Economic Reports, Housing Analysis, Market Insight

The Week Ahead for Mortgage Rates: July 8, 2013

What's Ahead For Mortgage Rates This Week July 8 2013Last week saw a relatively quiet week of economic reports due to the 4th of July holiday. However, there were some fireworks at the end of the week due to Jobs Report.

Last Week in Review

The Department of Commerce reported Monday that overall construction spending increased by 0.50 percent in May to a seasonally adjusted annual rate of $874.9 billion. Residential construction grew by 1.20 percent and May construction spending was 5.40 percent higher than in May 2012.

More spending in residential construction can indicate builder confidence in housing markets; added construction could help ease low inventories of available homes.

On Tuesday, CoreLogic reported that May national home prices increased by 12.20 percent over May 2012, and grew by 2.60 percent in May including sales of distressed properties. Excluding distressed properties, home sales rose by 2.30 percent in May for a year-over-year increase of 11.60 percent.

States hardest hit in the economic downturn are showing good recovery; Nevada home prices rose by 26 percent year-over-year. While double-digit increases in home prices are good news, economists note that home prices remain approximately 20 percent below their peak in 2006.

Employment Data: More Jobs, Less Unemployment

Employment data is important for housing markets. Employment is closely tied to home buyers’ ability to qualify for mortgage loans. Last week ended with several important jobs related reports.

ADP reported on Wednesday that 188,000 private-sector jobs were added in June for the highest increase in four months surpassing expectations of 160,000 new jobs and May’s revised figure of 134,000 jobs added.

The Labor Department released Non-farm Payrolls and the national Unemployment Rate for June on Friday. Non-farm matched May’s level of 195,000 jobs added, which surpassed expectations of 155,000 jobs added. The unemployment rate remains at 7.60 percent, just over expectations of 7.50 percent.

The Federal Reserve has cited a benchmark unemployment rate of 6.50 percent as a criterion for raising the federal funds rate and reducing its current quantitative easing policy. This news may help slow mortgage rates as the Fed isn’t likely to modify its programs based on the current unemployment rate.

Looking Ahead

This week’s economic news includes today’s report on consumer credit. Tuesday brings Job Openings for May and Wednesday brings the minutes from the recent FOMC meeting. The minutes should clarify exactly what the committee discussed concerning quantitative easing and their plans for modifying it.

Thursday, Freddie Mac will release weekly mortgage rates. The federal government will release weekly jobless claims and will update the federal budget. The week’s economic news will conclude with release of the Producer Price Index (PPI) and Core PPI for June, along with Consumer Sentiment for July.

This is The Week Ahead for Mortgage Rates: July 8, 2013.

Click here to see today’s mortgage rates.

Quick general rule of thumb when keeping an eye on mortgage rates.

Strong Economic News: $$$ from Bonds —> Stocks = Home Loan Rates Go Up

Weak Economic News: $$$ from Stocks —> Bonds = Home Loan Rates Go Down

If you or someone you know is thinking about buying a home, the combination of low home loan rates and affordable home prices make this an ideal time to buy a home. Want to know if you can afford a new home? Call or text me at 512-522-7284 to discuss your personal situation and your home loan options!

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James K Barath, CMPS®

James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, Certified Military Housing Specialist® and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval !  His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!

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