Sam Cotton Sr. Loan Officer news and updates - James Outland Real Estate Broker

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The cost of supplying new homes has negatively impacted US housing starts.

New figures from the HUD and Commerce Department show that June’s housing starts were down 12.3% to a seasonally adjusted annualized rate of 1.17 million units.

Single-family starts dropped 9.1% to 858,000 units while the multi-family sector slumped 19.8% to 315,000 units.

The National Association of Home Builders says it’s not surprising that builders have cut back on production.

“We have been warning the administration for months that the ongoing increases in lumber prices stemming from both the tariffs and profiteering this year are having a strong impact on builders’ ability to meet growing consumer demand,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “This is why we continue to urge senior officials to take leadership and resolve this issue.”

Permits down to the lowest of the year
There was also a decline in the issuance of building permits which dropped 2.2% to 1.27 million units in June, the lowest so far in 2018.

Single-family permits rose 0.8% but the 850,000 reading is the second lowest of the year says NAHB. Multi-family permits were down 7.6% to 423,000.

“The concern over material costs, especially lumber, is making it more difficult to build homes at competitive price points, particularly for newcomers entering the housing market. Moreover, the soft permit report does not suggest a significant increase in housing production in the near term,” said NAHB Senior Economist Michael Neal. “However, consumer demand for single-family housing continues to increase as the overall economy and labor market strengthens.”

Is there any good news?
First American chief economist Mark Fleming says that there are some positives in the data.

These include a rise in the number of completions and the growth in the construction labor force.

“The pace of housing completions, at a 1.26 million seasonally adjusted annualized rate (SAAR), is particularly important as it measures new supply that can immediately help offset current housing shortages. The continued year-over-year growth in completions means more homes on the market in the short-term,” Fleming said.

Meanwhile, LendingTree chief economist Tendayi Kapfidze also has a positive take on the data.

“The data is quite choppy and best viewed as a moving average to smooth out volatility. LendingTree prefers the 3-month average to balance timeliness with information value. The 3-month average of single-family starts was 900,000, still one of the strongest readings over the past year,” he says.

Sam Cotton – NMLS #263585
Sr. Loan Officer\Since 1996
1131 Monterey St.
San Luis Obispo, Ca 93401
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Week of 05/28/2018 – 06/01/18

News from Italy was positive for mortgage rates this week. However, this was partially offset by stronger than expected U.S. labor market data. Mortgage rates ended the week a little lower.

Italy has one of the largest economies in the European Union (EU). In recent years, Italy’s economic growth has been below the average for the EU as a whole, and its unemployment rate has been higher than average. The newly formed coalition government is proposing some major changes to attempt to address these issues. In particular, it would like to reduce the government spending constraints imposed by EU rules. Investors are concerned that this will lead to an increase in Italy’s already large budget deficit and that the risk has increased that Italy could one day exit the EU. The resulting uncertainty caused investors to shift to safer assets, including U.S. mortgage-backed securities (MBS), which helped push mortgage rates lower this week.

By contrast, stronger than expected labor market data pressured mortgage rates a little higher on Friday. Against a consensus forecast of 190,000, the economy added 223,000 jobs in May. In addition, upward revisions added 15,000 jobs to the results for prior months. The economy has gained an average of a very healthy 207,000 jobs per month so far this year. The unemployment rate declined from 3.9% to 3.8%, the lowest level since 2000. Average hourly earnings, an indicator of wage growth, were 2.7% higher than a year ago, up from an annual rate of increase of 2.6% last month.

Looking ahead, Factory Orders will be released on Monday. The ISM national services index will come out on Tuesday. The JOLTS report, which measures job openings and labor turnover rates, will be released on Wednesday. In addition, news about Italy could influence mortgage rates again next week.

Provided by Sam Cotton of The Mortgage House San Luis Obispo

Week of 05/07/2018 – 05/11/2018

“We still have attractive rates-and wonderful low/no down payment programs. Please let me know how I can assist.”

There was little major news this week and not much reaction to the economic data. Investors shifted some assets from bonds to stocks, and mortgage rates ended the week a bit higher.

Perhaps the most widely followed inflation report is the Consumer Price Index (CPI), which looks at the price change for a basket of goods and services. Investors generally prefer to look at the core reading, which excludes the volatile food and energy components, to get a feel for the longer-term trend. In April, Core CPI increased 0.1% from March, below the consensus for an increase of 0.2%. Core CPI was 2.1% higher than one year ago, the same annual rate of increase as last month.

While it is rarely a market-moving report, Fed officials pay close attention to the monthly JOLTS data to help determine the strength of the labor market. JOLTS measures job openings and labor turnover rates. In March, job openings jumped to 6.55 million, which was a record high level. An increase in job openings is viewed as a sign of strength in the labor market since it indicates that companies are interested in hiring but the pool of unemployed workers is not large.

Looking ahead, Retail Sales will be released on Tuesday, and it will be the biggest report of the week. Consumer spending accounts for about 70% of economic activity in the U.S., and the retail sales data is a key indicator. Industrial Production, another important indicator of economic activity, and Housing Starts will come out on Wednesday.

Week in Review 05/0/42018

“Rates are Holding steady and are still attractive. Remember our outside-the-box programs and give the Mortgage House a Call 805-550-5000.”

Despite a wide range of major economic news, it was a very quiet week for mortgage rates. The key labor market report, the inflation data, and the Fed meeting caused little reaction. Mortgage rates ended the week nearly unchanged.

The economy added 164,000 jobs in April, below the consensus for an increase of 190,000. However, upward revisions added 30,000 jobs to the results for prior months, bringing the net gains very close to the expected levels. The unemployment rate declined from 4.1% to 3.9%, below the consensus of 4.0%, and the lowest level since December 2000. There are two factors which influence the unemployment rate, and the decline was mostly due to workers leaving the labor force rather than job gains, so it was not viewed as a sign of strength. Average hourly earnings, an indicator of wage growth, fell slightly short of expectations. They were 2.6% higher than a year ago, the same annual rate of increase as last month. Overall, the modest weakness in wage growth tilted investors to view the report as a little weaker than expected.

As widely expected, the Fed made no change to the federal funds rate on Wednesday. The statement released after the meeting noted that inflation has moved “close to 2 percent” and that officials expect it to run near the Fed’s “2 percent objective over the medium term.” The meeting caused little change in investor expectations for the pace of future rate hikes.

The Fed’s comments regarding inflation were supported by the most recent reading of their favored inflation indicator, which matched investor expectations. The core PCE price index released on Monday revealed that inflation in March increased at an annual rate of 1.9%, up from an annual rate of 1.6% last month. This was the highest reading since February 2017.

Looking ahead, it will be a light week for economic data. The JOLTS report, which measures job openings and labor turnover rates, will come out on Wednesday. The Consumer Price Index (CPI) will come out on Thursday. CPI is a widely followed monthly inflation report that looks at the price change for

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