Technically, the benchmark 3.5% Bond is trading just below resistance at the 25-day Moving Average and near the upper end of the year’s trading range. We will continue to carefully float, not lock mortgage rates at this time.
Weekly Survey of Rates from the Mortgage Bankers Association
For the week of June 4th, 2014
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.26 percent from 4.31 percent, with points decreasing to 0.13 from 0.15 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.22 percent from 4.23 percent, with points decreasing to 0.11 from 0.16 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.39 percent from 3.42 percent, with points increasing to 0.07 from 0.06 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
Commercial Real Estate Lending
Commercial Mortgage backed Securities (CMBS)– The 10 Yr Swap rate moved lower to finish the week at 2.665%, up from last weeks 2.541%.
Housing News
You can’t sell what you don’t have
Some housing experts are concerned that the housing recovery seems to be stalling. Some are blaming the one percent increase in mortgage interest rates since the first quarter of last year. Others are pointing at an economy that is improving but only at a snail’s pace. Still, others are questioning whether homeownership is even considered by some to still be part of the American Dream.
However, there is great evidence that the true reason home sales aren’t stronger is because we lack inventory in the vast majority of markets across the country.
Here are a few reasons why we believe this to be true:
Buyers Are Searching the Internet for Homes in Record Numbers
Trulia, a major online residential real estate site for home buyers that lists properties for sale, recently reported that it is experiencing record levels of traffic as the spring buying season kicks into high gear. The site reached a record number of unique visitors in April with nearly 50 million.
Buyers Are Physically Out Shopping
The number of potential home buyers physically looking at homes is increasing. The National Association of Realtors (NAR) measures this each month in a data point they call “foot traffic”. Foot traffic measures the number of homes being shown by agents. That number has increased for each of the last three months and has doubled over that period of time.
Inventory Levels are BELOW Historic Norms
History shows us that a balanced real estate market requires a six month supply of available housing inventory. We have not reached that mark in over two years. Though inventory numbers are improving, the recent increase in buyers now looking will again put a strain on this number.
Bottom Line
While inventory levels remain below historic norms, it will remain a seller’s market. This being the case, if you are considering selling your home, now may be the time to list it for sale.
Economic News
Steady as she goes: Job creation keeps up pace
Nonfarm payrolls grew at a pace in line with recent trends, rising 217,000 in May as the unemployment rate held steady at 6.3 percent, according to numbers released Friday by the Bureau of Labor Statistics.
Most of the job gains came on lower-paying industries as wages rose modestly, increasing 5 cents an hour to maintain the 2.1 percent growth over the past 12 months. Average hours worked came in flat at 34.5.
A broader measure of joblessness that includes those working part time for economic reasons and those who have quit looking remained elevated at 12.2 percent, though that was a low for the year and the best “U6” measure since October 2008.
Economists surveyed by Reuters expected 218,000 U.S. jobs were created last month, down from April’s downwardly revised 282,000. The unemployment rate had been expected at 6.4 percent. Read more
US jobless claims rise as payrolls data loom
The number of Americans filing new claims for unemployment benefits rose last week, but the underlying trend continued to point to a firming labor market.
Initial claims for state unemployment benefits increased 8,000 to a seasonally adjusted 312,000 for the week ended May 31, the Labor Department said on Thursday. Read more
The Feds Quantitative Easing Time Line
The U.S. manufacturing sector expanded in May at a faster clip than previously seen, an industry report showed on Monday.
Financial data firm Markit said its final U.S. Manufacturing Purchasing Mangers Index rose to 56.4 in May from 55.4 in April, and following a preliminary reading of 56.2. A reading greater than 50 indicates expansion.
Sources: CNBC, Bloomberg, Reuters, KCM, MMG, Housingwire