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What's Ahead For Mortgage Rates This Week - March 8, 2021 Last week’s scheduled economic news included readings on construction spending and labor sector reports on public and private sector jobs. The national unemployment rate was published along with weekly readings on mortgage rates and jobless claims. Federal Reserve Chair Jerome Powell also spoke at a jobs summit.

Construction Spending Rises in January

U.S construction spending rose at a seasonally-adjusted annual pace of 1.70 percent in January as compared to 1.10 percent growth reported in December. Year-over-year construction spending was 5.80 percent higher in January 2021. Residential construction spending reported in January rose to $713 billion on a seasonally-adjusted annual basis as compared to December 2020’s construction spending pace of $695.70 billion.

Non-residential construction spending in the private sector rose to a seasonally-adjusted annual rate of $447 billion in January as compared to December 2020’s pace of $445.2 billion.

High demand for single-family homes persists as inventories of available homes fall. This scenario contributes to affordability issues that are also influenced by rising building materials costs.

Mortgage Rates, Jobless Claims Mixed

Freddie Mac reported higher rates for 30-year fixed-rate mortgages, which rose by five basis points and averaged 3.02 percent. Rates for 15-year fixed-rate mortgages were unchanged from the prior week and averaged 2.34 percent. Mortgage rates for 5/1 adjustable rate mortgages dropped by 26 basis points and averaged 2.73 percent. Discount points averaged 0.60 percent for 30-year fixed-rate mortgages and 0.70 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.30 percent.

First-time jobless claims rose to 745,000 new claims filed as compared to the prior week’s reading of 736,000 new claims filed. Ongoing jobless claims fell last week with 4.30 million continuing claims filed; 4.42 million ongoing claims were filed during the prior week.

Private- Sector Jobs Fall as Public-Sector Jobs Increase

ADP reported 117,000 private-sector jobs added in February as compared to January’s reading of 195,000 private-sector jobs added. The government’s Non-Farm Payrolls report for February showed 379,000 public and private sector jobs added in February; 166,000 public and private-sector jobs were added in January. The national unemployment rate fell to 6.20 percent as compared to January’s reading of 6.30 percent.

Fed Chair Promised to Hold Steady on Monetary Policy

Fed Chair Jerome Powell promised to maintain accommodative monetary policies for the foreseeable future as the Federal Reserve continues striving toward its dual mandate of achieving maximum employment and annual inflation of two percent. When asked about rising long-term rates, Mr. Powell said that he could not commit to reducing the Fed’s asset purchases as he thought that the Fed’s goal of achieving maximum employment was “highly unlikely.”

What’s Ahead

This week’s economic reporting includes readings on inflation and consumer sentiment. Weekly readings on mortgage rates and jobless claims will also be released.

What's Ahead For Mortgage Rates This Week - February 15, 2021

Last week’s scheduled economic reporting included readings on inflation, Federal Reserve Chair Jerome Powell’s speech on U.S. labor markets, and weekly readings on mortgage rates and jobless claims.

Oil Prices Push Inflation Higher in January

Rising oil and gasoline prices drove a jump in January’s consumer price index. Inflation rose 0.30 percent month-to-month, which matched analysts’ expectations. The year-over-year inflation rate rose to 1.40 percent but remained lower than the pre-pandemic annual pace of 2.30 percent. The core inflation rate, which excludes volatile food and energy sectors, was unchanged in January.

Some analysts expect stronger inflation throughout 2021 due to the impact of stimulus payments and the potential for covid-19 vaccines. Widespread vaccinations are expected to reduce quarantine requirements and local restrictions on businesses and workplaces.

Fed Chair Doesn’t Expect Lasting Jump in Inflation in Near Term

In remarks made during a speech to the Economic Club of New York, Federal Reserve Chair Jerome Powell said he anticipated neither “a large nor sustained” increase in inflation for the near future. Mr. Powell also said that rising prices caused by bursts of spending were not sustainable. “Inflation has been much lower and more stable over the past three decades than in earlier times.” The Fed Chair also observed that “In the 1970s when inflation would go up, it would stay up.”

Mortgage Rates Hold Steady as Jobless Claims Decrease

Freddie Mac reported no change in the average rate of 2.73 percent for 30-year fixed-rate mortgages; the average rate for 15-year fixed-rate mortgages dropped by two basis points to 2.19 percent. The average rate for 5/1 adjustable-rate mortgages rose one basis point to 2.79 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages, 0.60 percent for 15-year fixed-rate mortgages, and fell to 0.20 percent for 5/1 adjustable rate mortgages.

Jobless claims fell last week with 793,000 initial claims filed as compared to the prior week’s reading of 812,000 first-time claims filed. 4.55 million continuing jobless claims were filed last week as compared to 4.69 million ongoing claims filed in the prior week.

What’s Ahead

This week’s scheduled economic reports include readings from the National Association of Home Builders Housing Market Index and Commerce Department readings on housing starts and building permits issued. The National Association of Realtors will report on sales of previously-owned homes. Weekly readings on mortgage rates and jobless claims will also be published.

What’s Ahead For Mortgage Rates This Week – March 8, 2021

What’s Ahead For Mortgage Rates This Week – February 15, 2021

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