The Home Buyer's Korner

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July 21st, 2014

What Home Buyers Need to Know for the Week of July 21, 2014

Guy looking up in colorLast week we got a lot of indications that the economic recovery continues, but not all indices reached their expected levels. The Philadelphia and New York branches of the Federal Reserve Bank reported higher than anticipated manufacturing for their respective regions and new jobless claims were lower than expected. The Empire State Manufacturing Index reported a July reading of 25.60 as compared to an estimated reading of 17.50 and June’s reading of 19.30. This is good news after the Northeast’s economy was slammed by severe weather last winter; as conditions stalled area housing and labor markets. In other Fed-related news, the Philadelphia Fed released its manufacturing index for July with higher than expected results. The Philly Fed’s reading for July was 23.90 as compared to expectations of 16.50 and June’s reading of 17.80.

Federal Reserve Chair Janet Yellen testified that the Fed might have to raise interest rates sooner than expected if the economy continues to outperform the Fed’s projections. Ms. Yellen said that the central bank presently estimates that the first rate increases will take place approximately one year from now.

The Federal Open Market Committee (FOMC) has repeatedly stated that members will continue to review data and economic conditions changing monetary policy. Ms. Yellen said in last week’s remarks that this holds true whether economic conditions improve or decline

The University of Michigan’s Consumer Sentiment Index for July fell just short of expectations at 81.3. Analysts expected a reading of 83.0, based on June’s reading of 82.50. Analysts said that although labor markets are improving, consumers continue to face rising costs for gasoline and food, which likely explained the dip in confidence for July.

Weekly Jobless Claims were lower at 303,000 than expectations of 310,000 new claims and the prior week’s reading of 305,000 claims.

The National Association of Home Builders posted its highest builder confidence reading in six months for July with a reading of 53 against the expected reading of 50 and June’s reading of 49. Numbers above 50 indicate that more builders surveyed have a more positive outlook than not. Housing Starts on the other hand for June were reported lower than expected at an annual level of 893,000 against an expected reading of 1.02 million and May’s reading of 985,000 housing starts.

Freddie Mac’s weekly survey showed the average mortgage rates were slightly lower last week. The average rate for a 30-year fixed rate mortgage fell by two basis points to 4.13 percent. Discount points were 0.60 as compared to the prior week’s reading of 0.70 percent. The average rate for a 15-year fixed rate mortgage was 3.23 percent as compared to the previous reading of 3.24 percent. Discount points for a 15-year mortgage averaged 0.50 percent against the prior week’s reading of 0.50 percent. The average rate for a 5/1 adjustable rate mortgage dropped by two basis points to 2.87 percent with discount points unchanged at 0.40 percent.

What’s ahead for the week?

This week we will see data on Existing Home Sales from the National Association of REALTORS®, New Home Sales from the Department of Commerce, the FHFA House Price Index and the Chicago Fed is set to release its National Activity Index. Freddie Mac Mortgage Rates and New Jobless Claims will be released Thursday.