Friday Market Update for the Week of June 25th 2021

Happy Friday, Brian Manning here with the weekly update. Let’s get right to it. Monday this week, pretty quiet news day. Tuesday this week, we got existing home sales, this is for the month of May. Existing home sales were down 1%, actually it was a little bit better than expectation. The primary reason why is because inventory is down 21%. So it’s pretty amazing to see that home sales were only down 1% when inventory is down 21% and we’re seeing this really everywhere across the country.

Also Tuesday this week, we got some changes with the FHA. So the way that the FHA used to work was that when someone was qualifying for mortgage, if they had student loans, regardless of what the credit report said, you had to impute a payment of 1% of the outstanding balance. Well, they made a change which is really wonderful for first time homebuyers. And the FHA now says that for qualifying purposes, we’re either going to go off the monthly payment stated on the credit report, or that the monthly payment is in zero then we’re only going to use half a percent of the balance. The value there, though, is there’s a lot of people in the income based repayment plan. And they have really great payments to report to the credit report and before, we weren’t able to use the payments that they were actually paying, so really great to see some changes there for FHA that will definitely help out first time homebuyers.

Wednesday this week, we got new home sales. This is also for the month of May, new home sales were down 6%. This is really all new construction oriented builders saying that the challenges that they’re having right now is really with labor shortages. And I can tell you from just speaking with local builders here in the Boulder county market, that they’re just seeing shortages as well in labor, and also it’s just lots, there’s a lot of builders we talked to that just don’t have the lots to be released right now. So not shocking to see new home sales down. Also Thursday this week, we got Supreme Court ruling and Supreme Court says the leadership structure was unconstitutional with the way the FHFA is structured and not being able to remove someone midway through, so Mark Calabria getting the boot from Biden to here. You know, he was a Trump placed member of the FHFA and he’s been quite controversial. Giving example, back last year, he put in what’s called the adverse impact fee for refinances and charge an extra half a percent for every refinance that was going through. Last time I checked, there was really no adverse impacts on refinancing. Everyone that we were helping was saving money, reducing the terms of their mortgage, paying off debt, whatever it was, it was all positive changes. So it’s really going to be good to see him go, I have no idea who he’s going to get replaced with. And as far as what’s going to happen if they remove any of the stuff that Mark Calabria put into place, we’ll have to wait and see I’m not really sure.

Today we had the PCE, it’s the personal consumption expenditure. This is the Federal Reserve’s favorite gauge for measuring inflation. On a month over month basis, when we look at just the core rate. So we always focus on the core rate because the core rat  strips out volatile items such as food and energy. So the core rate on a month over month basis was up 0.5%. On a year over year basis, up 3.4%. So inflation right now is at a 13 year high. Normally, you would see markets react very negatively to this. But they didn’t because last week, we got the CPI report, CPI already told us that inflation was running hotter than expected. Now you get a report to follow with this, most markets have already digested the CPI report and already expected the inflation to run hot this time. It’s actually a little bit cooler than they expected. So really, everything’s pretty muted for the reactions that we’re seeing in the market right now, which is not usually the norm.

I just want to show you what’s going on on the 10 year treasury real quick. This will give you some feedback on mortgage rates. This is a snapshot of the 10 year treasury for the last quarter. Mortgage rates usually follow in sync with what this is doing and I would say this is really considered relatively flat. This really goes back to April 2nd, and we just haven’t seen much movement, very slight decrease in rates, you know, interesting to see that normally today, this would be a crusher in the bond markets, because this is today’s candlestick but we didn’t see anything negative reacting in the bond markets, very little. It’s only a four basis points right now, which is a pretty minimal reaction.

So mortgage rates are still phenomenal. We’re still helping people buy houses at incredibly low rates, refinance. It’s unbelievable where rates are at and they’re still sitting at historic lows. So if you have any questions, give me a call. If you want to learn about our  strategic buyer consultation, you want to go out there, make an offer or rival a cash offer, let us know how we can help you, I have some feedback for you on how to make your offer stronger.

I’m around a weekend. Happy Friday. Have a great day!