Mortgage rates jump back to 7%

🎉 TGIF! Good morning and welcome back to Mortgage Nuggets. Today’s newsletter is 610 words, a 2.5-minute read. Let’s dive in.

1. Existing home sales fall

According to the National Association of Realtors, existing home sales slumped 3.3% over the past month to a seasonally adjusted 4.16 million homes in June. That also represents a 19% decline from the 5.13 million home sales reported in June of last year, and it marks the lowest number of homes sold in June since 2009.

The drop in sales is largely due to the absence of inventory, as high mortgage rates have discouraged homeowners from listing their properties for sale. The supply of available homes in June remained relatively steady at 1.08 million units, though this still represents a 14% decrease from the supply recorded a year ago.

2. Rocket offers 3rd round of voluntary buyouts

An undisclosed number of employees at Rocket Mortgage were offered voluntary buyouts by the lender on Wednesday, as the company looks to reduce its number of employees before releasing its Q2 earnings..

This is at least the third time such an offer has been presented to employees since mid-2022. The company is offering between 12 to 24 weeks of pay with benefits depending on tenure, compensation for PTO, early vesting of certain stocks, and outplacement services such as career coaching.

3. More Nuggets

Mat Ishbia: Refinancing when rates drop will help the whole economy. (CNBC)

Mortgage rates jump back to 7%. Why? Jobless claims data came in much lower than expected — 228k compared to the forecasted 242k — indicating a still robust economy that is supporting inflation. (MND)

LO Interview: I’m seeing middle-class homebuyers take on $7,000 mortgages thinking they can ‘always refinance when rates come down in the future’. (Fortune)

The Federal Reserve’s instant payments system, FedNow, goes live for banks, credit unions. (BankingDive)

4. Mortgage demand for newly built homes rises

Months of high mortgage rates and low existing inventory led to another annual increase in new home purchases. According to the MBA builder application survey, the mortgage applications for new home purchases jumped 26.1% in June from the same period last year. Applications for new home purchases have now shown annual increases for five consecutive months.

“New home purchase activity continues to be a bright spot, as both new home applications and home sales were up on an annual basis,” said Joel Kan, MBA’s vice president. “With existing inventory still held back by homeowners, prospective buyers have turned to newly built homes instead.”

5. Fannie Mae raises 2023 origination forecast

Fannie Mae has revised its forecast for total single-family mortgage originations, now expecting them to reach $1.62 trillion in 2023, an increase from the previous estimate of $1.59 trillion. The forecast for 2024 remains steady at $1.9 trillion. In addition, the report includes these key predictions:

• Home price growth: Predicted to shift from negative trends to a positive 3.9% in 2023, before decreasing again to negative 0.7% in 2024.

• Single-Family Housing Starts: An upward revision has been made with expectations of 896,000 units in 2023, up from 824,000 in the previous year. This is expected to decrease slightly to 890,000 units in 2024.

• Economic Growth (GDP): The gross domestic product (GDP) growth outlook for 2023 has been upgraded from 0.1% to 1.1% on a Q4/Q4 basis.

☀️ See you on Monday!

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