Mortgage Rates – improved slightly these week as the price of Mortgaged Backed Securities (MBS) increased. Rates are at the same levels they were this time last year.
Inflation – the Personal Consumption Expenditures Index report showed all-in inflation rose 0.1% in June and year over year is down from 2.6% to 2.5% increases. The core rate, which strips out food and energy, remained at 2.6% year over year increase. While we are not at the lauded 2% level, we are getting closer to where the Fed wants to be.
Home Sales – closings on existing homes fell 5.4% in June to an annualized pace of 3.89M units. Sales are now down 5.4% year over year. Remember this is based on folks that were in contract in April and May when rates were higher, so we will see if this changes in the following couple of months. Inventory increased 3.1% month over month to 1.3M units, a very small increase from the previous months’ report of 1.28M. Inventory is now up 23% from last year and there is currently a 4.1-month supply of homes, still under a more balanced level of 4.6 months. Homes are on the market for an average of 22 days.
Durable Goods – the US Census bureaus released their Durable Goods Report and it showed that orders declined 6.6% but the entire decline was a drop in aircraft orders. If you remove transportation orders from the report overall orders actually rose 0.5%
New Home Sales, which measures signed contracts on newly constructed homes, fell 0.6% in June to a 617,000 annualized pace. There were 476,000 new homes for sale at the end of June which is an inventory of 9.3 months, however only 102,000 of these homes are completed, meaning there is actually only a 2 months’ supply of newly constructed homes.
Mortgage Applications to purchase homes fell 4% last week and are down 15% year over year. Refinance volume was flat and is up 38% year over year. Refi’s are now making up 40% of total applications.