Strong Mortgage Application Data and Favorable Labor Market

Mortgage application numbers came in much hotter than predications.  Purchase applications increased for the week of 1/7/2019 by 17% and refinances increased by 35%.  Purchases are 4% higher than this time last year.   With the holidays coming to an end and interest rates improving, we are seeing much more mortgage application activity and very strong levels of demand.  This is the biggest gain in mortgage activity since 2015!  This data is compiled from the Mortgage Banker’s Association and focuses on single family homes sales and housing construction.


Positive conditions are seen so far for 2019 from the Jobless Claims report.  Claims fell last week by 17,000 to 216,000.  This is a strong number and lower than many market experts’ expectations.  This decline is also gaining attention because it is lower despite the government shutdown where we saw 4,760 claims for unemployment just last week from federal jobs.  Even though the government shut down adds unique variables to the equation, this report as a whole points to a favorable labor market.



U.S. Adds Most Private Sector Jobs in Almost 2 Years!

Automatic Data Processing (ADP) reported that private sector employment jumped significantly in December, adding 271,000 jobs.  This increase was well above the 175,000 that economists expected and was the most jobs gained since February of 2017.   This ADP report is used by economists to get a feel for the Labor Department’s employment report which will be released on January 11th and covers government jobs in addition to the private sector.   Amidst concerns from economists that we are on the brink of a slowing economy, the ADP report data suggested otherwise.   Mark Zandi, Chief Economist at Moody’s Analytics stated, “At the current pace of job growth, low employment will get even lower.”  In addition, he noted that businesses continue to add aggressively to their payrolls despite the recent stock market slump and the trade war between the U.S. and China.

ADP Report Highlights (Jobs Created)

  • 66,000 – Professional and Business Services
  • 61,000 – Education and Health Services
  • 39,000 – Leisure and Hospitality
  • 37,000 – Construction
  • 12,000 – Manufacturing


30 Second Market Update - Housing is Consistently Strong

The S&P CoreLogic Case-Schiller Home Price Index (HPI) was released this month showing that national home prices continue to appreciate at a level of 5.5% for the year.   This number was in-line with last month, but still points to continued housing strength.  Some of the highest levels of appreciation were seen in the following cities: Las Vegas (12.8%), San Francisco (7.9%), Phoenix (7.7%), Seattle (7.3%) and Tampa (6.4%). The HPI tracks residential, single family real estate values.

The Federal Housing Finance Agency (FHFA) Home Price Index also tracks single family housing data.  For this release, the FHFA reported that national home prices have appreciated at a rate of 5.7% annually. Even though this number is slightly tamer from last month, it is again pointing to continued housing strength.  The data contained in this report analyzes homes that were purchased via conforming, conventional mortgages that utilized Fannie Mae and/or Freddie Mac guidelines.  VA and USDA mortgages are excluded from this report. 

Both of these reports point to a consistently strong national housing market.  Both show national levels of appreciation for the year of over 5%.  We understand there are some markets that aren’t seeing strong levels of appreciation, but where appreciation is found it is helping families increase wealth and is continuing to make home ownership a great financial opportunity.




Continued Healthy Housing Market

The Consumer Price Index (CPI) was released showing flat levels of inflation on the consumer level month-to-month.  Annually, CPI decreased by 0.3%, but when stripping out food and energy costs, the CPI number actually increased very slightly by just 0.1%

The CPI is a report that measures the change in prices on goods and services.  By analyzing this number, we can take a peak into the level of inflation down to the consumer level.  The energy component dipped because gasoline dropped in price by 4.2%, and medical care increased by 0.4%.  Housing, which is a major component, showed an increase of about 0.3%.  It is important to keep an eye on inflation data because it affects mortgage interest rates negatively when it is increasing.

Speaking of housing, it is encouraging to see that mortgage delinquencies across the U.S. in September fell to their lowest levels in about 18 years, at a rate of only 4.4%!  This time last year it was at 5%.  

With tamer levels of inflation, lower levels of delinquencies and continual home appreciation, we see the makings of a healthy and strong housing market.  Homeownership continues to be a strong investment, and a great mechanism to build wealth.



30-Second Update:  Stock Market Volatility Pushes Mortgage Rates to 2-Month Low

Rates for home loans have tumbled for a third straight week, and now represent a 2-month low during the week of December 6th.  Freddie Mac’s Chief Economist Sam Khater said, “this week’s rate reaction to the volatile stock market is a welcome relief to prospective homebuyers who have recently experienced rising rates and rising home prices.”  For the week ending December 7th, the Dow 30 was down 559 points, or 2.2%, the S&P 500 was off by 63 (2.3%), and tech-heavy NASDAQ fared the worst of the lot, tumbling 219 points (3.1%).

This recent pullback in mortgage rates not only represents a reprieve for homeowners in the market to purchase, but also for homeowners looking to refinance or take cash-out of their current residence.  Amid the recent pullback in rates and volatility in the stock market, the Federal Reserve officials have continued their indication that their will be a December rate hike at its next meeting, taking place on December 18th and 19th.  In addition to the expected December hike, the Federal Open Market Committee is projecting three more hikes in 2019. 

Holiday Version: Did you know? 3.1% of the world’s children live in America, but they own 40% of the toys consumed globally!




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