You are here

Home Price Gains, Job Growth Steady

04/04/2016

Last Week in Review: Home price gains and job growth hold steady. 

Forecast for the Week: Investors will read between the lines of the Fed’s meeting minutes. _____________________________________________________________________________________________

Last Week in Review

"Heigh-ho, heigh-ho, it's off to work we go." The Seven Dwarfs. A strengthening jobs market and low home rates are digging up demand for limited housing inventory. Meanwhile, home price gains hold steady. 

The S&P/Case-Shiller 20-city Home Price Index rose 5.7 percent year-over-year from January 2015 to January 2016. This was in line with estimates and matched December's 5.7 percent gain. Prices were up 0.8 percent month-over-month. The low inventory of homes available for sale has been the key reason for price growth; more Americans working also has fueled demand. 

On the labor front, the Bureau of Labor Statistics reported that 215,000 jobs were created in March, above the 200,000 expected, though down from the 245,000 created in February. While the Unemployment Rate edged higher to 5 percent from 4.9 percent, the report was positive, signaling that despite global economic woes, job growth here in the U.S. remains solid. 

At this time, home loan rates continue to hold steady as well, hovering just above historic lows. 

If you or someone you know has any questions about the housing market, current rates or home loan products, I would be happy to help. Please don't hesitate to email or call me. _____________________________________________________________________________________________

Forecast for the Week

In a light report week, investors will scour the words of the Fed’s meeting minutes looking for clues regarding the next hike to the benchmark Fed Funds Rate.

  • On Tuesday, the ISM Services Index will be released.
  • Wednesday brings the March Federal Open Market Committee meeting minutes.
  • Weekly Initial Jobless Claims will be delivered on Thursday.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse. 

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning. 

As you can see in the chart below, Bond prices moved higher recently following remarks by the Fed.

Chart: Fannie Mae 3.5%% Mortgage Bond (Apr 01, 2016)

Japanese Candlestick Chart

Economic Calendar for the Week of April 04 - April 08

Date

ET

Economic Report

For

Estimate

Actual

Prior

Impact

Tue. April 05

10:00

ISM Services Index

Mar

54.0

 

53.4

Moderate

Wed. April 06

02:00

FOMC Minutes

Mar

NA

 

NA

Moderate

Thu. April 07

08:30

Jobless Claims (Initial)

4/02

275K

 

276K

Moderate

 

--

By: Michael Borodinsky

Vice President/Regional Builder Branch Manager | Caliber Home Loans

NMLS #460228

 

 

 

 

 

 

 

Call Michael: 732-382-2654

Email Michael: Michael.Borodinsky@caliberhomeloans.com

Follow Michael on Twitter: @mikeborodinsky

 

 

Share

Search

Featured Companies

Twitter Feed