CCL Market Update: FOMC Report, Housing Market, Jobless Claims, Mortgage Rates

The Federal Reserve released their Federal Open Market Committee meeting report on Wednesday, stating that economic growth has “slowed” since the committee last met in March. After the April meeting most of the specific assessments were downgraded. Labor conditions were formerly described as “improving,” but now they are “moderating,” and household spending moved from “rising moderately” to “declining” this month. The Fed continues describe housing as “slow,” and inflation is still running “below target.” The Fed described consumer confidence as strong, confirmed by the final April consumer sentiment index of 95.9. This number is unchanged from the mid-April report, and is up from the final March level of 93.0.

Despite the Fed’s description of a slow housing market, pending home sales for March increased for the third consecutive month, up 1.1% from February. Hopefully this pickup in the existing home market will point to improvement in the new home market as well.

The Home Price Index released by S&P Case-Shiller reported an increase of 0.9% for February, surpassing expectations, and demonstrating the best performance since late in 2013. The year-over-year index also showed improvement, up 0.5% from January, and is the best showing since last summer.

March construction spending dropped by 0.6% after market expectations were for a 0.4% increase. Both residential and public building declined. Private residential spending for March dropped 1.6%, with regressions in both the single-family and multi-family home markets. Public construction was down for a third consecutive month to its lowest level since February 2014.

Jobless claims displayed a notable decrease over the last few weeks. Initial claims in the April 25 week dropped by 34,000 to 262,000—the lowest level since April 2000. The 4-week average for initial claims decreased by 1,250 to 283,750, just below month-ago levels, which points to improvement for the upcoming April employment report.

Mortgage Rates

Mortgage Rates for the majority of loan programs saw increases over the past week. Conventional loan programs all had increases near 1/8-points. Within the government loan programs, the FHA 203k and the Manufactured FHA programs both presented higher rates. The 30-year fixed FHA, VA, and USDA programs all remained unchanged over the past week, and the FHA has stayed at the same rate of 3.250% (4.825% APR) for nine weeks straight. Despite displaying slightly higher numbers, mortgage rates are still lower than a year ago. For example, the current average rate for a 30-year fixed conventional loan is 3.750% (3.794% APR), compared to 4.125% (4.224% APR) the same time last year.

Based on data from Freddie Mac’s weekly rate survey, national mortgage rates have increased very minimally. The 30-year fixed bumped up to 3.68% on average, and the 15-year fixed increased by 2 basis points to 2.94%. Visit our Mortgage Rate Update page for more weekly rate information.

Rates are still at low levels, so now is a great time to consider a home purchase or refinance! Give us a call at 805.543.LOAN to discuss your mortgage options.