This week the 10-year broke 3%, and actually closed at 2.97%. We will have to see if it can continue its momentum lower or if it moves back above 3% in the coming week. The two biggest pieces of data coming up are the June jobs report coming out next Friday and CPI, coming out July 13th. It is unclear if a weak jobs report will deter the Feds current hawkish stance, especially a bad print for one month. While we feel neutral on the market for the time being, this market is so volatile that it would be wise to take advantages of re-prices for the better and be defensive as we see the market start to tick up.
MBA Weekly Mortgage Applications
The MBA weekly mortgage applications index increased by +.7% for the week ending June 24th. Purchase applications rose by +.1% and were -24.0% lower than the same week a year ago. Refinance applications increased by +2.0% and were -80.0% lower vs. the same week last year. "Mortgage rates continue to experience large swings. After increasing 65 basis points during the past three weeks, the 30-year fixed rate declined 14 basis points last week to 5.84 percent. Rates are still significantly higher than they were a year ago, when the 30-year fixed rate was at 3.2 percent," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "The decline in mortgage rates led to a slight increase in refinancing, driven by an uptick in conventional loans. However, refinances are still 80 percent lower than a year ago and over 60 percent below the historical average." Added Kan, "Overall purchase activity has weakened in recent months due to the quick jump in mortgage rates, high home prices, and growing economic uncertainty. Purchase applications were essentially flat last week but were supported by a 6 percent increase in government loan applications. The average purchase loan amount declined to $413,500, which highlights an ongoing downward trend seen since it hit a record $460,000 in March 2022."
FHFA Home Price Index
According to the latest FHFA Home Price Index, house prices rose nationwide in April by +1.6% from the previous month, with prices up +18.8% YoY. The previously reported +1.5% price change in March 2022 was revised upward to +1.6% as well. For the nine census divisions, monthly changes ranged from +.3% in the East South Central to +2.5% in the West South Central division. The 12-month changes were all positive as well, ranging from +14.1% in the Middle Atlantic division to +23.5% in the South Atlantic division.
Case-Shiller Home Price Index
The S&P CoreLogic Case-Shiller Home Price Index showed prices up +20.4% YoY on a national level in April vs. the +20.6% in March. The 10-City composite annual increase was +19.7%, up from a prior +19.5% in March. The 20-City composite posted a +21.2% annual gain, which is up from +21.1% in the prior month. Tampa, Miami, and Phoenix continued to show the strongest price gains within the index. Nine of the 20 cities reported higher price increases in the year ending April 2022 vs. the year over year in March 2022.
The Conference Board's Consumer Confidence fell to 98.7 in June. This is now the lowest reading since February 2021, when the index was 95.2. The present situation index declined to 147.1 from 147.4, while the expectations index dropped from 73.7 to 66.4. According to The Conference Board, the Expectations Index falling and stabilizing below 80 suggests weaker growth in the second half of the year and growing risks of recession by the end of the year. Intentions for purchases of cars, homes, and significant appliances have cooled significantly since the start of the year and continue to drop further as Fed 'aggressively raises interest rates.'