Market Recap: Carson Approved, Dow20K, and Mortgage Movement
Mortgage rates experienced some volatility this week, opening with a decline and then climbing throughout the week. The Senate Banking, Housing, and Urban Affairs Committee approved Dr. Ben Carson’s nomination for the Secretary of the Department of Housing and Urban Development. The next step in his proceedings will be facing the entire Senate vote. On Wednesday, the Dow Jones Industrial Average broke 20,000 for the first time ever. Important housing reports that were released this week include existing home sales, new home sales, and the Federal Housing Finance Agency House Price Index.
Forecasters had expected a decline in existing home sales for December, however sales exceeded the prediction dropping 2.8% instead of 1.1%. The National Association of Realtors reported that a constricted inventory may be to blame, in December the supply of houses dipped to the lowest levels since 1999. Lack of supply and rising prices are triggering some buyers to hold off on existing home purchases.
The Federal Housing Finance Agency (FHFA) House Price Index (HPI) measures data collected by Fannie Mae and Freddie Mac. This index does not include FHA, VA, or other federally-insured loans. In November, the FHFA HPI saw a 0.5% month-over-month growth and a 6.1% year-over-year growth. Growth was driven by the Pacific region, up 7.7% on a year-over-year basis.
New home sales are down 10.4% in December to a seasonally-adjusted rate of 536,000. On a year-over-year basis, new home sales are down just 0.4%. Looking at the year in its entirety, 12.2% more new homes were sold in 2016 than 2015, reflecting an improved housing market. The drop is due in part to inventory constraints and land availability.
The rising mortgage rates are not drastically impacting loan originations. However, one of the obstacles buyers are facing is tightened inventory. Next week, the Federal Open Market Committee will meet for the first time in 2017. In their last meeting in December 2016, the FOMC raised the benchmark interest rate for the first time since December 2015, and projected two-to-three rate hikes this year.
Sources: Mortgage News Daily, Bloomberg, CNBC, Washington Post, MarketWatch, Federal Housing Finance Agency, Reuters