Jobs Report and Mortgage Rates, June 2014

The June jobs report beat expectations this morning, and mortgage rates are rising. June’s non farm payroll report showed the economy adding 288k jobs, compared to the consensus expectation of 211k. The prior two months were revised upward by a total of 29k jobs, and unemployment fell from 6.3% to 6.1%. Wages rose in line with expectations, by 0.2% month-over-month, and 2.0% year-over-year.

If you’re thinking of buying soon, my advice is to select a lender right and lock your rate now, rather than later…

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Existing Home Sales Rise Strongly in May

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WASHINGTON—Sales of previously-owned homes rose strongly in May but remain shy of last year’s pace, a sign the housing market has tentatively regained its footing this spring.

Sales of existing homes increased 4.9% the past month to a seasonally adjusted annual rate of 4.89 million homes, the National Association of Realtors said Monday. The pace was the highest since October, the last month annualized sales topped the five-million mark.

Coupled with an improvement in April, the May figure points to a housing market that has bounced back from a dismal winter and shows buyers are adjusting to modestly higher interest rates compared with the spring of 2013.

imageStill, May sales were down 5% from the year-earlier level and the recent rebound could be slowed if interest rates on mortgage loans begin to increase, as many economist project. Because of the sluggish start to 2014, the Realtors group expects a 3% reduction in sales this year compared with 2013′s total of 5.09 million.

“It would be risky to assume this gain marks the start of a sustainable rebound,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. The recent sales gains are largely “a reversal of the winter hit,” and other reports do “not support the idea that demand is recovering,” he said.

After a strong start last year, the pace of home sales began to ease in August before perking up this spring.

The roller coaster coincides with interest rates that jumped a percentage point in the spring of 2013 but have moderated recently, touching a six-month low in May. The average interest rate on a 30-year fixed-rate mortgage stood at 4.17% last week, according to Freddie MacFMCC -4.00%

Lower mortgage rates make home purchases more affordable for borrowers. But Realtors economist Lawrence Yun said he expects rates to start moving back up soon, reaching 5% by the first quarter of 2015.

Rates have edged lower this year even as the Federal Reserve scaled back its bond-buying program designed to push down long-term interest rates. That program is expected to end later this year, and then the Fed will contemplate increasing short-term rates from near zero.

A rate increase, which most Fed officials say will happen next year, likely would put upward pressure on mortgage rates.

Monday’s report showed the median sale price for a home in May was up 5.1% from a year earlier to $213,400. That was the slowest annual gain since March 2012.

The inventory of homes available for sale rose 6% from a year earlier. At the current pace, it would take 5.6 months to exhaust the supply, just below a typical level. The increased inventory drove May’s strong sales pace, said IHS IHS -1.08% Global Insight U.S. economist Stephanie Karol.

A larger inventory of homes could set up a virtuous cycle where the better selection draws buyers to the market, which sustains price gains, which then entice additional sellers to list. One weak link in that chain, however, could be first-time buyers. The share of first-time buyers fell in May even as sales rose.

“The market can only retain its strength for so long if move-up buyers cannot find a first-time buyer to purchase their starter homes,” Ms. Karol said.

 

New FHA Guidelines

Today marks an historic event for us here in Mississippi, as the FHA lending guideline on middle FICO scores has been reduced to 600, from 640. This improved guideline, requiring a middle score a full FORTY points less than was required just yesterday, will create opportunities for many more families here to realize the dream [...]

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Mississippi: Consumers harmed by credit reporting giant

By Jeff Horwitz Associated Press WASHINGTON – Mississippi has sued credit reporting giant Experian, alleging sweeping errors in the company’s data and routine violations of consumer protection laws. Mississippi’s action – and a previously unreported multi-state investigation of credit bureaus led by Ohio – represent a significant new legal challenge to the industry. Mississippi Attorney [...]

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Step 10 – Close the Deal

Buyer’s Guide, a Ten-Step Process Your real estate attorney will handle most of the details at closing and, depending on your state and local area, will advise you on any special paperwork that needs to be completed between you and the seller. Your attorney and your mortgage lender will also assist you with coordinating the [...]

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ARM or FRM…

With all the bad news surrounding interest rate increases lately (which is not exactly true, by the way), it’s no wonder buyers are sitting on the fences again. But what’s really going on?  And more importantly, what should buyers who want (or need) to buy now, do? First, let’s discuss what’s really going on: Two [...]

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An Autumn Fall?

Although there is still nearly a month of Summer left in 2013, this Autumn may see mortgage rates fall, again.  For now, rates remain favorable, as they dropped last week and appear poised to go even lower this week.  However, volatility prevails as mortgage rates are changing at their most rapid rate in more than a [...]

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Making Progress

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Last Week in Review Last week, research firm CoreLogic reported that home prices across the U.S. rose by nearly 12 percent from June 2012 to June 2013. By comparison, home prices only rose 3.76 percent from June 2011 to June 2012. In addition, research and analytics firm Clear Capital said that prices rose 9.3 percent [...]

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Looking for a Sign

The markets were certainly looking for a sign from the Fed meeting minutes that were released last week, regarding when the Fed may begin tapering its Bond purchase program known as Quantitative Easing. Read on to learn what the Fed revealed, and other key news from last week. The minutes from the Fed’s June meeting [...]

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Going Up?

The average U.S. rate on the 30-year fixed mortgage this week is back to 4.51 percent – the same as it was two weeks ago, and a tie for the two-year high for rates. Mortgage buyer Freddie Mac said Thursday that the average on the 30-year loan jumped from 4.29 percent the previous week. Just two [...]

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