Mortgage Blog - March 8, 2021
Last week’s scheduled economic news included readings on construction spending and labor sector reports on public and private sector jobs. The national unemployment rate was published along with weekly readings on mortgage rates and jobless claims. Federal Reserve Chair Jerome Powell also spoke at a jobs summit.
Construction Spending Rises in January
U.S construction spending rose at a seasonally-adjusted annual pace of 1.70 percent in January as compared to 1.10 percent growth reported in December. Year-over-year construction spending was 5.80 percent higher in January 2021. Residential construction spending reported in January rose to $713 billion on a seasonally-adjusted annual basis as compared to December 2020’s construction spending pace of $695.70 billion.
Non-residential construction spending in the private sector rose to a seasonally-adjusted annual rate of $447 billion in January as compared to December 2020’s pace of $445.2 billion.
High demand for single-family homes persists as inventories of available homes fall. This scenario contributes to affordability issues that are also influenced by rising building materials costs.
Mortgage Rates, Jobless Claims Mixed
Freddie Mac reported higher rates for 30-year fixed-rate mortgages, which rose by five basis points and averaged 3.02 percent. Rates for 15-year fixed-rate mortgages were unchanged from the prior week and averaged 2.34 percent. Mortgage rates for 5/1 adjustable rate mortgages dropped by 26 basis points and averaged 2.73 percent. Discount points averaged 0.60 percent for 30-year fixed-rate mortgages and 0.70 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.30 percent.
First-time jobless claims rose to 745,000 new claims filed as compared to the prior week’s reading of 736,000 new claims filed. Ongoing jobless claims fell last week with 4.30 million continuing claims filed; 4.42 million ongoing claims were filed during the prior week.
Private- Sector Jobs Fall as Public-Sector Jobs Increase
ADP reported 117,000 private-sector jobs added in February as compared to January’s reading of 195,000 private-sector jobs added. The government’s Non-Farm Payrolls report for February showed 379,000 public and private sector jobs added in February; 166,000 public and private-sector jobs were added in January. The national unemployment rate fell to 6.20 percent as compared to January’s reading of 6.30 percent.
Fed Chair Promised to Hold Steady on Monetary Policy
Fed Chair Jerome Powell promised to maintain accommodative monetary policies for the foreseeable future as the Federal Reserve continues striving toward its dual mandate of achieving maximum employment and annual inflation of two percent. When asked about rising long-term rates, Mr. Powell said that he could not commit to reducing the Fed’s asset purchases as he thought that the Fed’s goal of achieving maximum employment was “highly unlikely.”
What’s Ahead for the Week of March 8, 2021
This week’s economic reporting includes readings on inflation and consumer sentiment. Weekly readings on mortgage rates and jobless claims will also be released.
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