Mortgage Business

Is it Spring and Jobs Report Time Already?

March 3, 2015
It sure doesn’t feel like spring on the east coast. However, our calendar tells us that it is March and this week we have two important events — Daylight Saving Time starts this week, which means we must turn our clocks forward and we have another jobs report being released. It seems like we just had a jobs report to comment on, but we must remember that February is a short month.


The jobs data has been so strong lately, our guess is that projections are starting to creep up. There was a time not long ago in which 200,000 jobs added was considered a fantastic month. Now 200,000 may be considered a disappointment. If we continue to add jobs at the rate of 250,000 per month, it is possible that the Federal Reserve Board will raise short term rates more quickly than anticipated.

Evidence the fact that rates moved up significantly during the week of the last jobs report. The move was not enough to shake the markets nor enough to deter consumers from purchasing homes. However, that does not mean another strong report could not move rates up another notch. The real estate data released in the past week was not especially strong with existing sales slightly lower than expectations and new home sales slightly higher than expectations. Even though the data was not strong, the numbers continued to be improved on a year-over-year basis — thus the market is moving in the right direction and the very strong pending home sales numbers released on Friday confirms that assessment.


The Markets.  Fixed rates rose again in the past week, however they showed signs of leveling off. Freddie Mac announced that for the week ending February 25, 30-year fixed rates increased to 3.80% from 3.76% the week before. The average for 15-year loans rose slightly to 3.07%. Adjustables were mixed, with the average for one-year adjustables down slightly to 2.44% and five-year rising to 2.99%. A year ago, 30-year fixed rates were at 4.37%, which continues to be more than 0.50% higher than today’s levels. Attributed to Len Kiefer, deputy chief economist, Freddie Mac — “Rates on home loans rose for the third consecutive week in February following solid housing data. New home sales beat market expectations at an annual pace of 481,000 units, down slightly from 482,000 units in December, but up 5.3 percent from a year ago. Also, the S&P/Case-Shiller National House Price Index rose 4.6 percent over the 12-months ending in December 2014.”  Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.  

Current Indices For Adjustable Rate Mortgages
Updated February 27, 2015
Daily Value Monthly Value
February 26 January
6-month Treasury Security  0.07%  0.08%
1-year Treasury Security  0.22%  0.20%
3-year Treasury Security  1.04%  0.90%
5-year Treasury Security  1.54%  1.37%
10-year Treasury Security  2.03%  1.88%
12-month LIBOR  0.622% (Jan)
12-month MTA  0.128% (Jan)
11th District Cost of Funds  0.692% (Dec)
Prime Rate  3.25%

Americans are moving shorter distances when relocating, and they are favoring suburbs and the Sunbelt region, hunting for lower density, more jobs, and cheaper housing. Many Americans are finding they don’t have to go too far. Nearly half of county-to-county moves are less than 100 miles, according to newly released moving data from the Census bureau, which Trulia analyzed and combined with home prices, unemployment, density, and distance to see Americans’ relocating patterns. Source: Forbes

Home prices posted solid gains in the fourth quarter of 2014, with the majority of metro areas seeing a slightly stronger price growth, propelled by tight housing supplies, low interest rates, and a strengthening job market, according to the National Association of Realtors®’ latest quarterly report. The national median existing single-family home price was $208,700 in the fourth quarter, up 6 percent year-over-year, NAR reports. The median existing single-family home price rose in 150 out of the 175 metro markets tracked – or 86 percent. That marks a stronger price gain compared to the third quarter. By the end of the fourth quarter, 1.85 million existing homes were available for sale, which is slightly below the 2.01 million homes for-sale during the fourth quarter of 2013. The average supply was 4.9 months in the fourth quarter. “Despite affordable housing conditions in most of the country, an upward pressure on home prices still persists in some metro areas where the current supply of new and existing-homes for sale is failing to keep pace with overall demand and growing populations,” said Lawrence Yun, NAR’s chief economist. “Unless homebuilders significantly boost construction, housing supply shortages could develop and lead to further price acceleration this spring.Source: NAR

The missing piece may be falling into place for the U.S. economy. Housing-related employment — anemic throughout much of the current expansion — got a jolt in January. That’s unusual, since bad weather tends to make it one of the weaker months for construction hiring. But last month the number of residential construction workers rose 12,500, a gain of 1.8 percent, the biggest one-month jump in percentage terms since 2002. Other categories related to housing jobs also showed strength. Specialty trade contractors, who’ve been in short supply, increased by 7,600 to the highest level since 2009. Wood product manufacturers added 4,100 employees, building materials stores another 3,700. Architectural and engineering employment, which includes home designers, increased by 7,800 to the highest level since 2008. And as more homes get built, more realtors will be there to help sell them. Real estate employment rose by 4,400. “If there is an industry that has an opportunity to surprise” in 2015, “it is residential real estate,” said Neil Dutta, head of U.S. economics at Renaissance Macro Research in New York. “We see strong growth in housing and construction-related industries for both white-collar and blue-collar workers.” Source: Bloomberg

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s