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Mortgage Market Update 12-16-14

Home builder sentiment across the nation edged lower in December, but still remains robust as 2014 comes to an end. The National Association of Home Builders Housing Market Index fell to 57 this month, which was just below the 58 expected and down from the 58 recorded in November. Any number above 50 indicates that more builders view conditions as good rather than poor. Within the report it showed that current sales conditions and expectations for future sales declined, while the traffic gauge of prospective buyers held steady.

In another sign that the U.S. economy has improved from the depths of the Great Recession, the Federal Reserve reported on Monday that factory production rose by 1.1% in November from October. Output at factories has risen 4.8% over the past year, which is above levels seen before December 2007. Despite a global slowdown, the U.S. has continued to recover, led by a boost in auto sales, food, wood, plastics and rubber products.

Today is the busiest day of the shipping season for the U.S. Post Office and FedEx with just 10 days until Christmas. The nation’s largest shipper, the Post Office, says it will process 640 million pieces of mail on Monday, up 33 million from last year. The Post Office further reported that between Thanksgiving and Christmas, it expects to deliver 12.7 billion cards, letters and packages. FedEx reports that it will ship 22.6 million packages on Monday while it will deliver 290 million packages during the same period, up 9% from 2013.

Mortgage Market Guide 12-01-14

The National Federation of Retailers (NRF) reported today that Black Friday weekend sales didn’t sizzle, which could be attributed to deals that began before Thanksgiving. The NRF said that sales from Thanksgiving through Sunday is estimated to hit $50.9 billion, down from the $57.4 billion in 2013, an 11% decline. The NRF went on to say that during the four-day period, 2014 online sales will be flat from last year. Another reason for the ease in sales could be that shoppers are holding out until later in the holiday shopping season to see if they can get better deals.

In a move that could potentially make it possible for hundreds of thousands of additional consumers to get mortgages, Fannie Mae and Freddie Mac have relaxed lending standards beginning today, December 1st. The new measures stem from an agreement in October where lenders had blamed the lack of clarity on when they would be penalized for making mistakes on mortgages they sell to Fannie and Freddie. The new standards should include faster turnaround times for mortgage applications to be processed. In addition, lenders be able to consider reduced credit scores and look past one time events when consumers suffered a hit on credit scores.

Fannie Mae released its Economic and Housing Outlook report for November late last week revealing that “economic growth in the U.S. is slowing from the strong mid-2014 numbers to a more moderate pace heading into next year.” Fannie Mae said that full economic growth is expected to be around a modest 2.5% in 2015. Fannie went on to say their view of housing starts, home sales, and home price trends will be largely unchanged next year and that “mortgage activity in 2015 will be very similar to 2014.”

Mortgage Market Guide

Americans filing for first time unemployment benefits fell to multi-year lows in the latest week as the sector continues to recover and move into greener pastures. The Labor Department reported that Weekly Initial Jobless Claims fell by 10,000 to 278,000 and is the second lowest level since the Great Recession ended. The four-week moving average of claims, which irons out seasonal abnormalities, fell to a 14-year low of 279,000, down 2,950 from the previous week. Since June, claims have averaged 293,000 per week compared to last year’s same time period of 343,000 and well below the 594,000 average per week in 2009.

Global outplacement firm Challenger, Gray & Christmas reported today that after falling to a 14-year low in September, planned layoffs by employers across the nation surged by nearly 70% from September. U.S. employers announced planned cuts of 51,183 in October, well above the 30,477 planned in September. October is the second highest amount of planned cuts since the May 2014 figure of 52,961 and marks only the fourth time in the last 22 months that planned cuts were above 50,000.

With the Thanksgiving Holiday quickly approaching, more Americans are expected to take to the skies to visit friends and relatives this season. Airlines for America reports that 24.6 million passengers will fly domestically between November 21 and December 2. That’s up about 1.5% from 2013, or 31,000 more passengers per day. U.S. carriers have reaped some big profits in that past year and are making sure that there is enough room to meet the growing demand. The top three destinations for Thanksgiving are Chicago, Orlando and Cancun.

Mortgage Market Guide 10-14-14

Bank earnings were abundant today with Citigroup, JPMorgan and Wells Fargo all reporting their quarterly numbers. Wells Fargo reported that revenues came in at $21.2 billion, above the $21.1 billion expected. JPMorgan reported a profit of $5.6 billion, a big surge from the $380 million in the same period last year, which was due to hefty legal bills. Lastly, Citigroup earned $1.15 per share, which was above the $1.12 expected.

The National Federation of Independent Business reported that its small business optimism index fell in September. Business owners are expecting an ease in profits and sales, a tightening in credit conditions, and are experiencing a harder time filling job openings with qualified candidates. The Index fell 0.8 points to 95.3, which is five points below where it was before the start of the Great Recession in late 2007.

The U.S. Stocks markets have lost some ground in the past few weeks. U.S. equities have lost almost $744 billion in values since October 8 due to slowing global growth concerns and as the Federal Reserve eases back on its latest stimulus program dubbed Quantitative Easing III (QE). The QE program was originally announced in November of 2008 to promote job and economic growth. The closely watched S&P 500 Stock Index has lost 6.3% since hitting its all-time closing high of 2,011 back on September 18, 2014.

Mortgage Market Update 10-08-14

The big gains in home prices in 2013 are coming back down to more normal levels as the final quarter of 2014 gets underway. CoreLogic, a leading global property information, analytics and data enabled services provider, reported on Tuesday that home prices, including distressed sales, rose by 6.45% from August 2013 to August 2014. A spokesperson from CoreLogic said, “continued moderation of home price appreciation is a welcomed sign of more balanced real estate markets and less pressure on affordability for potential home buyers in the near future.” The company went on to say that national home prices will rise 5.2% from August 2014 to August 2015.

The Labor Department reported its JOLTS report, Job Openings and Labor Turnover Survey on Tuesday, and the numbers were mixed. The report examines the job market and collects information from employers in different industries. The data collected concerns hires, job openings, layoffs, separations and recruitments. In August there were 4.8 million job openings on the last business day, up from 4.6 million in July along with 4.6 million hires, down from 4.9 million in July.

The holiday shopping season in 2014 is expected to show some nice gains as the economy continues to recover. The National Retail Federation (NRF) said that consumer confidence is likely to pick up in November and December as consumers search for steep discounts. Sales are expected to rise by 4.1% this year, the highest increase since the 4.8% increase in 2011. Total sales for 2014 could rise to $616.9 billion.

Mortgage Market Guide 09-18-14

The housing markets received some sour news today as sales for new home construction declined in August from July. The Commerce Department reported that New Home Sales fell by 14.4% last month to an annualized rate of 956,000 units, which was below the 1.117 million rate in July and below the 1.045 million expected. The sector continues to improve, but tight credit conditions coupled with a still higher than normal unemployment rate is constraining further gains. Single family homes declined by 2.4% while multi-family dwellings plunged nearly 32%.

Americans filing for unemployment benefits plunged in the latest week to the lowest levels since July, which could signal that the low amount of job creation in August could be just a one-off aberration. The Labor Department reported that Weekly Initial Jobless Claims fell by 36,000 in the latest week to 280,000, near a 14-year low, and well below the 305,000 expected. The four week moving average, which irons out any seasonal abnormalities, fell by 4,750 to 299,500. The data suggests that the jobs market continues to improve, and will be a key factor to the members of the Federal Reserve.

The improving U.S. economy and labor markets have caused the poverty rate to decrease significantly in 2013 for the first time since 2006, reported the Census Bureau. The U.S. poverty rate fell to 14.5% last year from 15% in 2012. The Latino population saw the biggest decline in the poverty rate with a 2.1% decline while median household income posted its first increase since 2000. Within the report it showed that those Americans with year-round full-time jobs increased by nearly 2.8 million to 105.8 million in 2013.