CHM Blog

Realtor Market Insider October 18, 2021

October 18th, 2021 10:27 AM by Richard Sardella MLO.100007700/NMLS 233568


Rates At a Glance
Mortgage Rates
Currently Trending
7 Day Mortgage
Rate Forecast
This Week's
Potential Volatility

Neutral

High

High
(by Sigma Research)
Realtor Report

As lumber prices stabilize, the future of homebuilding remains steady

Builder confidence in the market for newly-built single-family homes remained unchanged in April at a level of 58 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

According to the latest National Association of Home Builders (NAHB) and Wells Fargo Housing Market Index (HMI) report based on a monthly survey of NAHB members. The consensus was that confidence among homebuilders steadied over the past month despite continuing material and labor challenges.

Respondents are also asked to rate market conditions for the sale of new homes at the present time and in the next six months as well as the traffic of prospective buyers of new homes. HousingWire’s Brooklee Han reports, “Scores for each component of the survey are then used to calculate an index where any number over 50 indicates that more homebuilders view conditions as good to poor. After a three-month decline, homebuilder sentiment in the market for newly built single-family homes increased one point to 76 in September. This is two points higher than it was forecasted to be, but still seven points below where it was at the start of the year.”

She goes on to say that the NAHB believes that this apparent steadying is due to the easing of material prices, especially softwood lumber and adds that the job openings rate in construction is also trending higher. “In November 2020 the index hit an all-time high of 90, but it has been steadily declining ever since.”

NAHB Chief Economist Robert Dietz clarifies what is now happening: “The single-family building market has moved off the unsustainably hot pace of construction of last fall and has reached a still hot but more stable level of activity, as reflected in the September HMI. Exurban markets have expanded the most over the last year, although inner suburbs are now experiencing an acceleration, with townhouse construction having had the best quarter in 14 years this spring.”

In the end, however, it’s all about affordability, which Dietz says will be an important demand-side fact in the coming months due to rapidly rising home prices and construction costs. As for regional HMI scores, the three-month moving average for the Northeast fell two points to 72, the South and the West also dropped to 80 and 83, respectively, and the Midwest held steady at 68.

HousingWire, TBWS

This Week's Mortgage Rate Summary

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market.  This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events.  When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up.  Tracking these securities real-time is critical.  For more information about the rate market, contact me directly.  I’m among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are moving slightly higher today. The MBS market worsened by -15 bps last week. This was may have been enough to increase mortgage rates or fees. The market experienced moderate to high volatility last week.

This Week's Rate Forecast: High

Three Things: These are the three areas that have the greatest ability to impact your rates this week. 1) The Fed, 2) Central Bank and 3) Manufacturing

1) The Fed: We are just a couple of weeks away from the next FOMC meeting where the bond market is expecting an official taper announcement. Wednesday's Beige Book is prepared specifically in advance of that meeting and will be utilized by the Committee in their evaluation of the economy and their policy. We also hear from several key members this week:

10/18 Neel Kashkari, Randall Quarles

10/19 Michelle Bowman, Christopher Waller, Mary Daly, Patrick Harker, Raphael Bostic

10/20 Randall Quarles, Charles Evans, James Bullard

10/21 Fed's Balance Sheet

2) Central Bank: We get a get interest rate decision out of the People's Bank of China specifically in light of the financial melt down due to Evergrande's defaults. But the Bank of England is getting a lot of attention after BoE governor Bailey said over the weekend that the central bank “will have to act” on inflation.

3) Manufacturing: We get some key readings this week with the Philly Fed and the flash composite PMIs.

This Week's Potential Volatility: High

This morning we're seeing a negative trend. Volatility is high as markets consider inflation and the Bank of England's implied interest rate hike.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

About Richard Sardella

Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

About This Report And Disclosure Information

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on October 18th, 2021 10:27 AM

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