Last week’s economic reporting included readings from the National Association of Home Builders Housing Market Index, data on sales of new and previously-owned homes, and weekly reports on mortgage rates and jobless claims.

NAHB: Affordability, Shortages of Labor and Materials Impacting U.S. Housing Markets

There is no denying that a number of conditions impact the housing market’s direction and ability to sustain future demand. According to July’s Housing Market Index produced by the National Association of Home Builders, the top conditions including high prices for building materials, labor shortages, and consumers’ perception of affordability. Although the HMI reading declined by one point in July, ongoing trends have definitely impacted builder confidence in overall market conditions. July’s index reading was 80 as compared to June’s reading of 81 and the expected reading of 82. Housing Market Index readings over 50 indicate that most builders surveyed were confident about housing market conditions.

That said, July’s Housing Market Index component readings included builder confidence in current market conditions, which fell one point to 86; builder confidence in housing market conditions for the next six months rose two points to 81. However, builder confidence in prospective buyer traffic in single-family housing developments fell six points to an index reading of 65. Although, it is worth noting that buyer traffic readings often fell below 50 before the pandemic.

Overall, regional builder confidence readings for housing market conditions were mixed in July. The Northeastern region’s reading was four points lower at an index reading of 75. The Midwest index reading was one point lower at 71, whereas the builder confidence reading in the South was unchanged at 85. And, in the West, the builder confidence reading dropped two points to 87.

Previously-Owned Home Sales Rise in June

Looking back at last month’s previously-owned home sales, the National Association of Realtors® reported a seasonally adjusted annual pace of 5.86 million sales in June alone. Nevertheless, analysts expected a reading of 5.93 million sales since May’s reading for existing home sales showed an annual pace of 5.78 million homes sold.

Demand for homes since the pandemic started is driven by home buyers who were looking for less congested suburban and rural areas. Although demand for homes encourages home builders, it also increases home prices when multiple buyers submit purchase offers on each available home. This drives home prices higher and sidelines first-time and moderate-income buyers. High-demand areas are also experiencing more cash offers, which creates difficulties for buyers needing to finance a home purchase.

Housing Starts Rise in July as Building Permits Issued Fall

U.S. housing starts also rose in June according to the Census Bureau—1.64 million starts were reported on a seasonally adjusted annual basis. 1.59 million starts were expected based on 1.55 million starts reported in May. Furthermore, building permits fell to 1.60 permits issued in June; analysts expected building permits issued in June to match May’s reading of 1.68 million building permits issued.

Mortgage Interest Rates and Jobless Claims

What’s more, Freddie Mac reported lower rates for fixed-rate mortgages with 30-year fixed rates averaging 10 basis points lower at 2.78 percent. Rates for 15-year fixed-rate mortgages were also 10 basis points lower and averaged 2.12 percent. Rates for 5/1 adjustable mortgages rose two basis points on average to 2.49 percent. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.
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In other news, 419,000 new jobless claims were filed last week as compared to 368,000 initial jobless claims filed in the previous week. 3.24 million continuing jobless claims were filed as compared to 3.27 million ongoing jobless claims filed in the previous week.

What’s Ahead for the week of July 26, 2021

This week’s scheduled economic reporting includes readings on home prices from S&P Case-Shiller Home Price Indices, data on pending home sales, and new home sales will be released along with the post-meeting statement of the Fed’s Federal Open Market Committee. Fed Chair Jerome Powell is scheduled to give a press conference after the FOMC statement is released. Weekly readings on current mortgage interest rates and jobless claims will be published along with the University of Michigan’s Consumer Sentiment Index.

​Cheers!

Scott Synovic
AnnieMac Home Mortgage
Colorado's Mortgage Expert
www.coloradosmortgageexpert.com
@coloradosmortgageexpert
303.668.3350 Direct

NMLS: 253799 / AnnieMac Home Mortgage NMLS: 338923
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 scheduled economic reports included readings on inflation, Fed Chair Jerome Powell’s testimony before the House Financial Services Committee, and the University of Michigan’s Consumer Sentiment Index. Weekly readings on current mortgage interest rates and jobless claims were also released.

Consumer Price Index: June Inflation Grows at Fastest Pace Since 2008

June’s Consumer Price Index showed the fastest pace of inflationary growth in 13 years; inflation grew by 5.40 percent on a seasonally-adjusted annual basis. Used car sales accounted for one-third of the growth, but prices also rose for clothes, food, energy, and travel/hospitality. The year-over-year inflation rate for May was 5.00 percent.

Moreover, inflation grew by 0.90 percent month-to-month, which exceeded analysts’ expectations of 0.50 percent growth and a 0.60 percent growth in May. The Core Consumer Price Index, which excludes volatile food and energy sectors, also grew by 0.90 percent in June as compared to a month-to-month reading of 0.70 percent in May. Analysts expressed concern that the rapid pace of inflation may not slow as quickly as the Federal Reserve predicted.

Fed Chair Jerome Powell Testifies Before House Financial Services Panel

Fed Chair Jerome Powell maintained the Federal Reserve’s earlier prediction that the pace of inflation would ease, but not immediately. “Inflation has increased notably and will likely remain elevated in coming months before moderating,” Mr. Powell said, and he also noted that inflationary growth has come in at a faster pace than the Fed was hoping to see.

Overall, Chair Powell points to three factors contributing to current inflationary growth, including weak inflation during the pandemic (dropped out of the year-over-year calculation), as well as production and supply chain constraints that have led to sharp price increases after the pandemic. The third and final factor or economic indicator is a surge in demand for services that we have notably seen since the economy reopened. The Fed Chair said, “This is a pretty narrow group of things, but it is these factors that are producing these high readings.”

Current Mortgage Rates, Jobless Claims Fall

In other news, Freddie Mac reported mixed interest rates for mortgages last week as the rate for 30-year fixed-rate mortgages averaged 2.88 percent and were two basis points lower. That said, rates for 15-year fixed-rate mortgages rose by two basis points to an average of 2.22 percent. Rates for 5/1 adjustable rate mortgages, on the other hand, fell by five basis points to 2.47 percent on average. Additionally, discount points averaged 0.70 percent for 30-year fixed-rate mortgages and 0.60 percent for 15-year fixed-rate mortgages. And discount points for 5/1 adjustable rate mortgages averaged 0.30 percent.

Similarly, new jobless claims fell, with only 360,000 initial claims filed from the previous week’s reading of 386,000 claims filed. Note, data for continuing jobless claims was not updated last week.

Last but not least, the University of Michigan reported no change in its Consumer Sentiment Index for July, with an index reading of 85.5. Analysts expected a reading of 86.3.

Cheers!

Scott Synovic
AnnieMac Home Mortgage
Colorado's Mortgage Expert
www.coloradosmortgageexpert.com
@coloradosmortgageexpert
303.668.3350 Direct

NMLS: 253799 / AnnieMac Home Mortgage NMLS: 338923
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.