Michael Mortgage Minute – April
March brought a slowdown in home sales and construction of single-family homes. Plus, does news from the World Bank and IMF signal that a recession is ahead?
Sales of existing homes fell 2.7% in March to a 5.77 million unit annualized pace. Note that this likely measured activity in January and February when rates were rising but not at the levels they are today. On a year over year basis, sales were only down 4.5%, which is still quite strong considering higher rates, higher home prices and tight inventory.
And speaking of inventory, there were 950,000 homes for sale at the end of March. While this is an increase of almost 12% from February, this level represents just a 2 months’ supply of homes available for sale, while a 6 months’ supply of homes reflects a balanced market.
Housing Starts, which measure the start of construction on homes, increased 0.3% in March to an annualized rate of 1.79 million units. However, starts for single-family homes, which are the most important because they are in such high demand among buyers, decreased by 1.7% monthly and 4.4% annually. Building Permits, which are a good forward-looking indicator for Housing Starts, declined for single-family homes as well, down 4.8% monthly and 3.9% year over year.
Builder confidence fell for the fourth straight month, as the National Association of Home Builders Housing Market Index declined 2 points to 77 in April. Looking at the components of the index, current sales conditions fell 2 points to 85, which is still very strong, while buyer traffic fell 6 points to 60. However, readings above 50 on this index, which runs from 0 to 100, still signals expansion. In other words, while some of these figures are contracting, they are still at strong levels overall.
Initial Jobless Claims declined by 2,000 in the latest week, with the number of people filing for unemployment benefits for the first time falling to 184,000. The number of people continuing to receive benefits fell by 58,000 to 1.417 million, which is the lowest number of Continuing Claims since 1970. There are now 1.622 million people in total receiving benefits, which is a stark contrast to the nearly 17.4 million people receiving benefits in the comparable week last year. The labor market remains tight as employers are holding on to their workers and firing less.
Wednesday’s 20-year Bond auction was met with strong demand. The bid to cover of 2.8 was higher than the one-year average of 2.4. Direct and indirect bidders took 91.2% of the auction compared to 81.0% in the previous 12. While Mortgage Bonds responded well to this news Wednesday, they gave back much of their gains Thursday morning.
Lastly, the World Bank slashed their global growth forecast from 4.1% to 3.2%. The largest single factor in the reduced growth forecast was a projected economic contraction of 4.1% across Europe and Central Asia. Other factors included higher food and fuel costs, and the Russia/Ukraine war. The International Monetary Fund (IMF) also said that they expect global economic growth to slow and feel the outlook has deteriorated. These are just additional indicators pointing to a global slowdown and increases the chances of a recession.
For a free consultation to find out what you are preapproved for to purchase or a free mortgage fitness check up to make sure your current mortgage fits what your short and long-term financial goals are, as
well as your payment and equity objectives, please call me at (702) 592-0722 or email me at michael.scialabba@benchmark.us.
Michael Scialabba
Home Loan Strategist
NMLS#408827