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Construction spending flat in April

Posted by Mehran Aram on Wed, Jun 5, 2019 @ 05:06 AM

After a surge earlier in the year, construction spending in the U.S. was relatively flat from March to April. According to data released by the U.S. Census Bureau, total construction spending in April was $1.3 trillion, roughly the same as March and 1.2 percent below the same month last year.

Increases in spending over the last several months have been driven largely by spikes in residential construction. Homebuilders are optimistic about the future of the housing market but are struggling to meet buyer demand for single-family homes.

Low mortgage rates and the summer home buying season is expected to keep demand for homes elevated through the coming months at least.

Today, conforming no-point 30-year fixed mortgage rates are averaging 3.875 percent, 15-year rates are near 3.375 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.

Topics: Mortgage rates, Homebuilders, Construction Spending, U.S. Census Bureau

Homebuilders deeply wounded by Fed rate hikes

Posted by The Aramco Group on Sat, Oct 27, 2018 @ 05:10 AM

Last month’s decision by the Federal Reserve to raise short-term interest rates may have spooked both borrowers and some investors but even a cursory glimpse at the housing market shows that homebuilders may be feeling sharp pains as well. Homebuilders shares in the S&P 1500 are down nearly 40 percent since mid-January and have joined the recent of the stock market in its recent slide.

A report from CNBC states that the drop in homebuilder stock prices comes in tandem with the rise in the 10-year Treasury yield following the Fed rate hike. The coinciding increase in mortgage rates has caused investors to back away from such investments. In addition to rising mortgage rates, scarcity in buildable land and rising material costs have stifled new home construction.

While some market trendsetters have downgraded builder stocks, other investment experts are doubling-down on their ‘buy’ stance claiming that even with higher rates, demand for housing remains high which could result in a rebound in stock prices.

Meanwhile, conforming no-point 30-year fixed mortgage rates are averaging 4.75 percent, 15-year rates are near 4.25 percent and the 5-year ARM is averaging 4.25 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.

Topics: Interest Rates, Housing Market, Federal Reserve, Mortgage rates, Homebuilders