Rates – moved mostly sideways this week and couldn’t quite break above the 25 day moving average. A Pennant Pattern has a emerged which can indicate a move towards the previous trend (up). Hopefully this is a positive sign for rates who’s levels are similar to where they were this time last year.


Jobs – the jobs report for August showed much fewer job creations (235k) than the anticipated number of 750K. The headline unemployment rate is hovering in the low 5’s but there are 5.7M people that aren’t being counted in the labor force as they aren’t actively seeking employment. Once benefits expire some of these folks will start looking again. The u-6 all-in unemployment figures is at 8.8% and 12.2M folks are still receiving some form of benefits. Weekly earnings are showing strong growth up 4.6% year over year putting inflationary pressure on MBS.

The Case Shiller Home price index showed home values increased over 2 % in June and are up 18.6% from this time last year. Over a 10 year period the annualized rate of return is 6.27%. If you purchased a $400K home in June of last year you would have gained $75k in equity in a 12 month period.

Affordability – if you were to compare the affordability of homes from today to 2006 you would note that rates are 3% lower while household income has increased 55%. Even when you account for the significant value increase of homes since 2006 (41%) homes are actually more affordable now due to lower rates and stronger income. This is, of course, assuming zero down payment so there are other minutia to consider.

Mortgage Applications to purchase a home increased by 1% last week and are down 16% year over year. inventory is down 12% and there are significantly more cash buyers than last year showing continued demand for homes. Refinance applications are down 4% from the previous week and are up 2% year over year.

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