CCL Market Update: Housing Market, Consumer Comfort, Mortgage Rates

The past week brought an abundance of housing market data for the months of March and April. The Federal Housing Finance Agency (FHFA) House Price Index rose 0.3% in March. Year-over-year prices did slightly better with an increase of 5.2%, down just slightly from the 5.3% price gain for February. S&P Case-Shiller also released their 20-city house price index, which rose slightly more than expected, up 1.0% in March. The Case-Shiller year-over-year index showed a 5.0% gain.

New home sales increased by 6.8% in April to a 517,000 annual rate, which was at the high end of expectations. The supply of new homes on the market rose slightly in April to 205,000, but supply is still considered to be low across most markets. Ideally, the low supply should encourage the construction of more homes, but at the moment low supply hurts current sales numbers. Price readings for April are more positive with a 4.1% rise in the median home price to $297,300 and a strong 8.3% year-over-year gain.

Pending home sales, a leading economic indicator, are reporting some of the most consistently positive data within the housing market. Pending sales have now been on the rise for four straight months with the higher-than-expected 3.4% gain in April following a 1.2% gain in March. Year-over-year, pending sales are up 14.0% for the month of April. Existing home sales were up 6.1% for the same period.

Consumer confidence seems to be stabilizing at 95.4 for May. Contributing to this are higher income expectations, as well as increased buying plans for autos, homes, and appliances. However, the overall consumer assessment of the job market is down, with 23.3% describing jobs as currently hard to get, compared to 25.9% in April.

Consumer sentiment for May is also initially looking positive, increasing to 90.7 for the month vs. the mid-month reading of 88.6. However, the current conditions component retreated to 100.8 in May after a reading of 107.0 in April. The expectations component is also down, coming in at 84.2 vs. 88.8 in April. The downward motion in both components hints at trouble for the job market, and less confidence in the longer-term jobs outlook. One large factor that likely affected sentiment is the continued rise in gas prices, which have increased by more than 5% since April.

Mortgage Rates

National mortgage rates increased slightly this week, according to the Freddie Mac Primary Mortgage Market Survey released on May 28. The 30-year fixed mortgage displayed an average rate of 3.87%, up from the previous week’s level of 3.84%. This is still lower than the year-ago 30-year fixed rate of 4.12%. The 15-year fixed average mortgage rate also increased, going from 3.05% on May 21 to 3.11% on May 28, but still slightly lower than the 3.21% rate from a year ago.

Here on the Central Coast, mortgage rates declined nearly across the board over the past week! Visit our Mortgage Rate Update page for more in-depth rates analysis.

Now is a great time to contact us regarding your home purchase or refinance! Give us a call at 805.543.LOAN to get a free rate quote. You can also Apply Now for free online!