Market update

QUOTE OF THE WEEK… “Life is like the ocean, it goes up and down.” –Vanessa Paradis, French singer, model, and actress

INFO THAT HITS US WHERE WE LIVE… Life in the housing market sure mimicked the ocean last week. Let’s start with the up part. New single-family home sales blasted up 18.0% in August, reaching a solid 504,000 unit annual rate. These sales are now 33% ahead of where they were a year ago, hitting their highest level in more than six years and posting their biggest monthly jump in 22 years! Plus, the median price of new homes sold was up 8.0% versus a year ago. With all the torrid selling going on, the months’ supply of new homes fell to 4.8, but inventories grew by 2,000 units although they’re still quite low. Builders may now be inspired to improve that situation.  The week began, however, with the down part of life in the housing market. Existing Home Sales dipped 1.8% in August, to a 5.05 million unit annual rate. But, hey, this follows four months in a row of gains, showing that while existing home sales are not yet booming, they’ve clearly bounced off the bottom. The median price of an existing home slipped a tad in August, but is still up 4.8% from a year ago. Inventories dipped for the month, but that was after rising for seven months in a row. August also evidenced a big gain in existing home sales that include financing, versus all-cash deals, evidence of a growing mortgage market. BUSINESS TIP OF THE WEEK…Spend 10 minutes a day on social media. People want real interaction online. Putting even a small amount of time into checking and answering customer questions can go a long way.

>> Review of Last Week

A TOUGH WEEK… Stocks did not have an easy time, as volatility was the name of the game. Markets were down three out of five days, and the up days were not up enough to keep all three major indexes from posting losses for the week. Friday was an up day, as bargain hunters swooped in after Thursday’s 264-point downswing. Also on Friday, the final Q2 GDP estimate showed the economy growing at a 4.6% annual rate. This follows the Q1 GDP reading, which had the economy shrinking at a 2.1% annual rate, so experts rightly wonder if growth can be sustained. Some even doubt the numbers, since the government keeps changing the definitions of the components that go into the GDP. Other economic data certainly did not paint a picture of an economy growing at a robust rate, as we had our usual mixture of good and bad news. August saw New Home Sales beat estimates by a country mile while Existing Home Sales edged south for the month. Durable Goods Orders, expected to be down badly, came in down even worse. Michigan Consumer Sentiment didn’t hit its forecast, although it remains at a fairly positive level. In another up and down move, weekly Initial Unemployment Claims rose by 12,000 but this only took them to a still low 293,000 level. Continuing Claims grew by 7,000, but remain well below 2.5 million. The week ended with the Dow down 1.0%, to 17113; the S&P 500 down 1.4%, to 1983; and the Nasdaq down 1.5%, to 4512.Treasuries and bonds in general experienced a mixed trading week, with sellers controlling the front end and buyers edging up prices at the rear. The 30YR FNMA 4.0% bond we watch finished the week up .09, to $105.11. National average mortgage rates for the week ended September 25 barely moved from the week before in Freddie Mac’s Primary Mortgage Market Survey. Fixed rates fell slightly and are still well down from where they were a year ago. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.  DID YOU KNOW?… A major real estate information provider reported that in Q2, nearly 1 million properties returned to positive equity. This creates more opportunities for homeowners to sell, buy, and refinance.

>> This Week’s Forecast

PENDING HOME SALES AND MANUFACTURING SLIP, INFLATION AND JOBS OK… An action packed week, if your taste for action tends to a barrage of economic reports. The important ones include August Pending Home Sales, forecast off a bit, plus ISM and Chicago PMI, expected to show manufacturing slipping to a slower growth rate. Core PCE Prices are predicted to reveal inflation under control, while Personal Spending should edge up. The big news of the week is the September Employment Report, expected to come in with another moderate gain of just over 200,000 new Nonfarm Payrolls.

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates. Economic Calendar for the Week of Sep 29 – Oct 3

 Date

Time (ET)

Release

For

Consensus

Prior

Impact

M Sep 29

08:30

Personal Income

Aug

0.3%

0.2%

Moderate

M Sep 29

08:30

Personal Spending

Aug

0.4%

-0.1%

HIGH

M Sep 29

08:30

Core PCE Prices

Aug

0.0%

0.1%

HIGH

M Sep 29

10:00

Pending Home Sales

Aug

-0.2%

3.3%

Moderate

Tu Sep 30

09:45

Chicago PMI

Sep

61.5

64.3

HIGH

Tu Sep 30

10:00

Consumer Confidence

Sep

92.0

92.4

Moderate

W Oct 1

10:00

ISM Index

Sep

58.5

59.0

HIGH

W Oct 1

10:30

Crude Inventories

9/27

NA

-4.273M

Moderate

Th Oct 2

08:30

Initial Unemployment Claims

9/27

297K

293K

Moderate

Th Oct 2

08:30

Continuing Unemployment Claims

9/20

2.458M

2.439M

Moderate

F Oct 3

08:30

Average Workweek

Sep

34.5

34.5

HIGH

F Oct 3

08:30

Hourly Earnings

Sep

0.2%

0.2%

HIGH

F Oct 3

08:30

Nonfarm Payrolls

Sep

210K

142K

HIGH

F Oct 3

08:30

Unemployment Rate

Sep

6.1%

6.1%

HIGH

F Oct 3

08:30

Trade Balance

Aug

-$40.9B

-$40.5B

Moderate

F Oct 3

10:00

ISM Services

Sep

58.9

59.6

Moderate

 

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months… The Fed seems to be afraid of raising the Funds Rate too soon, so many economists don’t expect a hike to begin before the middle of next year. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%-0.25%

After FOMC meeting on:

Consensus

Oct 29

0%-0.25%

Dec 17

0%-0.25%

Jan 28

0%-0.25%

Probability of change from current policy:

After FOMC meeting on:

Consensus

Oct 29

     <1%

Dec 17

     <1%

Jan 28

     <1%

Information provided by:

Laurie Moore 

Sr. Mortgage Consultant

Certified Reverse Mortgage Specialist

Wallick & Volk Mortgage lending

2086 Willow Creek Road

Prescott, AZ 86301

Office: 928-778-7167

Mobile: 928-308-1723

Fax: 928-445-5308

laurie.moore@wvmb.com


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