciate

The Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, showed that home prices rose 8.4% on an annual basis in October nationwide. This was up from an already strong reading of 7.0% in September.

The 20-city Index rose at the quickest pace in six years, rising from 6.6% to 7.9% year over year, with all of the cities showing strong gains. Phoenix (+12.7%), Seattle (+11.7%) and San Diego (+11.6%) reported the highest annual gains among the 20 cities.

The national reading of 8.4% is an extremely strong reading for appreciation. Look at it this way. Someone buying a $300,000 home that gains 8.4% in appreciation would benefit by just over $25,000 in just one year on appreciation alone. The equity gain with amortization would be even greater.

 

Low Inventory Impacts Pending Home Sales

Pending Home Sales, which measures signed contracts on existing homes, were down 2.6% in November from October. This was lower than the 0.3% drop expected, but sales are still up 16.42% year over year.

It’s important to note that the month-over-month decline was not due to a lack of demand, but a lack of supply, as the supply of existing homes is down 22% compared to November of last year.

Quite simply, if there were more homes on the market, there would be even more sales. Nonetheless, it is still impressive that sales are up 16.42% year over year with inventory down 22% through that same period.

 

Family Hack of the Week

Finding a snack that’s both healthy and delicious may seem like a challenge, but this homemade granola bar recipe from Allrecipes makes it easy. Plus, it’s a fun recipe to make if you’re looking for a cooking project to do as a family.

Preheat oven to 325 degrees Fahrenheit. Grease a 9-inch square baking dish.

Spread 2 cups of rolled oats and 1/2 cup of shredded coconut evenly on a baking sheet. Toast until browned, approximately 10 minutes, and then transfer to a large mixing bowl.

Mix 1/2 cup honey, 2 tablespoons peanut butter, 1 teaspoon vanilla extract, and 1/8 teaspoon salt in a saucepan over medium-low heat. Cook and stir until smooth and then pour over the oats and coconut. Stir to coat. Spread the mixture evenly into the prepared baking dish.

Bake until granola bars begin to dry. For crunchy granola bars, about 15 minutes, for chew granola bars about 10 to 12 minutes.

Cool completely before cutting and then enjoy!

 

What to Look for This Week

News from the labor sector dominates the first full week of the new year. On Wednesday, we’ll get an update on private payrolls with the ADP Employment Report for December. Thursday brings the latest weekly Jobless Claims figures, as usual. And on Friday, we’ll get the highly anticipated Bureau of Labor Statistics Jobs Report for December, which includes Non-farm Payrolls and the Unemployment Rate.

There will also be an update Tuesday on manufacturing with the ISM Index for December.

 

Technical Picture

The Fed’s ongoing purchases of Mortgage Backed Securities continues to provide stability to the markets. Mortgage Bonds have tested their all-time high at 103.953 and remain just below this tough ceiling of resistance.

 

Todd Abelson - Tucson Mortgages

Tucson Mortgages Home Loan News 12-28-2020

By Todd Abelson NMLS #180858 on .

Week of December 21st, 2020 in Review

The spike in COVID cases continues to impact businesses and employees around the country, as another 803,000 people filed for unemployment benefits for the first time during the week ending December 19. However, this was a decline of 89,000 from the previous week. The number of people continuing to receive benefits also declined but remains at a staggering 5.3 million.

In the housing sector, sales of both new and existing homes fell from October to November, but both were much higher compared to November of last year, up nearly 21% and 26% respectively. Low inventory remains the biggest challenge for buyers, with inventory of existing homes reaching a record-low of just a 2.3 months’ supply, while just a 4.1 months’ supply of new homes were available.

This lack of supply has helped home prices appreciate. Prices for single-family homes with conforming loan amounts were up 1.5% from September to October and 10.2% annually per the Federal Housing Finance Agency (FHFA). The housing sector has been a bright spot in our economy this year.

Inflation remains tame as the Fed’s favored measure of inflation, Personal Consumption Expenditures (PCE), was flat in November and fell from 1.2% to 1.1% year over year.

Core PCE, which strips out volatile food and energy prices and is the Fed’s real focus, was also flat in November and remained stable at 1.4% on an annual basis. Remember inflation reduces the value of fixed investments like Mortgage Bonds. Since home loan rates are tied to Mortgage Bonds, it’s always important to keep a look out for news that inflation is on the rise.

The final estimate of third quarter Gross Domestic Product (GDP) came in at 33.4% on an annualized basis, which was slightly higher than the 33.1% expected. While this was a solid rise, remember that it follows a 31.4% drop in the second quarter. GDP would have to increase 50% to make back what was lost. And with the recent spike in COVID cases, fourth quarter GDP may not be as strong as was hoped.

Lastly, after months of negotiation, Congress passed a $900 billion stimulus deal. Read on below for some highlights of what’s included.

 

Initial Jobless Claims Decline in Latest Week

Another 803,000 people filed for unemployment benefits for the first time during the week ending December 19, which was a decline of 89,000 from the previous week. Continuing Claims, which measures people who continue to receive benefits, also decreased by 170,000 to 5.3 million.

In addition, it’s important to note that people can file for Pandemic Emergency Unemployment Compensation (PEUC) once their regular benefits expire, which extends their benefits for another 13 weeks. These claims remained relatively stable in the latest week but are still at elevated levels.

Despite the weekly decline that was reported, the bottom line is that we are not seeing any real improvement in unemployment claims as 19 million people are still receiving some type of benefits.

 

Record Low Housing Inventory Remains a Challenge

Existing Home Sales, which measures closings on existing homes, were down 2.5% from October to November, which was in line with expectations. However, sales were up nearly 26% compared to November of last year.

Low inventory remains the biggest challenge for buyers, as there were only 1.28 million homes for sale. This is down 9% from October and a whopping 22% annually. Unsold inventory is at just a 2.3 months’ supply, which is a record low.

As a result, homes sold quickly in November as they averaged just 21 days on the market and 73% of them sold in under 30 days. The other 27% were probably not priced realistically.

The median home price was $310,800, up 14.6% compared to November of last year. Remember this is not the same as appreciation. The median home price simply means half of the homes sold were above and half were below that price. In November, sales on the lower end of the market were flat to lower, but sales for homes above $750,000 are up 85% year over year. This is why the median home price moved higher.

Also of note, the number of first-time homebuyers remained stable at 32%, even with the stiff competition for homes on the lower end.

Sales of new homes also declined 11% from October to November, which was lower than expectations. However, given the downward revision to October’s sales figures, sales in November were really down 16%.

On an annual basis, however, sales are up 20.8% compared to November of last year even with the big drop in inventory – which is down 13.4% year over year! Part of the reason inventory is so low is the lack of building during the beginning of the pandemic.

Quite simply, if there were more homes for sale there would be more sales.

The median new home price increased to $335,300, up 2.2% year over year. Again, this measures the middle-priced home that sold, not appreciation.

 

Home Price Appreciation Remains Strong

The Federal Housing Finance Agency (FHFA) released their House Price Index, which measures home price appreciation on single-family homes with conforming loan amounts. Home prices rose 1.5% from September to October and are up 10.2% year over year, which is even higher than the 9% annual reading in the previous report.

Note that while you can have a million-dollar home with a conforming loan amount, the report most likely reflects lower-priced homes, where supply is tightest and demand is strongest. This is why the annual appreciation data was even stronger than Case-Shiller’s Home Price Index.

 

Key Elements of the Stimulus Bill

After months of negotiation, Congress passed a $900 billion stimulus deal, which among other things includes direct payments of $600 to individuals who earn up to $75,000 and couples filing jointly who make up to $150,000. The bill adds another $600 for every child.

The bill will add a $300 federal unemployment supplement through mid-March and extends programs making freelancers and gig workers eligible for benefits. It also puts $284 billion into Paycheck Protection Program small business loans.

The bill also extends the federal eviction moratorium through January 31 and funds $25 billion in rental assistance.

 

Family Hack of the Week

Ringing in the New Year may look a bit different this year, but that doesn’t mean you can’t have fun with family and friends virtually. These ideas from Parade will help you enjoy a memorable evening with loved ones.

Virtual game nights have become popular this year, with old favorites like Charades, scavenger hunts and trivia options great for video chat along with tons of online games to choose from.

Netflix and movie parties are another great option, and with all the ghoulish events of 2020, a zombie apocalypse theme could be a fun choice. Everyone can get creative with makeup and food to match the entertainment, with contests for best zombie walk, makeup and more.

A karaoke party is a great choice for music lovers. You can make a playlist of the best songs from the year, or the songs you want to represent 2021.

If you’ve spent the past year learning new skills like many people, consider hosting a virtual talent show for friends and family to showcase any artistic or musical hobbies you’ve learned this year.

Lastly, after the year we’ve had, everyone can use a little pampering. Ring in the new year with a virtual spa night, filled with face masks, mani-pedis and more.

 

What to Look for This Week

The last week of 2020 brings some important housing data. First in on Tuesday, the S&P Case-Shiller report will give us a read on how home prices appreciated in October. November’s Pending Home Sales follows Wednesday.

Also on Wednesday, we’ll get an update on manufacturing this month in the Chicago region via the Chicago PMI, while Thursday will bring the latest Jobless Claims figures.

All markets will be closed Friday in honor of New Year’s Day.

 

Technical Picture

The Fed’s ongoing purchases of Mortgage Backed Securities continues to provide stability to the markets. Mortgage Bonds have moved higher from support at their 50-day Moving Average and are trading in a range between this support and the ceiling of resistance at their 25-day Moving Average.

 

Todd Abelson - Tucson Mortgages