Mortgage Rates Hit 2 Year Low

Dated: 12/04/2018

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Mortgage rates managed to hit the lowest rates in 2 months on a technicality.  The reason for this is simple.  There was a big gap between the rates seen on October 2nd and October 3rd.  Rates merely had to hold steady today in order to earn the "2-month" title.  

Despite the absence of mortgage rate movement, there were some encouraging developments behind the scenes.  When it comes to rates, 'behind the scenes' refers to trading in the bond market, and bonds managed to scratch out a solid day after starting out on weaker footing.  Typically, bonds need some inspiration for this sort of strength.  That can come from weaker economic data, weakness in stocks or other related markets, and even from geopolitical drama.  Today's strength, however, arrived without any obvious external prompt. 
Given that we were already seeing the best levels in nearly 2 months, this sort of strength is especially encouraging.  It means markets are giving serious consideration to the possibility of a broader correction in rates (i.e. a bigger push to lower levels).  Don't bank on such things yet.  Just know that the conversation has been opened.  


Construction spending was lower on a month-over-month basis in October, but an increase in public sector spending held the overall decline to a minimum.  The U.S. Census Bureau said that total expenditures on spending nationwide was at a seasonally adjusted annual rate of $1.309 trillion, down 0.1 percent from the revised (from $1.330 trillion) September rate of 1.311 trillion.  Overall spending has been relatively flat for some months, but spending is up year-over-year by 4.9 percent.
On a non-adjusted basis total spending was $117.333 billion during the month compared to $117.898 in September.  For the year-to-date (YTD) through October total spending of $1.044 trillion is 5.1 percent higher than through the first 10 months in 2017.
Private sector spending was at $998.692 on a seasonally adjusted basis, down 0.4 percent from $1.003 trillion in September and up 3.9 percent compared to October 2017.  On a non-adjusted basis spending was $88.295 billion for the month and $839.936 billion for the YTD.  The latter is up 4.4 percent from the same period in 2017.
Private sector residential construction was down 0.5 percent from September at a rate of $538.958 billion and single-family construction was down a half-point as well, to $282.611 billion.   Both remain higher than in October 2017, total residential spending by 1.8 percent and single-family by 2.4 percent.  October spending on buildings with five or more units was at a rate of $62.035 billion, up 1.0 percent for the month and 3.2 percent year-over-year.
Of the 11 categories of non-residential spending, seven declined during the month.  The only two categories that gained more than a fraction of a point were office, up 1.6 percent, and commercial which gained 3.1 percent.  All but three categories however were higher than during the previous October.
On a non-adjusted basis, overall residential expenditures totaled $48.079 billion for the month and $461.993 for the YTD, an increase of 5.0 percent from the same period in 2017.  Single-family construction spending through October was $240.012 billion, a 6.8 percent increase, while multi-family, at $50.026 billion, is down 0.2 percent thus far in 2018.
Public sector spending rose by 0.8 percent from September and 8.5 percent from a year earlier to a seasonally adjusted annual rate of $310.156 Billion. Residential spending was up 2.0 percent for the month at a rate of $6.108 billion but that is 4.8 percent lower than in October 2017.  Spending YTD in the public sector is up 7.3 percent to $256.439 but residential spending has declined by 2.8 percent.

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David Sarnowski

David is a seasoned real estate professional, specializing in residential sales, rentals and investment properties. David is an 18 year resident of the New Jersey Gold Coast, with the local knowledge ....

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