What’s Ahead For Mortgage Rates This Week – October 3, 2016

Last week’s economic releases included reports on new and pending home sales, S&P Case-Shiller Home Price Indices and regularly scheduled weekly reporting on mortgage rates and weekly jobless claims. Readings on consumer sentiment and confidence were also released.

New and Pending Home Sales Lower as Peak Sales Season Winds Down

August readings for new and pending home sales were lower than for July; analysts said that slim supplies of available homes and rising home prices contributed to slower home sales. Peak home sales typically occur during spring and summer. Homebuyers with school-aged children prefer to be settled into a new home when school starts in August and September.

According to the Commerce Department, new home sales achieved their second highest reading since the Great Recession. Although lower than July’s reading, August sales of new homes reached 609,000 on a seasonally-adjusted annual basis. Analysts expected a reading of 600,000 new home sales based on July’s reading of 659.000 new homes sold. August’s reading was 20.60 percent higher year-over-year. High demand for homes appears to be kicking home builders into higher gear as they strive to ease slim inventories of available homes.

The impact of short inventories of available homes was reflected in August’s reading for pending home sales. Home sales awaiting closing fell in August from July’s reading of +1.20 percent in July to 2.40 percent in August. The National Association of Realtors® said that home sales are declining due to very limited inventories of available homes. Rapidly rising home prices and strict mortgage qualification requirements also contributed to slipping sales. After home buyers sign a purchase contract, they are at the mercy of changing mortgage rates their ability to qualify for a mortgage. Pending home sales supply an indication of future closings and mortgage loans.

According to the S&P Case-Shiller 20-City Home Price Index for July, home price growth dipped from June’s seasonally adjusted annual rate of 5.10 percent to 5.00 percent. Slim inventories of homes for sale and high demand were again cited as primary reasons for slower home price growth. While demand is high, slim supplies of available homes can cause would-be buyers to postpone their home search until more homes are on the market.

Mortgage Rates Fall, New Jobless Claims Rise

Mortgage rates fell across the board last week according to Freddie Mac’s weekly survey of rates. The average rate for a 30-year fixed rate mortgage fell six basis points to 3.42 percent; the average rate for a 15-year fixed rate mortgage was four basis points lower at 2.72 percent. 5/1 adjustable rate mortgages had an average rate of 1.81 percent, which was one basis point lower than the previous week’s reading Discount points were also lower and averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

New jobless claims rose last week to 254,000 claims, but new claims were lower than the expected reading of 259,000 new claims which was based on the prior week’s reading of 251,000 new jobless claims. New jobless claims have stayed below 270,000 new claims for three months for the first time since 1973.

In prepared testimony before the Financial Services Committee, Federal Reserve Chair Janet Yellen discussed problems facing two major banks and said the Fed’s goal was managing its regulatory stance to support financial stability.

September’s Consumer Confidence Index reading rose to 104.1, which exceeded analysts’ estimated reading of 99.3 and August’s reading of 101.1.

What’s Next

Next week’s scheduled economic reports include readings on construction spending and several labor-related releases including ADP Payrolls, Non-Farm Payrolls and the National Unemployment Rates. Weekly reports on mortgage rates and new jobless claims are set for release as usual.

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11489 W Deanne Drive Youngtown, AZ 85363

$459,900

3 Beds

2 Baths

1,795 SqFt

Status Active

MLS # 6683451

Property Type Single Family Residence

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3 bedrooms, 2 bath, and all of the space you could imagine makes this floor plan the perfect home for you! This new home comes filled with upgrades including a full suite, stainless steel energy-efficient kitchen appliances, beautiful granite countertops, stunning wood cabinets, designer light fixtures, and an attached two-car garage. The Prescott floor plan also showcases a private master suite complete with a walk-in closet, as well as a spacious kitchen with walk-in pantry, fully fenced backyard, covered patio and front yard landscaping. As an added bonus, this home has a separate den off the entryway, giving you space for a formal dining room or home office. Whatever your heart desires, the Prescott is sure to have it! Enjoy the view of the White Tank Mountains from your NEW home!

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$459,900

3 Beds

2 Baths

1,905 SqFt

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MLS # 6671604

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Brand new roof! This remodeled property near a freeway in Phoenix offers a combination of modern upgrades, convenient access, and a desirable location. New cabinets, new paint inside and out, new bathrooms, new fans, new windows, etc. A perfect home for you!

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5739 N Thornberry Drive Prescott Valley, AZ 86314

$459,900

3 Beds

2 Baths

1,438 SqFt

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MLS # 6679725

Property Type Single Family Residence

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Much desired Granville master planned community. Subdivision amenities: 3 pools/ clubhouses, fitness centers, library, tennis/pickle ball, dog park, and more. 10' ceilings, corner lot with private backyard. Upgraded front and rear landscaping with artificial grass. Seller design finishes when built (2017) are top notch in this upgraded home, including: *Granite counter kitchen and bathroom cabinets. *Extended length & width epoxy floored garage (20k builder upgrade) w/garage windows & multi temp LED lighting. *Vessel sinks in bathrooms. *High end front security door. *Custom window coverings, patio door sliding panels & recently painted exterior. *18'' Travertino tile & designer carpeting (bedrooms). 3rd Bedroom set up as a den/flex space, can be converted back as bedroom w/closet.

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14207 N 51st Drive Glendale, AZ 85306

$459,900

4 Beds

2 Baths

1,980 SqFt

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MLS # 6682072

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Welcome to this lovely 4-bedroom, 2-bathroom home that boasts a 2-car garage and an RV gate. This home features new floors, a fully remodeled kitchen, and updated bathrooms, all completed in 2024. The roof, windows and A/C were all replaced in 2022, so there's no need to worry about any major repairs. The best part? There's no HOA, giving you the freedom to enjoy your home as you please. This property is conveniently located near shopping centers and freeways. All that's left to do is move in and make it your own!

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