I've been enjoying Brian's weekly commentary for a couple of years and thought I would start sharing with my readers...
WEEK OF NOVEMBER 26, 2013
Mortgage Loan Interest Rates and U.S. Treasury Market:
As the stock market continues its unprecedented climb during 2013, (almost a 30% year to date gain) with record after record being broken for most of the major stock market indexes, the interest rate market appears relatively calm. The bond market took a little bit of a hit when the minutes of the last Federal Reserve Policy Setting Committee from late October were released. The minutes showed that The Federal Reserve is still open to starting the scale back of their unprecedented $85 billion a month program of extra stimulus within the U.S. Treasury and mortgage backed securities markets sooner rather than later. The likely outcome is no immediate action at their December 18th Federal Open Market Committee (FOMC) meeting, but the probable commencement of the scale back of this quantitative easing program at their end of January 2014 meeting and most certainly by their March 2014 meeting.
Analysts and investors have sort of forgotten or pushed to the side the debt troubles throughout most of Europe, the U.S. budget and debt ceiling debates that have only been pushed back to January and February of 2014 respectively, along with U.S. employment numbers that while not falling off a cliff, do not support sufficient growth to lift our economy into a higher growth mode.
Investors have been focused on the current low interest rate environment where corporate earnings have generally beat market expectations. With low inflation and with the lack of higher interest rate options for investors for money market accounts, bonds, U.S. treasuries and certificates of deposit, this has pushed more and more money into the stock market.
The U.S. Treasury and mortgage backed security markets have moved up in yield only a modest amount over the past 2 weeks. Over the past 10 days, the 10 Year U.S. Treasury bond has ranged from a low of 2.67% on November 18th to an high of 2.80% on the 20th of November. As of this writing on November 26, the 10 year U.S. Treasury is at 2.70%. Mortgage rates are about the same as they were two weeks ago.
See the attached mortgage loan rate sheet for the latest interest rates. Feel free to post them on your websites or share with your buyers AND with you sellers, who will become buyers. Shown below are recently issued economic reports that may be of interest to you, with housing related reports first.
Housing Related News:
MBA (Mortgage Bankers Association) Purchase Applications (for the November 15, 2013 week):
The purchase index popped 6% higher in the November 15 week to end a run of negative readings. The refinance index, however, extended its run of decreases in activity, falling another 7.0%. Recent indications from housing have not been as robust as trends from the Spring/Summer. (Slightly Negative Report)
Homebuilders Housing Market Index for November 2013: Prior reading 55, prior reading (revised) of 54 and actual November 2013 reading of 54:
The Housing Market Index is a weighted average of separate different indexes: present sales of new homes, sales of new homes expected within the next 6 months and traffic of prospective buyers in new homes.
Homebuilders are still confident but not quite as much as they were during the third quarter of 2013. The housing market is at a read-ing of 54 this month and is unchanged from a slight downward revision last month in October, but down from a peak recovery reading of 58 in August. The index has failed to show a gain over the past 3 months. There is still plenty of strength in the 6-month outlook for new homes where that component is at a reading of 60. Present sales is still strong at a reading of 58. But buyer traffic has de-creased by a large amount from a reading of 50 to a reading of 42, indicating that
high-end buyers appear to be a driving force in new home sales. The West is at 58 and the South is at a reading of 55. The Midwest, the leader for much of the year, has fallen back to a reading of 54. The Northeast, at a reading of 44, continues to noticeably trail other regions of the U.S. (Neutral report)
Existing Home Sales for October 2013:
Housing appears to be slowing with existing home sales down 3.2% in October 2013 to a 5.12 million annual sales rate, down from a 5.29 million sales pace the previous month. Weakness is centered on single-family homes which is down 4.1% in October, following a 1.5% decline in September. The condo component, which is a much smaller component than single-family homes, increased 3.3%, but still could not reverse the prior months' 4.7% decline.
Supply of housing is at 5.0 months and is about the same as 4.9 months in September. Median home prices for the U.S. rose .5% to $199,500. The year-over-year increase in home prices is 12.8%. Housing, billed as a leading sector for 2013, has been slowing down during the second half of the year; held down by low supply, rising mortgage rates as compared to early summer and a slow jobs market, which are keeping first time homebuyers out of the market.
(Slightly negative report)
Initial Jobless Claims (for the week of November 16, 2013):
Initial jobless claims fell a sharp 21,000 to 323,000 jobless claims in the November 16th week, for the lowest level since the partial government shutdown lifted claims in the first half of October. The four-week average, which is a better indicator of activity, is down 6,750 jobless claims to 338,500. This level of jobless claims is nearly even with the 337,500 claims in the October 19 week. The trend points to a slightly smaller number of jobless claims going forward.
(Slightly positive report)
Consumer Price Index (CPI) and Producer Price Index (PPI) Sentiment for October 2013:
CPI: Prior .2%, Actual for October 2013: -.1%; Year-over-year .9%
PPI: Prior .1%, Actual for October 2013: + .1%; Year-over-year 1.7%
Low inflation and thus room for The Federal Reserve to continue accommodative monetary policy (low interest rates) continues.
Manufacturing Surveys for U.S. Regions for November 2013:
Empire State (New York) Manufacturing Survey:
Prior 1.52, Consensus for November 5.5, Actual -2.21 reading
Philadelphia Federal Reserve Manufacturing Survey:
Prior 19.8, Consensus for November 15.5, Actual 6.5 reading
Kansas City Federal Reserve Manufacturing Survey:
Prior 6, Consensus for November 6, Actual 7 reading
Manufacturing activity has been disappointing across most of the United States.
FINALLY, HAVE A HAPPY AND HEALTHY THANKSGIVING WITH YOUR FAMILIES!
America’s Fastest Growing Mortgage Company
Senior Vice President of Mortgage Lending
400 Skokie Blvd., Suite 110, Northbrook, IL 60062www.guaranteedrate.com/BrianJessen