Realtor Market Insider Report - September 21, 2020
Rates at a Glance
New housing starts jump
The real estate market has seen very tight inventories for some time, so it is welcome news to see an uptick in new Single Family Home Starts (SFR) in August.
Single-family starts rose 4.1% to a seasonally adjusted annual rate of 1.02 million – the highest production rate since February. NAHB Chief Economist Robert Dietz said, “Low interest rates and solid demand are spurring single-family construction growth, which makes up the bulk of the housing market. Single-family permits continue to rise as well, and are now up almost 7% on a year-to-date basis.”
On a regional and year-to-date basis (January through August compared to the same period the previous year), combined single-family and multifamily starts were up 13.6% in the Midwest, up 5.4% in the South, up 3.8% in the West, and down 4.5% in the Northeast.
Overall permits dwindled 0.9% to a 1.47million-unit annualized rate in August. Single-family permits jumped 6% to a 1.04 million-unit rate, while multifamily permits plunged 14.2% to a 434,000 pace.
Regionally, year-to-date permits were 2.6% higher in the Midwest, 4.8% higher in the South, 8.2% lower in the Northeast, and 1.3% lower in the West.
Source: NAHB | TBWS
This Week’s Mortgage Rate Summary
How Rates Move:
Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I’m among few mortgage professionals who have access to live trading screens during market hours.
Rates Currently Trending: Neutral
Rates are trending sideways to slightly lower this morning. Last week the MBS market worsened by -28bps. This was enough to move rates higher last week. We saw high rate volatility through the week.
This Week’s Rate Forecast: Neutral
Three Things: Here are the three areas that have the greatest ability to impact rates this week. 1) Coronavirus, 2) The Fed, and 3) Domestic.
1) Coronavirus: Concerns over the prolonged economic impact of the Covid Pandemic has risen recently as the news and data continues to get worse globally. Here are few headlines to the start the week:
U.S. Deaths are 200K, and global deaths approaching a grim milestone of 1M (currently 961K).
The U.K. is expected to announce another lockdown within 24 hours as the ”second wave” pounds Europe.
Former FDA Director Dr. Scott Gottlieb said, “I think we have at least one more cycle with this virus heading into the fall and winter.”
2) The Fed: We will hear from Fed Chair Powell several times this week and many other Fed representatives and our Treasury Secretary (who is not part of the Fed, but we will lump him into this same category). Here is this week’s schedule:
09/21 John Williams, Robert Kaplan
09/22 Jerome Powell
09/23 Jerome Powell, Loretta Mester, Eric Rosengren, Randall Quarles, Mary Daly
09/24 Jerome Powell, Steven Mnuchin, James Bullard, Charles Evans
3) Domestic: We get a lot of housing data this week with Existing Home Sales and New Home Sales and some other lower-level reports, but its Thursday's Initial Weekly Claims and Friday's Durable Goods Orders which will get the most attention from bond traders.
This Week’s Potential Volatility: Average
Rate volatility has spiked over the last couple of weeks. We don't expect too much volatility this week, but of all of the areas that can move rates, we'll be paying very close attention to weekly jobless claims.
If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.
La Puerta Real Estate Services*
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About Vancellen Sturgeon
Vancellen Sturgeon began her mortgage career in the commercial lending field in 1981 and moved into residential lending in 1998. She has an exceptional background in mortgage lending and financial advising.
About This Report and Disclosure Information
All information furnished is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.
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