First Team’s Weekly Mortgage Watch (June 24th, 2018) This Week Highlights The Following Updates:
- Last week saw mortgage rates wobble about with no clear direction. Housing data revealed that builders are still very optimistic but continue to remain cautious as they slowly increase the number of permits that they pull.
- Existing home sales slipped back for the second month, but inventory levels did step upward again. Additionally, home price acceleration is showing some signs of slowing.
- The LEI did increase by 0.2%, the smallest increase in eight months.
- This week may feature some strong debate about the relative health of the overall economy.
- The final estimate for Q1 GDP is due, with expectations of no change to its 2.2% rate. While the overall economy remains strong, the debate continues as to whether it is growing faster.
- Since the beginning of the recovery, an annual GDP of 2.9% in 2015 was the best.
- Any adjustments downward in GDP make it slightly harder to hit that 3.0% mark and could help mortgage rates remain low. Even with little political drama to sway rates last week, doesn’t mean we won’t see more this drama week.
Affordability Continues To Decline
According to data released by ATTOM Data Solutions, median home prices in the US have risen 75% since the beginning of 2012. During the same period of time, wages growth has only increased by 13%. Historically, an average earner would need to spend 29.6% of their income on housing. Now, that same earner would need to spend 31.2%. Many experts are concerned that increasing mortgage rates will continue to push this trend, stressing home affordability.