Market Forecast: Mortgage Apps, FOMC Minutes, and Job Openings
This week will be a light week for housing news. The Mortgage Bankers Association (MBA) will release its weekly mortgage application survey on Wednesday. The Federal Reserve will also release the minutes from its March Federal Open Market Committee (FOMC) meeting on Wednesday. In employment news, the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) will come out on Friday.
The MBA weekly mortgage application survey declined last week. New purchase applications were down 3.0% and refinance applications dropped 5.0% for a composite decrease of 3.3%. The downward trend is not likely to continue, especially with mortgage rates hovering the lowest levels in two months. Recent stock market swings, related to data sharing and privacy concerns surrounding technology companies and political uncertainty regarding trade wars, may have warded off potential home buyers. However, Realtor.com director of research, Javier Vivas, said, “our latest data tells us buyers are out in full force this spring. Never in history have there been more eyes on fewer homes than today.”
The release of the FOMC meeting minutes is not likely to be a market-moving report but will further outline the Fed’s plan for the rest of 2018. The market expects at least two more rate hikes based on current economic trends. Job growth and hiring are strong, but wage growth is sluggish. Though inflation has picked up, Gross Domestic Product (GDP) has yet to reach the 3.0% mark. Analysts are expecting these minutes to take a more hawkish tone.
JOLTS reviews job openings, offer rates on hirings, and voluntary quits. Workers are more comfortable quitting a position if they believe they will find comparable employment. In January, job openings hit a record high, rising to a seasonally adjusted level of 6.3 million. However, the data showed hiring continued to lag, due in part to low wages. In this tight labor market, economists suggest employers are going to have to increase wages to fill open positions.
Although the decision to raise rates in March was unanimous, more dovish Fed officials, like St. Louis Fed President James Bullard, insist monetary policy is close to “neutral” and further rate hikes are not necessary at this time. The Fed has been increasing rates gradually since setting the federal-funds rate close to zero after the financial crisis. Although interest rates, including mortgage rates, are expected to rise, they are still low by historic standards.
Sources: Bloomberg, CNBC, FX Street, MarketWatch, MarketWatch, Mortgage News Daily, Reuters