Last week’s economic news included readings on sales of new and previously-owned homes along with final March index readings on consumer sentiment. Weekly readings on mortgage rates and jobless claims were also released.
Sales of New and Pre-Owned Homes Fall in February
Weather-related problems disrupted sales of new and previously-owned homes in February as low inventories of homes for sale further stalled sales. The National Association of Realtors® said that sales of new and pre-owned homes were slowed by persistent shortages of homes on the market.
Shortages of available homes were common before the pandemic and are more pronounced now. Realtor.com estimates that 200,000 homeowners stayed out of the market in the past year; this contributed to the two-month supply of homes available in February. Real estate professionals consider a six-month supply of homes for sale to indicate a balanced market. Sales of previously-owned homes were 9.10 percent higher in February 2020.
High demand for homes fueled competition among buyers and drove home prices higher. Rising mortgage rates, short supplies of homes, and rising home prices presented obstacles for first-time and moderate-income home buyers as the national median price for previously-owned homes reached $313,000.
New homes sold at a seasonally-adjusted annual pace of 775,000 sales in February according to the Census Department and was 18.20 percent lower than the reading of 948,000 new home sales reported in January. The inventory of new homes available rose to a 4.80 month supply as buyers were sidelined by winter weather and rising mortgage rates. Analysts expect high demand for new homes to continue as buyers move out of crowded urban areas and seek larger homes that meet increasing needs for work-at-home space and up-to-date technology.
Mortgage Rates Rise as Jobless Claims Fall
Freddie Mac reported higher average mortgage rates last week as rates for 30-year fixed-rate mortgages jumped eight basis points to 3.17 percent; the average rate for 15-year fixed-rate mortgages rose five basis points to 2.45 percent and the average rate for 5/1 adjustable-rate mortgages rose five basis points to 2.84 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages and 0.60 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable-rate mortgages averaged 0.20 percent.
New jobless claims fell to 684,000 claims from the prior week’s reading of 781,000 first-time jobless claims. Ongoing claims were also lower with 3.87 million continuing claims filed as compared to the previous week’s reading of 4.13 million continuing claims filed.
The University of Michigan reported an index reading of 89.1 for its Consumer Sentiment Index in March. February’s reading was 83.0 and analysts expected an index reading of 83.7.
What’s Ahead
This week’s economic reporting includes readings from Case-Shiller Home Price Index and reporting on pending home sales. Private and public sector job growth and the national unemployment rate will be released along with weekly reports on mortgage rates and jobless claims.
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About the Author:
Babak Moghaddam graduated from University of Southern California in 1985. He entered the mortgage industry as a compliance auditor at the Bank of New York in 1986 and completed his masters in Business Administration two years later. After seventeen years in the traditional mortgage banking world Babak finally transformed this vision into his own practice in 2002 when he formed Charter Pacific Lending Corp, a mortgage company that has provided over $900 Million in residential real estate loans throughout Southern California. Babak and his team do things a little differently than other mortgage providers. They work as financial advisors, because they have come to realize that a mortgage is a very powerful financial tool. And just like any other financial tool, it should be managed as part of the overall financial management plan to reach every home owner’s long and short-term financial goals much faster. You can contact Babak for a free consultation and strategy session at (800) 322-1217 X103.