Monday Market Report || Interest Rates?

 

During the past week, comments from a Fed official increased investor expectations for a Fed rate hike this year, causing mortgage rates to move a little higher. The week's economic data was mostly right on target and had little net effect.

On Tuesday, Fed member Dennis Lockhart gave investors the impression that the first federal funds rate hike is likely to take place soon. In essence, he said that he believes that a rate hike will be appropriate in September unless the economy significantly underperforms expectations. While other Fed officials may feel differently, investors took this as a warning to be prepared for a rate hike at the next Fed meeting on September 17.

The major economic reports released since Lockhart's comments showed that the economy remains on track to meet his requirements for a rate hike. Wednesday's ISM Services data revealed an unexpectedly large increase to the highest level since 2005. Friday's Employment data, the biggest report of the month, matched the consensus forecast across the board. The economy continued its pace of strong job gains above 200K with the addition of 215K jobs in July. The Unemployment Rate remained at 5.3%. Average Hourly Earnings, an indicator of wage growth, were 2.2% higher than a year ago.

Looking ahead, we will get more labor market data on Tuesday with the JOLTS report, which measures job openings and labor turnover rates. After that, Retail Sales will be released on Thursday. Since retail sales account for roughly 70% of economic activity, this is one of the biggest reports of the month. Industrial Production, another important indicator of economic activity, will come out on Friday. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday. 

Copyright @ 2015 MBSQuoteline

First quarter 2013 sets aggressive pace for Texas real estate

Today, the Texas Association of REALTORS® released the 2013-Q1 edition of the Texas Quarterly Housing Report, showing surging demand for Texas homes at the start of the year as well as rising prices and shrinking inventory. Fueled by Texas’s population and job growth, the report bodes well for the summer selling season.

Shad Bogany, chairman of the Texas Association of REALTORS®, commented: “2012 was a strong year for Texas real estate and, based on these first-quarter results, 2013 looks to be even stronger. We’ve heard a lot about the growth of Texas and now we’re starting to really see the impact on our real estate market.”

As featured in the report, 53,937 single-family homes were sold in Texas in the first quarter of 2013, which is 17.53% more than the same quarter of the prior year. Of the 48 markets included in the report, 40 markets featured increases in sales, indicating the surge is broad-based throughout the state.

The median price for Texas homes in 2013-Q1 was $158,000, which is 7.04% more than the first quarter of 2012. In the same timeframe, the average price was $204,718 – that’s 6.87% more than 2012-Q1. The median price for Texas homes has steadily increased, exceeding or matching the price of the prior year every quarter since the Texas Quarterly Housing Report began in 2009.

“Historically, the median price for Texas homes has increased about four percent each year and we usually see the biggest jump in price between the first and second quarters,” said Jim Gaines, Ph.D., economist with the Real Estate Center at Texas A&M University. “So, with price increases already in the range of seven percent in the first quarter, we could see Texas homes increase in value significantly this year.”

However, Gaines also offered a strong caution, “We’ll only realize our potential for increased sales volume if more sellers enter the market and start listing their properties, increasing the inventory of homes for sale.”

In first quarter 2013, the market featured 4.2 months of inventory, which is 1.7 months less than the prior year. That is significantly less than the 6.5 months of inventory cited by the Real Estate Center as a market in which the supply of homes is balanced with demand.

Gaines explained, “There is clearly demand for Texas homes and rising prices are encouraging more homeowners to consider listing their properties. However, if a homeowner wants to move up, they must be able to find a property to move to, so more supply is needed to capture the growth potential in the market.”

Gaines continued, “In the coming months, I expect we’ll start to hear national news reports about increasing sales in other markets, possibly exceeding those in Texas. That’s because other markets boomed in the mid-2000s and busted in the late 2000s, meaning they need dramatic increases in sales volume and price to recover. I call that an ‘echo boom’ and it’s more indicative of market fluctuations than fundamentals. That never happened in Texas, so the increases you’re seeing in our state are indicative of true increases in demand, driven by population growth. Assuming we continue to add jobs as we have recently, that will make our increases more sustainable.”

The Texas Association of REALTORS® has been working to help the state absorb that growth, advocating for homeowners at the Texas Capitol during the current legislative session. Texas REALTORS® have advanced ideas on improving infrastructure for transportation and water in the state as well as consumer-protection provisions in the property-tax loan industry, mortgage lending, and the property-appraisal process. The 83rd Texas Legislature regular session ends May 31.

Chairman Bogany concluded, “The word is out that Texas is a great place to live and these results are further evidence of that. Now, Texas REALTORS® are on a mission to ensure that remains the case and help our state provide for the needs of its homeowners today and far into the future.”

The Texas Quarterly Housing Report is issued four times per year by the Texas Association of REALTORS® with multiple listing service data compiled and analyzed by the Real Estate Center at Texas A&M University.

About the Texas Quarterly Housing Report

Data for the Texas Quarterly Housing Report is analyzed by the Real Estate Center at Texas A&M University using statistics compiled from 48 multiple listing services in markets throughout Texas. The report includes data for single-family home sales over the course of one quarter and is scheduled for release by the Texas Association of REALTORS® on the following dates each year (or the next business day): Feb. 1, May 1, Aug. 1, and Nov. 1. This report is issued to the media, local REALTOR® organizations, and published on the Texas Association of REALTORS®’ consumer Web site, TexasRealEstate.com.

About the Texas Association of REALTORS®

With approximately 80,000 members, the Texas Association of REALTORS® is a professional membership organization that represents all aspects of real estate in Texas. We advocate on behalf of Texas REALTORS® and private-property owners to keep homeownership affordable, protect private-property rights, and promote public policies that benefit homeowners. Visit TexasRealEstate.com to learn more.

Monday Market Update

In recent weeks, mortgage rates have been pushed and pulled mostly by Fed policy expectations and European Union headlines. With little news on these fronts, though, the US economic data emerged as the main driver of mortgage rates this week. Unfortunately for mortgage rates, the data was generally stronger than expected, and rates ended the week higher.

This week's economic data exceeded expectations nearly across the board. Important broad indicators of economic growth, including Retail Sales and Industrial Production, showed solid increases from last month. The Philly Fed manufacturing index rose to the highest level since April. Perhaps the biggest surprise came from the housing data (see below). While stronger economic growth is great news for the economy, it tends to increase future inflationary expectations, which is bad news for mortgage rates.

The national housing data released this week continued to reflect solid improvement. September Housing Starts jumped 15% from August to the highest level since July 2008. Building Permits showed similar strength. September Existing Home Sales were 11% higher than one year ago, making 15 straight months of increases on an annual basis. Inventories of unsold existing homes declined to the lowest level since March 2006. The October NAHB Home Builder Sentiment index rose slightly, its sixth consecutive monthly increase, to the highest level since June 2006.

The big story next week will be Wednesday's Fed meeting, although investors are not expecting any major changes from the Fed following the announcement of QE3 at the last meeting. The most significant economic data will be Friday's release of third quarter Gross Domestic Product (GDP), the broadest measure of economic growth. Before that, New Home Sales will come out on Wednesday. Durable Orders and Pending Home Sales will be released on Thursday. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday.

Call us today and we will get you in contact with one of the best lenders out there to help you get the best rate possible and find the perfect home!  : )

 www.TorresRealtyGroup.com

Copyright @ 2012 MBSQuoteline

Monday Market Update

Global central banks continued to add monetary stimulus this week, which was favorable for US bonds. The economic data was roughly neutral. As a result, mortgage rates ended the week a little lower.

On Wednesday, the Bank of Japan (BOJ) announced that it will increase its level of monetary stimulus, following similar recent moves by the Fed and the European Central Bank (ECB). The goal of the central banks is to boost economic growth and to reduce joblessness. The primary tool used by the central banks is bond purchases. The increased demand for bonds, including US mortgage-backed securities (MBS), from central bank purchases has helped push mortgage rates lower.

The housing data released this week continued to show improvement in the sector. August Existing Home Sales rose 8% from July to the highest level since May 2010. August Housing Starts increased 2% from July, and Building Permits for single-family homes rose to the highest level since March 2010. The September NAHB Home Builders confidence index rose for the fifth straight month to the highest level since June 2006.

Next week, New Home Sales will be released on Wednesday. The final revisions to second quarter GDP, Durable Orders, and Pending Home Sales will come out on Thursday. Personal Income, Core PCE inflation, and Chicago PMI manufacturing will be released on Friday. Consumer Confidence and Consumer Sentiment will round out the schedule. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday.

Copyright @ 2012 MBSQuoteline

The Market Update

 

While there was a full slate of economic data and Treasury auctions this week, investors were focused on a speech by Fed Chief Bernanke on Friday. The resulting increase in expectations for future Fed action was positive for mortgage rates, which ended the week a little lower.

Bernanke did not commit to implementing any additional easing measures in his highly anticipated speech from Jackson Hole, but his comments caused investors to raise their expectations for a third round of Fed asset purchases (called quantitative easing or QE3). Bernanke emphasized that a high jobless rate imposes large costs on the economy and left the door open for further easing. QE3 would likely involve Fed purchases of mortgage-backed securities (MBS), so mortgage rates improved after his speech. The possibility of additional monetary stimulus also caused stocks to rally on Friday.

The housing sector data released this week continued to show improvement. July Pending Home Sales increased 2% from June to the highest level since April 2010, which was shortly before the deadline for the homebuyer tax credit. Pending Home Sales are a leading indicator of future housing market activity. The June S&P/ Case-Shiller 20-city home price index increased 2.3% from May.

The biggest economic event next week may be the European Central Bank (ECB) meeting on Thursday. Investors will be watching whether there will be an announcement of additional aid measures for European countries with debt troubles. The biggest US economic report next week will be the important Employment data on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month, particularly this month coming out a little before the next Fed meeting on September 12. Before the employment data, ISM Manufacturing and Construction Spending will be released on Tuesday. Productivity is scheduled for Wednesday. ISM Services will come out on Thursday. Mortgage markets will be closed on Monday in observance of Labor Day.

Monday Market Update

Overall, the economic data came in pretty close to expectations this week, and Greece successfully reached a debt deal with private bondholders. With a lack of surprises in the economic news, mortgage rates ended the week nearly unchanged.

While it was a little stronger than expected, the important monthly Employment report had little impact on mortgage rates. Against a consensus forecast of 200K, the economy added 227K jobs in February, and revisions to prior months added an additional 61K jobs. The Unemployment Rate remained at 8.3%, as expected. Average Hourly Earnings, a proxy for wage growth, increased at a 1.9% annual rate. With gains above 200K for the first three months of the year, the recent pickup in job growth and the decline in Jobless Claims reflect solid improvement in the labor market.

Greece took a necessary step along its path to receive a much needed financial aid package. Private bondholders agreed to the proposed Greek bond swap deal, which will help reduce its debt burden. Without the deal, Greece was at risk of a potentially disastrous full default on its debt, which may have forced it to leave the European Union.

The big news next week will be Tuesday's Fed meeting. Investors will be trying to determine the likelihood of additional Fed easing. The most significant economic data next week will be the monthly inflation reports. The Producer Price Index (PPI) focuses on the increase in prices of "intermediate" goods used by companies to produce finished products and will come out on Thursday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Friday. CPI looks at the price change for those finished goods which are sold to consumers. In addition, Retail Sales will be released on Tuesday. Retail Sales account for about 70% of economic activity. Industrial Production, Consumer Sentiment, Import Prices, Philly Fed and Empire State will round out a busy schedule. In addition, there will be Treasury auctions on Monday, Tuesday, and Wednesday.

Copyright @ 2012 MBSQuoteline