FRM Update

May 21, 2018

MBS yield spreads versus Treasuries widened, as Treasury yields rose across the curve.  Mortgage rates rose significantly last week, continuing the trend higher this year.  Mortgage applications fell for the fourth consecutive week, as both purchase and refinance applications declined.  Refinance activity continues to be historically low and range-bound, driven lower by increasing mortgage rates in 2018.






Mortgage Rates and Refinance Activity





Housing Starts and Building Permits Fall:  April Housing Starts disappointed expectations, falling 3.7% (exp. -0.7%) but March’s figures were revised up from +1.9% to +3.6%.  By region, starts were notably weak in the Midwest (-16.3%), the West (-12.0%), and the Northeast (-8.1%), while the South showed a gain of 6.4% driven by a 17% gain in single family starts, the only region to register gains in single family activity.  Building permits beat low expectations for April, falling just 1.8% (exp. -2.1%).  The trends in permits were similar to those of starts with weakness in the Midwest (-4.4%), the West (-13.2%), and the Northeast (-31.9%).  Permits in the South rose 12.0% including a 5% gain in single family and a 29% gain for multi-family.



Home Builder Confidence Rises: The NAHB’s Home Builder Index rose from a revised-lower 68 to 70 in April, the first monthly improvement this year and only four points shy of a nearly two-decade high from last December. While construction costs and rising mortgage rates should serve as headwinds for demand, the NAHB’s Chief Economist said, “Tight housing inventory, employment gains and demographic tailwinds should continue to boost demand for newly-built single-family homes. …With these fundamentals in place, the housing market should improve at a steady, gradual pace in the months ahead.”



Dan Stimpson, CPA

Senior Vice President

Vining Sparks

The information included herein has been obtained from sources deemed reliable, but it is not in any way guaranteed, and it, together with any opinions expressed, is subject to change at any time. Any and all details offered in this publication are preliminary and are therefore subject to change at any time. This has been prepared for general information purposes only and does not consider the specific investment objectives, financial situation and particular needs of any individual or institution. This information is, by its very nature, incomplete and specifically lacks information critical to making final investment decisions. Investors should seek financial advice as to the appropriateness of investing in any securities or investment strategies mentioned or recommended. The accuracy of the financial projections is dependent on the occurrence of future events which cannot be assured; therefore, the actual results achieved during the projection period may vary from the projections. The firm may have positions, long or short, in any or all securities mentioned. Member FINRA/SIPC.
Copyright © 2021
This is a publication of Vining-Sparks IBG, L.P.
775 Ridge Lake Blvd., Memphis, TN 38120