Mortgage rates worsened last week in response to more indications that the U.S. economy and global economic trends are improving. Global economic data was stronger than expected; which generally boosts investor confidence and leads to higher mortgage rates in Sacramento and across the country.
We may see a reversal of this trend in the short-term because the stock market remains overbought and ready to retrace, the obvious question is when? With little economic news this week, there is no reason the stock market should improve or interest rates should change much. Until the stock market retreats, U.S. interest rates are not likely to decline much.
According to Freddie Mac, the average rate for a 30-year fixed rate mortgage was 3.53 percent with borrowers paying all of their closing costs and 0.8 percent in discount points along with a full complement of closing costs.
The ISM Services Index for January was released Tuesday and fell to 55.2 from December’s reading of 56.1 and was slightly higher than against investors’ expectations of 55.0. Readings above 50 indicate expansion of the service sector of the economy. The ISM Services Index is also an indicator of future inflationary pressure.
Homebuilders Say Markets Improve For 6th Consecutive Month
On Wednesday, the National Association of Home Builders (NAHB) released its NAHB/First American Improving Markets Index (IMI), which provided good news for housing markets in all 50 states and Washington, D. C. Metro housing markets surveyed showed expansion of improving markets for the sixth consecutive month.
259 of the 361 metro areas surveyed in the IMI showed improvement in February. By comparison, only 12 improving metro markets were reported for September of 2011.
Increasing home prices and mortgage rates suggest that now the time for buying a home. But, as many of my clients can attest to, this is a tough market to buy because there are many more buyers chasing way too few available homes on the market.
The weekly Jobless Claims report released on Thursday indicated that 366,000 new claims were filed, which was higher than Wall Street’s estimate of 360,000 new jobless claims, but lower than the previous week’s 368,000 new jobless claims.
Falling U.S. Trade Deficit Signals Economic Uptick
The best economic news for last week came on Friday, when the U.S. trade deficit fell to its lowest level since January 2010. The Trade Balance Report for December shows the trade deficit at -$38.5 billion against expectations of -$46 billion and November’s deficit of -$48.7 billion. While a great boost for the economy, this is another indicator that recent low mortgage rates and home prices may soon become history.
Economic News scheduled for this upcoming week includes U.S. Treasury Auctions set for Tuesday, Wednesday and Thursday.
Retail Sales for January will be released on Wednesday and watched closely by investors. Retail sales account for about 70 percent of the U.S. economy and are viewed as a strong indicator of the economy’s direction.
Jobless Claims on Thursday, Industrial Production and Consumer Sentiment on Friday round out the week’s economic reports.
If you would like to get pre-qualified for a new home purchase, or a refinance, don’t hesitate to call me!