Existing home sales for the month of August slowed slightly following fruitful numbers in July. Existing sales came in at a 5.31 million annual rate for August, which is lower than expected, and the lowest reading since April. Year-year sales growth is also down, at 6.2% for the lowest since February. The year-on-year median price showed slight improvement with a 4.7% rise to $228,700, but is still at its lowest since August 2014. The dip in sales relieves some pressure from the home supply, but there is still a significant lack of homes on the market.
On the flip side, new home sales numbers were higher than expected in August, with a 552,000 annual rate, the highest rate since February 2008. The median price for the month came in at $292,700 for a 0.5% monthly gain and a 0.3% year-on-year gain. Year-on-year sales growth for new homes was an impressive 22% for the month of August.
Jobless claims continue their streak near record lows in the week of September 19, where there were 267,000 initial claims reported for a slightly decreased 4-week average of 271,750. Continuing claims for the week of September 12, the sample week for monthly employment reports, dropped by nearly 25,000 since the August sample week. The 4-week average for continuing claims is down nearly 15,000 from the previous week to 2.252 million.
The final consumer sentiment reading for September is 87.2, which is up slightly from the mid-month reading of 85.7, but is the weakest reading since last October. The expectations component, which tracks the jobs outlook, did improve by 1.2 points from mid-month to a 78.2 level, but is the lowest since September 2014. The current conditions component, which tracks ongoing strength in the jobs market, rose 0.9% to 101.2 in September, is also on the lower end, and the lowest since last October. Inflation expectations remain unchanged from August at 2.8% for the 1-year outlook, and at 2.7% for the 5-year outlook. Despite the soft numbers in the September consumer confidence report, it is suggested that the worst effects of the recent market turmoil may have passed, and the markets should begin to stabilize from here on out.
Keep an eye out for updates on employment numbers, payroll data, and construction spending in the coming week.
Rates have dropped once again over the past week, following the Fed’s announcement that they will not be issuing a Federal funds rate hike at this time. All loan programs displayed rate decreases, most by 10 or more basis points. The largest decrease was seen in the 30-year USDA program, which went from 3.625% (4.346% APR) on September 16 to 3.375% (4.106% APR) on September 22, an drop of 24 basis points! Similar to most of the other loan programs, the 30-year Fixed Conventional mortgage rates dropped 1/8 percentage points (12.5 basis points) to 3.875% (3.915% APR), after creeping into the 4.000% range in the previous week. It continues to be below the year-ago rate of 4.125%.
And with the drop in rates comes a rise in mortgage applications! According to the Mortgage Bankers Association, purchase applications rose 9% and refinance applications rose 18% in the week of September 18, which points to an upcoming boost for housing sales, and shows that borrowers seem to be reacting more closely to FOMC activity.
According to Sean Becketti, chief economist for Freddie Mac, the Fed’s decision to defer a rate hike was influenced by global growth concerns and lackluster inflation. He goes on to say,
“In response, Treasury yields fell about 9 basis points over the week, with some larger day-to-day swings along the way… Mortgage rates have remained below 4 percent for 9 consecutive weeks and have remained range-bound between 3.8 and 4.1 percent since May. These low mortgage rates have supported strong home sales, and 2015 is on pace to have the highest home sales total since 2007.”
As mortgage rates remain below 4.000%, now is a great time to contact the Mortgage Experts for your home purchase or refinance! With our 21-Day Processing method, you can make a stronger purchase offer, reduce stress, and save money! Give us a call at 805.543.LOAN to discuss your mortgage options and to get a free rate quote.