BACK ON PACE AGAIN After a respite in January, payrolls returned to form in February, with job growth in excess of 200,000.
Markets have turned things around as well. Stocks are again on the rise; commodity prices continue to trend higher. Oil, in particular, is up $9 a barrel over the past three weeks. This isn’t great news for us at the pump, but it is good news for the U.S. oil-and-gas sector (The sector swims in debt, estimated at $2 trillion.)
When times look this good, lending rates tend to rise. The yield on the 10-year U.S. Treasury note hovers around 1.9% – 20 basis points higher than two weeks ago. As the 10-year note goes, so, too, go mortgage rates. Not surprisingly the 30-year fixed-rate mortgage is at a one-month high.
Odds are rising that another interest-rate increase could come sooner than later. Last week, traders in federal funds rate futures contracts were placing a 30% chance of another rate increase by June. The odds of a June rate hike have increased to 35%.
Keeping you informed on events this week that may create volatility in mortgage rates.
DEMOGRAPHY IS DESTINY We’re becoming a nation of renters, so we’ve been told since the housing bubble burst in 2008.
We never bought the narrative. Surveys, most notably those produced by Fannie Mae, continually show that the vast majority of people prefer to own than rent.
The good news is that more people are moving into a key home-buying age demography – those age 30 to 39. Data aggregated by CalculatedRiskBlog show that people embrace and pursue home buying with more conviction when they hit their 30s. This age demography is expected to grow significantly over the next decade.
Given current trends, the long-term outlook on housing remains positive, particularly for new-home construction. This market niche has yet to return to historical norms.. Rising demand driven by millennials hitting their 30s will help lift annual starts back to historical norms. This is a key reason we expect starts – single-family starts, in particular – to grow in coming years.