Your local resource for mortgage rate indicators and real estate market data
Good morning and happy Monday to you. I dunno about you but we’re coming down from a turkey and pumpkin pie high in our house. It was a wonderful holiday, filled with good food, time with family and fresh air! We even managed to get outside for a bit despite the much needed rain! Now it’s on to the next holiday. We are a multi-faith household, which means we have three more holidays (including New Year’s Eve) to celebrate before January.
Hanukkah and the festival lights begins at sundown this coming Sunday. Chabad of SF puts on a wonderful celebration with the lighting of their giant menorah each night in Union Square. As a raised-in-the-church Lutheran, I have always felt welcome in this wonderfully inclusive event. If you never been to a community menorah lighting, I highly recommend it. You can find more information about community menorah lighting events near you by following these links: San Francisco – Oakland – Walnut Creek – Castro Valley / San Leandro – Peninsula
One last thought, 2019 is just 35 days away.
Here’s your Local SF Bay Area Real Estate Market Information for select cities:
(Don’t see your city? Email me and I’ll add it)
Castro Valley • Danville • Fremont • Hayward • Lafayette • Oakland • Pleasanton
Redwood City • San Anselmo • San Carlos • San Francisco • San Leandro
San Jose • San Ramon • Santa Cruz • Walnut Creek
Here’s your weekly market update:
The stock market suffered sizeable losses this past week as several sectors entered bear markets led by the so-called FAANG stocks (Facebook, Amazon.com, Apple, Netflix, and Google parent Alphabet) that ended the week off more than 20% from their recent highs. Crude oil has also entered into a bear market over the past three weeks crashing below $51 per barrel. At least this should result in lower gasoline prices making holiday travel less expensive.
The week’s economic data were generally sub-par. Wednesday, core Durable Goods Orders (orders excluding the volatile aircraft and defense sectors) were approximately flat in October following a decline in September that was larger than originally forecast. Weekly jobless claims also increased to their highest levels since summer while the University of Michigan’s Consumer Sentiment Index declined more than forecast.
Measures of manufacturing and services activity from the IHS Markit Flash U.S. PMI report released Friday also missed expectations. The Flash U.S. Composite Output Index fell to 54.4 from 54.9 in October, a 2-month low. The Flash U.S. Services Business Activity Index fell to 54.4 from 54.8 in October, another 2-month low. The Flash U.S. Manufacturing PMI dropped to 55.4 from 55.7 in October, a 3-month low, and the Flash U.S. Manufacturing Output Index dropped to 54.5 from 55.2 in October, another 3-month low. The one bright spot for the week was the Existing Homes Sales report showing sales increasing more than expected to snap a six-month record of declines.
Tuesday, the Census Bureau released its October Housing Starts, Permits, and Completions report. Housing Starts increased 1.5% month-over-month in October to a seasonally adjusted annual rate of 1.228 million units from an upwardly revised 1.210 million in September.
Building Permits fell slightly by 0.6% to a seasonally adjusted annual rate of 1.263 million from an upwardly revised 1.270 million in September.
Single-unit housing starts were lower across all regions except in the Northeast where starts rose by 14.8%. Single-unit permits were up 10.9% in the Northeast and were 0.9% higher in the South. However, they were 2.5% lower in the Midwest and were down 5.5% in the West.
The 1.137 million units under construction at the end of the period was 1.1% above the third quarter average and will register as a positive input in 4th Quarter GDP forecasts. Yet, single-unit permits were down 0.6% while starts were 1.8% lower month-over-month and they were respectively down 0.6% and 2.6% on a year-over-year basis.
Wednesday, the National Association of Realtors (NAR) reported Existing Home Sales increased 1.4% month-over-month in October to a seasonally adjusted annual rate of 5.22 million. The October reading represented the first month-over-month increase in seven months. Year-over-year, total sales were 5.1% lower.
The median existing home price for all housing types increased 3.8% year-over-year to $255,400 – the 80th consecutive month of year-over-year gains. The median existing single-family home price rose 4.3% year-over-year to $257,900.
Regionally, median home prices were 3.0% to $280,900 in the Northeast; 2.4% to $197,000 in the Midwest; 3.8% to $221,600 in the South; and 1.9% to $382,900 in the West.
Single-family home sales were up 0.9% month-over-month at a seasonally adjusted annual rate of 4.62 million but were 5.3% below the year-ago sales rate. Unsold inventory is at a 4.3-months’ supply versus 4.4 months in September. This is below the 6.0-months’ supply typically associated with a more balanced market. First-time buyers made up 31% of sales in October, down from 32% in September and 32% one year ago.
As for mortgages, the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey showed the number of mortgage applications declined slightly from the prior week. The MBA reported their overall seasonally adjusted Market Composite Index (application volume) fell 0.1% for the week ended November 16, 2018. The seasonally adjusted Purchase Index increased 3% from the week prior while the Refinance Index fell 5% to reach its lowest level since December 2000.
Overall, the refinance portion of mortgage activity decreased to 38.5% from 39.4% of total applications from the prior week. The adjustable-rate mortgage share of activity decreased to 7.3% from 7.7% of total applications.
According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance decreased to 5.16% from 5.17% with points decreasing to 0.48 from 0.55 for 80 percent loan-to-value ratio (LTV) loans.
For the week, the FNMA 4.0% coupon bond lost 7.9 basis points to close at $100.234 while the 10-year Treasury yield decreased 2.8 basis points to end at 3.0460%. The Dow Jones Industrial Average lost 1,127.27 points to close at 24,285.95. The NASDAQ Composite Index fell 308.89 points to close at 6,938.98. The S&P 500 Index dropped 103.71 points to close at 2,632.56. Year to date on a total return basis, the Dow Jones Industrial Average has lost 1.75%, the NASDAQ Composite Index has gained 0.52%, and the S&P 500 Index has dropped 1.54%.
This past week, the national average 30-year mortgage rate remained unchanged at 4.94%; the 15-year mortgage rate decreased to 4.43% from 4.44%; the 5/1 ARM mortgage rate rose to 4.75% from 4.71% while the FHA 30-year rate decreased to 4.45% from 4.47%. Jumbo 30-year rates increased to 4.58% from 4.57%.
Economic Calendar – for the Week of November 26, 2018
Economic reports having the greatest potential impact on the financial markets are highlighted in bold.
Event /Report /Statistic
|Nov 27||09:00||Case-Shiller 20-city Index||Sept||5.3%||5.5%|
|Nov 27||09:00||FHFA Housing Price Index||Sept||NA||0.3%|
|Nov 27||10:00||Consumer Confidence Index||Nov||135.5||137.9|
|Nov 28||07:00||MBA Mortgage Applications Index||11/24||NA||-0.1%|
|Nov 28||08:30||Second Estimate for 3rd Qtr. GDP||Qtr. 3||3.6%||3.5%|
|Nov 28||08:30||Second Estimate for 3rd Qtr. GDP Deflator||Qtr. 3||1.4%||1.7%|
|Nov 28||08:30||Advance International Trade in Goods||Oct||NA||-$76.0B|
|Nov 28||08:30||Advance Retail Inventories||Oct||NA||0.1%|
|Nov 28||08:30||Advance Wholesale Inventories||Oct||NA||0.3%|
|Nov 28||10:00||New Home Sales||Oct||575,000||553,000|
|Nov 28||10:30||Crude Oil Inventories||11/24||NA||4.9M|
|Nov 28||14:00||FOMC Minutes||Nov||NA||NA|
|Nov 29||08:30||Personal Income||Oct||0.4%||0.2%|
|Nov 29||08:30||Personal Spending||Oct||0.4%||0.4%|
|Nov 29||08:30||PCE Prices||Oct||NA||0.1%|
|Nov 29||08:30||Core PCE Prices||Oct||0.2%||0.2%|
|Nov 29||08:30||Initial Jobless Claims||11/24||218,000||224,000|
|Nov 29||08:30||Continuing Jobless Claims||11/17||NA||1,668K|
|Nov 29||10:00||Pending Home Sales||Oct||0.7%||0.5%|
|Nov 30||09:45||Chicago Purchasing Managers Index (PMI)||Nov||58.0||58.4|
Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond
The FNMA 30-year 4.0% coupon bond ($100.234, -7.9bp) traded within a narrower 26.5 basis point range between a weekly intraday high of $100.328 on Monday and a weekly intraday low of 100.063 on Wednesday before closing the week at $100.234 on Friday.
Mortgage bond prices moved up into an “overbought” position while bouncing back toward the 50-day moving average resistance level last Friday. The chart suggests we could see some range-bound “sideways” movement between the 25-day and 50-day moving averages this coming week which should provide a stable mortgage rate environment.