30-second update:  Federal Reserve Leaves Rates Unchanged

At the Federal Reserve’s most recent meeting on May 1st, the Fed voted unanimously to keep its benchmark interest rate in a range of 2.25% to 2.5%.  The benchmark interest rate influences the cost of borrowing for mortgages and various other consumer and business loans.   Fed Chairman Jerome Powell went on to state that, “The Federal Reserve feels comfortable with current policy and is likely to keep interest rates steady for an extended period of time.”  In addition, President Donald Trump has even been pushing the Fed to lower rates, and that a one percentage point cut would be in order.   The President has cited low inflation as a key reason for the possible Fed cut to interest rates. 

Overall, the economy continues to grow at a solid rate, and with the welcoming news that we will most likely remain in a low interest rate environment for the rest of the year, current homeowners and those looking to buy are reaping the benefits.   With the spring housing market in full swing, now seems to be the perfect time to take advantage of these lower rates, by refinancing your current mortgage or purchasing a new home. 



New Construction Up and Values Still Rising

Newly constructed homes with a signed contract are on the rise.  For the month of March, new home sales increased to 692,000 from 667,000 in February.  This new rate of increase is at its highest level since 2017 and proves there are still large amounts of demand and competitive interest rates.  The largest gains in new home sales came from the west and south regions of the U.S.  When new homes sell, they open up consumers to purchase items to make it a “home,” such as furniture, blinds, appliances, etc.  Because of this, higher home sale numbers point to increased consumer purchasing and stronger economic conditions.

Every month, the Federal Housing Finance Agency (FHFA) reports on the level of appreciation across the nation.  For this month’s release, its Home Price Index, or HPI, reported on February’s data, and we see appreciation at a level of 4.9%.  Even though this number is lower than its HPI for January (5.6%), it is still a positive number and means that homes are appreciating at a strong rate.  The homes that this report focus on are single family with conforming, conventional mortgages.  FHA and VA mortgages with higher loan amounts are excluded from this report.


Mortgage Applications are Increasing and Home Builders are Optimistic!

The Mortgage Bankers Association (MBA) released their weekly mortgage application data.  This week’s report shows applications to purchase a home have increased 1% since last week, with purchases making up a large portion of these new applications, due to large amounts of demand.  Since last year, applications are now up 7%.  Applications to purchase a home are nearing their highest levels that were seen back in 2010!

Refinance applications, which are more interest rate-sensitive, were down in this weekly report by 8%, but are still up around 25% from about a year ago.

The National Association of Home Builders (NAHB) conducts a survey every month where they try to get a pulse on the general economy and the current state of the housing market.  By conducting this survey, they create a Housing Market Index for each month.  For April, they released a score of 63 which was in-line with expectations and higher than last month’s score of 62.  The increase was mostly due to the demand of homes found via foot traffic by potential buyers, which increased by three points.  The “sales of new homes” component also increased.  A score over 50 is seen as strong and optimistic for the housing market.




The Advisor 2019 - Spring Edition

Apr 16
Category | The Advisor

30- Second Update:  US Jobless Claims Drop & Interest Rates Remain Low!

For the week ending April 6th, initial jobless claims fell 8,000 to a seasonally-adjusted 196,000, marking the lowest levels in almost 50 years.  These numbers are welcome and surprising, since economists polled by Reuters had previously forecasted that claims would rise to 211,000 in the latest week.  This report is indicative of a strong economy with sustained labor market strength.  Bloomberg Economist Eliza Winger stated, “Employers are adding jobs at a pace that is well above the natural growth rate of the labor force, and job openings continue to exceed the number of job seekers.”

This report came a day after the Federal Reserve officials signaled they’re prepared to move interest rates higher or lower as needed, but due to fluctuations in the economy and overall market risk, it is expected that interest rates will remain on hold all year.  Currently, interest rates are hovering near 15-month lows, a welcome sign for borrowers looking to purchase or refinance a home this Spring.



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