The Home Buyer's Korner

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October 13th, 2014

What Home Buyers Need to Know for the Week of October 13th, 2014

The Home Buyer's Korner LogoWe had three key economic news reports affecting housing last week. CoreLogic reported on the housing market and the most recent FOMC minutes were released, which eased concerns about rising mortgage rates as the Fed ends its Quantitative Easing Program.  We also got news on concerns about the European Union and current economy conditions across the pond.  Additionally we saw the lowering of mortgage interest rates after seeing several months of increases.

CoreLogic reported the lowest home price gains for August in almost two years, which bods well for home buyers. Annual home prices grew by 6.40 percent in August as compared to July’s reading of 6.80 percent and year-over-year home price growth reached a rate of 11.40 percent for the same period.

Slower home price gains are expected to continue through next year and housing analysts are predicting an annual growth rate of 5.20 percent by August 2015. Home prices currently are about 12 percent below peak levels reached in 2006 and just before the housing bubble burst.

Minutes of the Federal Open Market Committee meeting held in September were released last week.  FOMC Member pointed to concerns that changed the committee’s language from its repeated assertion that target rates for federal funds would remain between 0.00 percent and 0.250 percent for a considerable time” after asset purchases under the QE program ended, which could be viewed as a fundamental change in FOMC policy.

The FOMC also addressed concerns over the impact of a stronger U.S. dollar on the economy and said that persistent weakening of the European Union could cause the dollar to strengthen to undesirable levels; cause exports to decrease and slow inflation to less than its desired rate. 

Freddie Mac’s Primary Mortgage Market Survey reported that average mortgage rates fell last week from seasonal highs. The average rate for a 30-year fixed rate mortgage fell by seven basis points to 4.12 percent with discount points higher at 0.50 percent.

The average rate for a 15-year fixed rate mortgage fell by six basis points to 3.30 percent with discount points unchanged at 0.50 percent.

The average rate for a 5/1 adjustable-rate mortgage was also lower by one basis point to 3.05 percent with discount points unchanged at 0.50 percent.

Weekly Jobless Claims came in lower the expected with 287,000 new claims filed against predictions of 294,000and the prior week’s reading of 288,000. The number of new claims further supports recent indications of stronger job markets, which was more good news. Coupled with lower home prices and mortgage rate, this could stimulate more would-be home buyers into the market.

What’s Ahead for the Week?

Markets were closed Monday for Columbus Day and not reports or news was issued.   The Fed will release its Beige Book Report on Wednesday. The National Association of Home Builder’s Index for October is due Thursday, along with Freddie Mac’s PMMS Report and Weekly Jobless Claims.  Friday we’ll get Housing Starts and the Consumer Sentiment Index.