What’s Ahead For Mortgage Rates This Week – January 26, 2015

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Whats Ahead For Mortgage Rates This Week January 26 2015Last week’s economic reports included the National Association of Home Builders Wells Fargo Housing Market Index, Housing Starts for December and the FHFA Home Price Index report for November. The National Association of Realtors® also released its Existing Home Sales report for December.

Freddie Mac and the Department of Commerce released their weekly reports on mortgage rates and new jobless claims.

Builder Confidence Close to Record High, Housing Starts Rise

The National Association of Home Builders (NAHB) reported that home builder confidence slipped by one point in January to an index reading of 57. This was not a significant decline as any reading over 50 indicates that a majority of builders are confident about current housing market conditions. January’s confidence reading remained close to a 2005 peak. 

Housing Starts rose in December to 1.09 million starts as compared to expectations of 1.04 million starts and November’s reading of 1.04 million housing starts according to the Department of Commerce.

December’s annual reading reflected strong home builder confidence and was the highest for housing starts since 2007. Low mortgage rates and improving labor markets were seen as factors contributing to housing construction.

Existing Home Sales Fall, FHFA Home Price Index Gain 

The National Association of Realtors reported that sales of previously owned homes fell to 4.05 million in December, which fell short of 5.08 million expected sales and 4.93 million sales of existing homes in November. Analysts were puzzled at the first drop in sales volume for existing homes since 2010.

Low mortgage rates, job growth and the possibility of less restrictive mortgage requirements were cited by analysts as factors that should have fueled sales of existing homes and should continue to boost home sales as more home buyers enter the market.

FHFA reported that prices of homes associated with Fannie Mae and Freddie Mac mortgages rose 5.30 percent year-over-year in November. This was an increase of 0.90 percent over October’s year-over-year reading of 4.40 percent.

Mortgage Rates, Jobless Claims Lower

Mortgage rates dropped across the board according to Freddie Mac. The average rate for a 30-year fixed rate mortgage fell by three basis points to 3.63 percent with discount points higher at 0.70 percent. The average rate for a 15-year mortgage was five basis points lower at 2.93 percent and discount points higher at 0.60 percent. The average rate for a 5/1 adjustable rate mortgage dropped by seven basis points to 2.83 percent with discount points unchanged at an average of 0.40 percent.

Weekly jobless claims fell from the prior week’s reading of 317,000 new claims filed to 307,000 new claims filed. Analysts had expected a reading of 298,000 new jobless claims filed. Analysts noted that this was the third consecutive reading above 300,000 new jobless claims since July, but the higher readings were attributed to layoffs of seasonal holiday workers.

What’s Ahead

Case-Shiller will release its composite home price index reports; new home sales, consumer confidence and consumer sentiment reports are scheduled along with a customary statement from the FOMC at the conclusion of its January meeting.

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