Last week’s economic reporting included readings on home sales, Fed Chair Jerome Powell’s testimony on monetary policy to the House Financial Services Committee, and the University of Michigan’s Consumer Sentiment Index. Weekly reports on mortgage rates and jobless claims were also released.

New Home Sales Pace Rises as Pre-Owned Homes Sales Pace Slows

The Commerce Department reported a seasonally-adjusted annual pace of 696,000 new homes sold in May; analysts predicted a year-over-year pace of 587,000 new homes sold as compared to April’s year-over-year pace of 629,000  new homes sold. While the year-over-year pace of new home sales increased by 10.70 percent month-to-month in May, the year-over-year sales pace for new homes fell by 5.90 percent.

Increasing materials and labor costs continued to challenge home builders, but high demand for homes fueled sales of new homes even as mortgage rates and home prices rose.  The median price of new homes sold in May fell to $449,000 from April’s record high of $454,700. The inventory of available homes fell by 7.20 percent in May, which equaled a 7.70-month supply of new homes for sale.

Regional results for new home sales were mixed; sales of new homes fell by -51.10 percent in the Northeast and were -18.30 percent lower in the Midwest. New home sales rose by 12.80 percent in the South and were 39.30 percent higher in the West.

In other news, Fed Chair Jerome Powell spoke on monetary policy before the House Financial Services Committee and explained the Fed’s strategy to ease inflation through a series of interest rate increases intended to cut into consumers’ purchasing power. 

Mortgage Rates Rise; New Jobless Claims Fall

Freddie Mac reported higher average mortgage rates last week as the rate for 30-year fixed-rate mortgages rose by three basis points to 5.81 percent. Rates for 15-year fixed-rate mortgages averaged 4.92 percent and were 11 basis points higher than in the previous week. The average rate for 5/1 adjustable rate mortgages was eight basis points higher at 4.41 percent. Discount points averaged 0.80 percent for 30-year fixed-rate mortgages and 0.90 percent for 15-year fixed-rate mortgages.

Initial jobless claims fell to 229,000 new filings last week as compared to 231,000 new claims filed in the previous week. Analysts expected 225,000 new jobless claims last week. Continuing jobless claims inched up with 1.32 million continuing claims filed as compared to the previous week’s reading of 1.31 ongoing jobless claims filed.

The University of Michigan’s Consumer Sentiment Index fell to an index reading of 50.0 for June as compared to May’s reading of 50.2 and the expected June reading of 50.2. Consumer concerns over fuel prices and rising inflation eroded consumer confidence in the economy. Readings above 50 indicate that most consumers have a positive outlook on current economic conditions.

What’s Ahead for the Week of June 27, 2022

This week’s scheduled economic reports include readings from Case-Shiller on home prices, pending home sales,  and construction spending. Weekly readings on mortgage rates and jobless claims will also be released.
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Cheers!

Scott Synovic
Fairway Independent Mortgage Corporation
Colorado's Mortgage Expert
www.coloradosmortgageexpert.com
@coloradosmortgageexpert
303-668-3350 Direct

NMLS: 253799 / Fairway Independent Mortgage Corporation NMLS: 2289
Regulated by the Division of Real Estate

The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial
services and other professionals only. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without errors.

Last week’s economic reporting was highly focused on inflation, which grew at its fastest pace since 1981. Rising fuel and food prices boosted inflation in the U.S. and abroad; Analysts said the Ukraine War and supply chain problems continued to drive inflation. Weekly readings on mortgage rates and jobless claims were also released.

Inflation Hits Highest Level in 41 Years

The government’s Consumer Price Index, which tracks inflation, rose at a month-to-month pace of 1.0 percent in May compared to the expected reading of 0.70 percent and April’s reading of 0.30 percent growth. May’s Core Consumer Price Index, which excludes food and fuel sectors, rose by 0.60 percent month-to-month.

Year-over-year readings for inflation also increased in May as inflation rose by 8.60 percent compared to an expected reading of 

8.30 percent growth that matched April’s reading for year-over-year inflation. The year-over-year core Consumer Price Index rose by 6.0 percent in May compared to expectations of 5.90 percent and April’s year-over-year reading of 6.20 percent growth in consumer prices. Consumers felt the most pain paying higher rents and dealing with rising food and fuel prices. These categories represent a significant portion of household expenses and there was no immediate relief in sight. The Federal Reserve plans to raise its key interest rate range every month as it attempts to slow rapid inflation.

Mortgage Rates, Jobless Claims Rise

Freddie Mac reported higher average mortgage rates last week as rates for 30-year fixed-rate mortgages rose by 14 basis points to 5.23 percent; rates for 15-year fixed-rate mortgages averaged six basis points higher at 4.38 percent. Rates for 5/1 adjustable rate mortgages loans were eight basis points higher at 4.12 percent. Discount points for 30-year fixed-rate mortgages averaged 0.90 percent and 0.80 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.30 percent. Ongoing shortages of available homes and rising materials costs continued boosting home prices and eroding affordability for first-time and moderate-income home buyers.

Initial jobless claims increased last week with 229,000 first-time claims filed compared to the prior week’s reading of 202,000 initial claims filed. Continuing jobless claims were unchanged last week with 1.31 million ongoing claims filed.

What’s Ahead for the Week of June 13, 2022

This week’s scheduled economic reports include readings on housing markets, building permits issued, and housing starts. The Federal Reserve’s Federal Open Market Committee will release its post-meeting statement and Federal Reserve Chair Jerome Powell will give a post-meeting press conference. Weekly readings on mortgage rates and jobless claims will also be released.

​Cheers!

Scott Synovic
Fairway Independent Mortgage Corporation
Colorado's Mortgage Expert
www.coloradosmortgageexpert.com
@coloradosmortgageexpert
303-668-3350 Direct

NMLS: 253799 / Fairway Independent Mortgage Corporation NMLS: 2289
Regulated by the Division of Real Estate

The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial
services and other professionals only. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without errors.

Last week’s economic reporting included readings on new and pending home sales, minutes from the Federal Reserve’s recent Federal Open Market Committee meeting, and data on inflation. Weekly readings on mortgage rates and jobless claims were also released. Mortgage rates are going up, as are monthly mortgage payments, but home sales are slowing in response, which could have an effect on the economy.

New and Pending Home Sales Pace Slides

According to the Commerce Department, the annual pace of new home sales fell fairly sharply in April; the year-over-year sales of new homes fell to a pace of 591,000 sales as compared to the March reading of 709,000 sales of new homes.

This is in contrast to what analysts expected, which was a year-over-year pace of 750,000 new home sales in April. First-time and moderate-income home buyers were challenged by rising home prices and mortgage rates, contributing to the falling sales.

Readings for pending home sales fell by -3.90 percent in April, another bigger than expected slump, as analysts expected a reading of -2.00 percent based on the March reading of -1.60 percent.

Prospective buyers’ interests have cooled as high home prices and recently rising mortgage rates as well as concerns over rising inflation and economic conditions contribute to sidelining of low and moderate-income home buyers.

The chief economist for the National Association of Realtors®, Lawrence Yun, has announced that rising mortgage rates have increased monthly mortgage payments by as much as $500. Fewer home sales also has a secondary effect on the economy by reducing the sales of goods and services associated with home ownership.

The Federal Reserve’s Federal Open Market Committee minutes documented the Fed’s decision to raise its key interest rate range to 0.75 to 1.00 percent. FOMC members expect ongoing rate range increases and corresponding effects on home sales as the Fed continues its efforts to control inflation.

Lower Average Mortgage Rates

Freddie Mac has now reported lower average mortgage rates for the second consecutive week. Rates for 30-year fixed rate mortgages have now fallen by 15 basis points to 5.10 percent and rates for 15-year fixed rate mortgages have fallen by 12 basis points to 4.31 percent. However, the average rate for 5/1 adjustable rate mortgages rose by 12 basis points to 4.20 percent.

Discount points averaged 0.90 percent for 30-year fixed-rate mortgages and 0.80 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgage rates averaged a mere 0.30 percent.

New Jobless Claims Drop

New jobless claims fell sharply to 210,000 claims filed from the prior week’s reading of 218,000 initial claims filed. Analysts expected only a 3,000 drop to end at 215,000 new jobless claims. Continuing jobless claims rose to 1.35 million ongoing claims filed as compared to 1.32 million ongoing claims filed week over week.

The University of Michigan’s Consumer Sentiment Index also fell, arriving at an index reading of 58.40 in May as compared to April’s reading of 59.10. Readings over 50 are considered positive.

What’s Ahead for the Week of June 6, 2022

Next week’s scheduled economic reports include readings on home prices and construction spending along with labor sector readings on job growth and the national unemployment rate.​
​
​Cheers!

Scott Synovic
Fairway Independent Mortgage Corporation
Colorado's Mortgage Expert
www.coloradosmortgageexpert.com
@coloradosmortgageexpert
303-668-3350 Direct

NMLS: 253799 / Fairway Independent Mortgage Corporation NMLS: 2289
Regulated by the Division of Real Estate

The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial
services and other professionals only. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without errors.