Jobless Claims Slowing Down and Mortgage Volume Up

Last week initial jobless claims came in at 1.314 million.  This shows the number of individuals who claimed or filed for unemployment for the first time.  It came in better than the expectations of 1.4 million and was slightly lower than last week’s number of 1.413 million.  Continuing claims, which measures individuals who “continued” their file of unemployment, improved rather significantly from 18.76 million to 18.06 million.  This was one of the first very meaningful unemployment improvements in a long time, and may be pointing to a recovery. This is, however, a lagging indicator, so we will continue to monitor it closely. 

On the mortgage front, the Mortgage Bankers Association released their application data, and it showed that overall mortgage volume was up by 2.2% for the week of the 29th.  Purchase applications are up by 5% and year-over-year they are up 33%.  Refinances are up by 0.2% for the week and up by 111% compared to last year.   Also, it is important to know that refinances made up about 60% of all mortgage transactions as interest rates are at historically low levels.

As individuals get back to work and businesses reopen, we are poised for a very active and healthy housing market.  The stage is set with home buyer demand at record levels and historically low interest rates. 




Advisors 30 Second Market Update for the week of July 6, 2020.

Pending Home Sales Soar Record Highs

According to the National Association of Realtor’s Pending Home Sales Index (PHSI), pending home sales spiked 44.3% in May, compared to April.  This record increase beat expectations by 15%, and represents the largest one-month jump in the history of the survey, which dates back to 2001.  NAR’s Chief Economist, Lawrence Yun stated, “This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership.”  He also weighed in on the overall economy stating, “This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”

Overall, this report strongly indicates that buyers are extremely eager to purchase homes, despite some of the restrictions put in place due to COVID-19.  Many are viewing homes via virtual tours, or using lockboxes to tour the homes themselves.  While inventory still remains an issue, buyers have proven they are eager to capitalize on record-low interest rates and begin reaping the rewards of homeownership.


Call your Advisors Mortgage Loan Officer today to discuss the current market in more detail and to learn what you qualify for.

The Resilient Housing Market

Home prices rose in the month of April by 0.2% and by 5.5% year over year, according to the newest report from the Federal Housing Finance Agency.  The FHFA’s Home Price Index measures home price changes on single family detached properties purchased and/or refinanced with conventional, conforming mortgages.

New home sales increased by 16.6% in the month of May.  This was a large increase over the estimated 1.6% forecast.  Compared to last year, new home sales are up 12.7%.  Estimated inventory of new homes has decreased by 7,000 down to 318,000.  At the current sales pace, supply of new homes available for sale is about 5.6 months.  Lastly, median sales prices of new homes has increased to $317,900, which is an increase of 4.9% since last reported.  The overall average sales price was $368,800, which is an increase of 4.6% since last reported.  New home sales measure signed contracts, not closings, on new single-family homes.

Reports that contain measurements that are further away from the first few months of the coronavirus outbreak show a strong comeback.  As states across the nation re-open their businesses, we are seeing housing reports improve, and the housing market resume its heathy onward growth.   


Homebuyer Mortgage Highest in Eleven Years!

According to the Mortgage Bankers Association’s seasonally-adjusted index, mortgage purchase applications rose 4% last week from the previous week, and is up a staggering 21% from a year ago.  Overall, this is the ninth consecutive week of increases, and represents the highest volume in eleven years!  MBA Economist Joel Kan echoed the strong numbers, stating, “The housing market continues to experience the release of unrealized pent-up demand from earlier this spring, as well as gradual improvement in consumer confidence.” 

Strong mortgage demand was further supported by a report conducted by Redfin, which reflected that seasonally-adjusted demand for houses during the week of June 1st was 25% above pre-pandemic levels.  In addition, the percentage of newly-listed homes that resulted in an accepted offer within fourteen days, increased from 42% in May to 47% in June. 

Overall, these two strong reports indicate that demand for housing continues to accelerate through the summer months.  Strong demand coupled with record-low interest rates are keeping the housing market’s continued strength. 

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The Fed and Interest Rates

Last week the Federal Reserve (the Fed) had met and decided to leave their Federal Funds Rate unchanged at 0.0% – 0.25%.  They also had mentioned that they expect the rate to stay at this level through 2022.  The Fed Funds Rate, in a nut shell, is the rate banks use to lend money to one another.  The lower the rate, the cheaper it is to borrow and the more stimulating for the economy, as money is “cheaper”. 

Even though lower Fed rates point to higher inflation, the Fed surprisingly said last week that they predict no inflation for 2020, around 1.5% inflation levels for 2021 and under 2% inflation for 2022.  Lower levels of inflation point to lower longer term interest rates. If they are predicting lower levels of inflation, that could be a good indicator for lower rates going forward.  On top of low levels of forecasted inflation, the Fed has also been purchasing over $20B a week in mortgage backed securities.  This is also very much helping interest rates stay low and aids home buyers’ affordably and homeowners’ refinance potential. 

Call your Advisors Mortgage Loan Officer today to discuss the current market in more detail and to learn what you qualify for.


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