Home purchase loans rise in June. President Trump “not thrilled” with rate hikes. New home purchase activity declines year over year.

Home purchase loan closings rose in June while refinancing activity declined, reports Ellie Mae. Ellie Mae’s Origination Insight for June revealed that 71% of all loans in June represented home purchases, up from 70% in May and a new high since the report began in 2011. Refinance closings fell to 29% from 30%, as home loan rates have pushed higher since the end of 2017. Times to close all loans rose slightly to 42 days from 41 days with the breakdown being 44 days for purchases, 37 days for refinancing.

President Trump spoke to CNBC yesterday saying that he is “not thrilled” with interest rate hikes. “I’m not thrilled,” President Trump said. “Because we go up and every time you go up they want to raise rates again. I don’t really – I am not happy about it. But at the same time, I’m letting them do what they feel is best.” One thing we don’t ever want is the Fed’s independence challenged. The Fed is likely going to hike the short-term Fed Funds Rate in September but may pause after that, as the U.S. dollar continues to strengthen against global currencies.

The Mortgage Bankers Association recently reported that new home purchase applications fell year over year. Builders remained constrained due in part to a shortage of workers, and rising costs, particularly lumber costs. The MBA Builder Application Survey for June 2018 fell nearly 9% from June 2017. “Applications for new home purchases fell in June, both compared to last year at this time and relative to May, which fits the seasonal pattern. So far this year, new home applications are up 2.5% relative to the first 6 months of 2017,” said Mike Fratantoni, MBA Chief Economist and Senior Vice President of Research and Industry Technology.

Foreclosure activity declines. Builder confidence remains high. Fed Chair Powell says that U.S. unemployment to decline further.

Foreclosure activity continues to decline and is down significantly from the peak seen in early 2010. ATTOM Data Solutions reports that there were 362,275 properties with foreclosure filings, default notices, scheduled auctions or bank repossessions in the first half of 2018, down 15% from the same period last year. In addition, foreclosure filings are down a whopping 78% from the 1,654,634 filed in the first six months of 2010. The report went on to reveal that properties foreclosed in the second quarter of 2018 took an average of 720 days from the first public foreclosure notice to complete the foreclosure process.

Builder confidence remained elevated in July for newly-built single-family homes, reports the National Association of Home Builders (NAHB). The NAHB Housing Market Index was unchanged this month at 68 where any number over 50 indicates that more builders view conditions as good rather than poor. “Consumer demand for single-family homes is holding strong this summer, buoyed by steady job growth, income gains and low unemployment in many parts of the country,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La.

Fed Chair Powell is testifying on the state of the U.S. economy this morning in front of the Senate Banking Committee. Mr. Powell says that that gradual increases to the Fed Funds Rate is necessary while second quarter 2018 economic growth is considerably stronger than the first quarter. Mr. Powell sees solid economic growth abroad and U.S. unemployment declining further. Wage growth has been trending higher, but is not causing high inflation.

Consumer Sentiment edges lower. Mixed bank earnings reported. Fed Chair Powell on Capitol Hill next week.

Consumer Sentiment edged lower in early July but remains near lofty levels. The continued strength in the index is due in part to favorable job and income prospects. The preliminary July Consumer Sentiment Index came in at 97.1 versus the 97.8 expected and down from 98.2 in June. Looking ahead, there are rising concerns about the potential negative impact of tariffs on the domestic economy. In comparison, in July 2017 the index was at 93.4.

Three of the largest banks in the nation reported earnings this morning showing mixed results. JPMorgan Chase reported a record quarterly profit of $8.3 billion, an increase of 18% from the same period last though below first quarter profits of $8.7 billion. Citigroup reported revenues that were below forecasts while earnings per share beat expectations. Wells Fargo reported that revenues and earnings missed expectations.

Next week Fed Chair Powell will be on Capitol Hill as he will give his semi-annual testimony on the state of the U.S. economy to Congress on Tuesday and Wednesday. It was formerly known as the Humphrey-Hawkins testimony – a reference to the 1978 law that requires Fed Chairs to deliver testimony twice a year. Mr.Powell’s testimony comes two weeks before the next Federal Open Market Committee meeting on July 31-August 1.

Small business optimism remains high. Job openings near all-time highs. Mortgage delinquency rates decline.

The NFIB Small Business Optimism Index remains historically high as sales and profits maintained strength in June. The Small Business Optimism Index hit 107.2 in June, down 0.6 from May, its sixth highest reading in survey history. “The first six months of the year have been very good to small business thanks to tax cuts, regulatory reform, and policies that help them grow,” said NFIB President and CEO Juanita Duggan. Since December 2016, the Index has averaged lofty levels of 105.4, well above the 45-year average of 98 and just below the all-time high of 108.0 from July 1983. The biggest problem employers are now facing is finding qualified workers to fill positions.
Job openings remained at near all-time highs in May as the labor markets continues to gain strength. The Bureau of Labor Statistics reports that there was 6.6 million job openings on the last business day of May, just below the series high of 6.8 million in April, according to its JOLTS (Job Openings and Labor Turnover Survey) report. The report is closely monitored by the members of the U.S. Federal Reserve.
Mortgage delinquency rates have been edging lower as the economy and job markets strengthen. CoreLogic reports that the 30 days or more delinquency rate for April 2018 was 4.2%. In April 2017, 4.8% of mortgages were delinquent by at least 30 days or more including those in foreclosure. This represents a 0.6% decline in the overall delinquency rate compared with April 2017. CoreLogic says that delinquency rates are nearing historic lows, reflecting a long period of strict underwriting practices and improved economic conditions.

Non-Farm Payrolls rise more than expected. U.S. Stocks rise. Kohl’s to begin hiring seasonal holiday workers.

The Bureau of Labor Statistics reports that Non-Farm Payrolls rose by 213,000 in June, above the 195,000 expected. April and May were revised higher by a total of 37,000. The Labor Force Participation Rate edged higher to 62.9 from 62.7 as more Americans entered the labor force. On the negative side of the data, average hourly earnings came in at 0.2% from the 0.3% in May, year-over-year was recorded at 2.7%, unchanged. The U6 number, or total unemployed, rose to 7.8% from 7.6%. The Unemployment Rate rose to 4.0%. Overall, it was a good report.
U.S. Stock markets pushed higher on Friday after the June Jobs Report was released. On Thursday night, Washington imposed $34B in tariffs on imported goods from China as the trade issues continue. Howerver, concerns about the conflict escalting have capped equity prices from futher gains. U.S Stocks were modestly higher in mid-morning trading.
Holiday hiring in July! Say it isn’t so! Recently, Kohl’s announced that it will be hiring seasonal workers for the back-to-school, fall and holiday shopping months earlier than ever before. With a tight labor market, Kohl’s feels it will be getting a jump on top talent before they’re gobbled up by the other retailers. We are hiring seasonal associates earlier than ever to ensure our teams are fully staffed, trained and ready to support peak shopping seasons,” Ryan Festerling, executive vice president of human resources at Kohl’s, said in a statement.

Home prices continue to rise. Many homeowners’ mortgage rate is less than current rates. Renters looking to purchase a home.

Home prices continue to rise due in part to a shortage of homes for sale on the market. CoreLogic reports that home prices, including distressed sales, rose 7.1% from May 2017 to May 2018, up 1.1% month over month from April to May. Looking ahead, CoreLogic forecasts that home prices will rise 5.1% from May 2018 to May 2019. From May 2018 to June 2018, prices are expected to increase by 0.3%.
CoreLogic also reported that during the first quarter of 2018, about 50% of all existing homeowners had a mortgage rate of 3.75% or less. May’s mortgage rates averaged a seven-year high of 4.6%, with an increasing number of homeowners keeping the low-rate loans they currently have, rather than sell and buy another home that would carry a higher rate. In closing, CoreLogic states that despite high home prices, renters want to get out of their rental property and purchase a home.

Mortgage rates decline. Confidence in housing market hits a four-year high. Weekly Initial Jobless Claims remain at multi-decade lows.

Mortgage rates declined over the past week and have now decreased in four of the past five weeks. Rates hit their high water mark at the end of May due in part to an improving economy and modestly higher inflation pressures. Freddie Mac reports that the 30-year fixed-rate mortgage fell to 4.55% this week with an average 0.5 in points and fees. Freddie Mac said that the economy and housing market overall are on solid footing this summer, which should support continued strength in housing demand.
A new survey conducted by Chase Home Lending and Pulsenomics show record highs among U.S. homeowners and renters in three key areas; market conditions, aspirations for homeownership and expectations regarding home values and affordability. The Chase Housing Confidence Index (HCI) systematically measures and tracks key dimensions of consumer confidence in housing markets across the United States using data collected in the U.S. The survey revealed that both homeowners and renters agree that now is a good time to buy and sell a home. The Chase Housing Confidence Index hit 66.3 for the national average with levels above 50 being positive.
Americans filing for first time unemployment benefits continue to hover near lows seen in the early 1970s, as the labor market is now at or near full employment. Weekly Initial Jobless Claims rose 9,000 in the latest week to 227,000. The less volatile four-week moving average of claims, which irons out seasonal abnormalities, edged higher to 222,000 from 221,000. The June Jobs Report will be released Friday, July 6.

Rising costs keeps renters away from their ideal locations. Home prices continue to rise. Gas prices edge lower.

A recent survey conducted by RENTCafe shows that 83% of renters are kept away from their ideal locations and jobs due to rising rent costs. Nationally, the average rent charged by buildings in top-rated locations is $1,655 per month, 37% more than the national average rent of $1,211 charged in lower-rated locations. The survey showed that the “ideal location” for most renters is near their job; close to friends or family; or near attractions such as entertainment, dining, shopping or a gym.
Home prices continued their winning ways in April due in part to an improving economy, low home loan rates and a low supply of homes for sale on the market. The S&P CoreLogic Case-Shiller 20-City Home Price Index rose 6.6% from April 2017 to April 2018, slightly lower than the 6.8% expected. From March to April, the 20-City Index was up 0.2% month over month. Seattle, Las Vegas and San Francisco continue to report the highest year-over-year gains among the 20 cities.
Gas prices at the pumps have edged lower in the latest week as motorists head into next week’s 4th of July celebration. The national average price for a regular gallon of gas is $2.85, five cents cheaper than a week ago, 12-cents less than a month ago and 58-cents more than a year ago. Motor Club AAA said that prices should edge a bit lower in late summer or early fall.

Renewed China tariff woes push Stocks lower. Fed raises rates, consumers feel the pinch. Mortgage lenders profit margins decline.

Renewed tariff woes with China are helping the U.S. Bond markets today while pushing the Dow Jones Industrial Average, S&P 500 and the NASDAQ lower as the week comes to an end. President Trump has approved tariffs on $50 billion worth of Chinese goods imported into the U.S. An official announcement is expected later today. The closely watched Dow Jones Industrial Average was down nearly 300 points in early trading.

The Federal Reserve raised its benchmark short-term Fed Funds Rate this week, but what does that actually equate to for the U.S. consumer? The consumer will see a hike on rates for credit cards, home equity lines of credit, auto loans and other adjustable-rate instruments. In addition, student loan rates will creep higher while savings rates for banks will edge higher, but not by much.

Fannie Mae reported this week that mortgage lenders reported a net-negative profit margin outlook for the seventh consecutive quarter due in part to rising home prices and a tight supply of home for sale on the market. Tight supplies continue to put a squeeze on mortgage demand. “Lenders remain bearish this quarter as they continue to face headwinds from rising mortgage rates, tight supply, and strong home price appreciation, which have drastically reduced refinance activity and restrained home purchase affordability,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.

Housing sentiment continued to strengthen in May. Now is a good time to sell a home. Next week’s Fed meeting has capital markets at a standstill.

Housing sentiment continued to strengthen in May, but high home prices complicate consumer purchase confidence, reports Fannie Mae. Higher home prices are due in part to limited inventories of homes for sales on many markets across the nation. The Fannie Mae Home Purchase Sentiment Index (HPSI) rose 0.6 points in May to 92.3, reaching a new all-time survey high for the second consecutive month. The net share of respondents who reported that now is a good time to sell a home increased to 46% in May, and is now up 14 percentage points year over year. However, the net share of those surveyed said now is a good time to buy, decreased to 28%, showing little improvement in the past 12 months.

Not much action in the U.S. capital markets today as the investing world sits on their hands awaiting next week’s Fed decision and monetary policy statement. Currently, there is a 90% chance of a 0.25% hike to short-term Fed Funds Rate. The Federal Open Market Committee meeting begins Tuesday and ends Wednesday at 2:00 p.m. ET with the rate announcement and statement. The Fed will also release economic projections while Fed Chair Powell will hold a press conference at 2:30 p.m. ET.