Market Forecast: Mortgage Applications, Existing Home Sales, and FOMC Minutes
Most banks and markets are closed today in observance of Presidents' Day. This will be a short week for economic data, though two important housing reports will be released. The weekly mortgage application survey and existing home sales are scheduled to come out on Wednesday. Additionally, the Federal Open Market Committee (FOMC) will release the minutes from its January meeting.
The Mortgage Bankers Association (MBA) releases a weekly mortgage application survey tracking changes in new purchase and refinance application submissions. Mortgage activity was somewhat stalled in January due to cold winter weather and rising mortgage rates. Typically, home buying and selling activity picks up in the warmer months. For the week ending 2.9, new purchase applications decreased 6.0% and refinance applications decreased 2.0% for a composite decrease of 4.1%.
Existing home sales or resales count the sales of previously constructed homes and make up the majority of real estate transactions. Low “for sale” inventory is driving home price appreciation in many metros across the country. In December, existing home sales declined 3.6% month-over-month to a seasonally adjusted annual rate of 5.57 million. Annually, median home prices increased 5.8%, while available inventory declined 10.3%, to the lowest level since 1999.
The FOMC will release the minutes from its January meeting on Wednesday. The FOMC is expected to continue raising rates into 2018. Predictions range from three to four rate hikes. Though the new Federal Reserve Chair Jerome Powell is considered more hawkish than Janet Yellen, analysts do not expect a major disruption in current economic policy.
The housing industry is grappling with limited housing inventory, creating a competitive market. Some housing professionals expect the spring buying and selling season to start early, with savvy buyers starting their search before the market gets too crowded.
Sources: Bloomberg, MarketWatch, Mortgage News Daily