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Trade concerns helping keep mortgage rates low in this week’s Markets in a Minute!

Trade concerns helping keep mortgage rates low in this week’s Markets in a Minute!
June 22, 2018 Fred Kreger


For the Week Ending June 22, 2018

The Markets:

Investors do not like the increased banter and threats relating to tariffs and trade. The stock market has lost all the gains for 2018 and has even dropped into negative territory. The goal of all the tariff talk and actual implementation has been to bring countries to the negotiating table to create more balanced trade agreements for the United States, versus the current one-sided relationships that exist to the detriment of the country. Thus far the strategy is not working, however there is hope that smarter heads will prevail before this trade war creates global turmoil.


Housing Starts:

Housing starts for May roared to an 11-year high. At an annualized pace of 1.35 million, this is the fastest activity since 2007. The latest pace is 5% higher than April and a whopping 20.3% higher than the same time last year. Although permits were down 4.6 %, this decline pales in comparison to the incredible growth in construction that is happening. Housing starts for residential single-family homes rose to an annualized pace of 936,000, one of the highest numbers of the recent housing cycle.


Existing Home Sales:

Once again existing home sales are down, but not because of demand. Tight inventory continues to stifle the existing home market. Sales declined by 0.4% from April to May. This is the second straight month of declines as the supply continues to prevent would be buyer from getting that elusive accepted offer.


Median home prices continue to rise. The latest data shows that home prices are rising at an annualized rate of 4.9%. First timers represent 31% of buyers, when historical norms are usually around 40%. Sales in the Northeast rose 4.6%, and this was the only region to show an increase.


Mortgage Application Activity:

The Mortgage Bankers Association reported that applications for home loans increased 5.1% from the prior week. Applications for purchase loans represent 4% of the increase. Refinances now account for 36.8 percent of mortgage loan activity.


Next week’s potential market moving reports are:

• Monday June 25th – New Home Sales
• Tuesday June 26th – Case-Shiller Home Price Index, Consumer Confidence
• Wednesday June 27th – Pending Home Sales, MBA Mortgage Applications
• Thursday June 28th – First Time Jobless Claims
• Friday June 29th – Consumer Sentiment, Consumer Spending


As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can.


Please enjoy this quick update on what happened this week in the housing and financial markets.



Tariffs imposed by President Trump have elicited retaliation from countries around the globe. Concerns about a trade war have helped mortgage rates.
Fed Chair Powell recently confirmed the case for continuing to raise interest rates remains “strong.” He cited solid economic growth and full employment.
Jobless claims have fallen for the 4th straight week. Employers are increasingly reporting labor shortages, which are likely to lead to wage growth and inflation.


Home builders are excited by strong demand for housing. However, they are frustrated with labor shortages and rising costs for lumber.
New housing starts surged to an 11-year high of 1.35 million in May. Both single-family and multi-family home construction increased.
Existing home sales fell last month, as a shortage of properties pushed prices to a record high. At May’s sales pace, unsold inventory is at a 4.1-month supply.

Knowledge is knowing a tomato is a fruit; wisdom is not putting it in a fruit salad.


Rate movements and volatility are based on published, aggregate national averages and measured from the previous to the most recent midweek daily reporting period. These
rate trends can differ from our own and are subject to change at any time.


Fred  Kreger
American Family Funding
Certified Mortgage Consultant
NLMS # 1850 / 214640 BRE# 01215943 / 01371184
(661) 505-4311
28368 Constellation Road
Suite 398
Santa Clarita, CA



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