 The housing market got off to a great beginning this year.
Existing Home Sales shot up 3.3% in January to a 5.69 million unit annual rate, the fastest pace since 2007! The National Association of Realtors chief economist commented, "there are still challenges that remain however the housing market is off to an excellent start." Existing home sales are up 3.8% over last year. The challenges include low inventories, which have now fallen 20 months in a row, and a median price up 7.1% from a year ago, thanks to growing demand however that should bring more on-the-fence sellers into the market to boost supply. Let's also note that mortgage rates are still extremely low by historical standards, incomes are increasing and the market will grow as surveys show homeownership continues to be the American dream. New Home Sales also had a great beginning to the year, posting a 3.7% gain in January, to a 555,000 unit annual rate. Some negative types harped on the fact that this sales pace was less than expected and still way below where we were pre-recession. Everyone knows this, and the trend is positive, with new home sales up 5.5% versus a year ago. Also, our painfully slow economic recovery finally appears to be picking up steam. Review of Last Week Investors believe the economy will soon be heading up at a faster rate, and that's precisely the direction they continue to send stock prices. Friday, the Dow logged its 11th straight record setting trading day, the longest streak of record closings since 1987. Forget records, the Dow hasn't seen 11 straight days of gains since 1992. The current performance made it three weekly gains in a row for the Dow, while the S&P 500 and the Nasdaq posted five weeks in a row of weekly increases. The S&P 500 also ended at a new record level, significant because it's a way more broadly based index than the blue-chip Dow. Economic reports were sparse during the holiday shortened week but the ones we did receive were good. Gains in sales of existing homes and new homes for January are reported above. The final reading of the University of Michigan Consumer Sentiment index for February hit a better than expected 96.3. This was a tick down from January but still a very strong indicator of a positive mood about the economy among average Americans. FOMC Minutes from the last Fed meeting revealed a rate hike could happen fairly soon if forthcoming reports on inflation and the employment situation come in as the central bankers expect. The week ended with the Dow UP 1.0%, to 20822; the S&P 500 UP 0.7%, to 2367; and the Nasdaq UP 0.1%, to 5845. Bonds, including U.S. Treasuries, benefited from a decline in equities outside the U.S. This flight to safety boosted bond prices, as the 30YR FNMA 4.0% bond we watch finished the week UP .46, to $105.38. After dipping the week before, national average 30-year fixed mortgage rates remained essentially flat, rising just .01% (1 basis point) in Freddie Mac's Primary Mortgage Market Survey for the week ending February 23. Where are interest rates headed? This Week’s Forecast Analysts are forecasting continued growth for Pending Home Sales in January but at a slightly slower pace. Likewise, Personal Spending should be up, though not as much as the month before. The Fed's favorite inflation measure, Core PCE Prices, is predicted to come in a little hotter, which is why more economists now think the central bank will hike rates in May instead of June. Nice to see manufacturing growing, both by the Chicago PMI and the national ISM Index. 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 February 27th – March 3rd Feb 27 08:30 Durable Goods Orders Feb 27 10:00 Pending Home Sales Feb 28 08:30 GDP - 2nd Estimate Feb 28 09:45 Chicago PMI Feb 28 10:00 Consumer Confidence Mar 1 08:30 Personal Income Mar 1 08:30 Personal Spending Mar 1 08:30 Core PCE Prices Mar 1 10:00 ISM Index Mar 1 10:30 Crude Inventories Mar 1 14:00 Fed's Beige Book Mar 2 08:30 Initial Unemployment Claim Mar 2 08:30 Continuing Unemployment Claims Mar 3 10:00 ISM Services Federal Reserve Watch Speculating Forecasting Federal Reserve policy changes in coming months: After the FOMC Minutes came out last Wednesday, a slight majority of Fed watchers now think we will get the next rate hike in May however rates will stay at that level in June. Note: In the lower chart, a 27% probability of change is a 73% certainty the rate will stay the same. Current Fed Funds Rate: 0.5%-0.75% After FOMC meeting on: Mar 15 0.5%-0.75% May 3 0.75%-1.0% Jun 14 0.75%-1.0% Probability of change from current policy: After FOMC meeting on: Mar 15 27% May 3 52% Jun 14 69% Where are interest rates headed? Call me now, 303.668.3350 or click here to apply! Apply Now! Get the Insider Track on Interest Rates! Cheers! Scott Synovic Nations Reliable Lending, LLC Colorado's Mortgage Expert www.scottsynovic.com 303.668.3350 Direct NMLS: 253799 / NRL NMLS: 181407 Regulated by the Division of Real Estate  January Housing Starts declined 2.6% however there was plenty to be optimistic about. First, January's 1.246 million unit annual rate handily beat expectations. Next, the dip was due to multifamily starts, which are volatile from month to month. Single family starts actually increased in January and are up 6.2% the past year and all this follows a big surge for starts in December.
Looking ahead, Building Permits were up 4.6% in January, to a 1.285 million annual rate, with single family permits up 11.1% over a year ago. The National Association of Home Builders (NAHB) confidence index dipped a tad to a still high 65. The chairman explained: "Regulatory burdens remain a major challenge," and added also, "NAHB looks forward to working with the new Congress and administration to help alleviate some of the pressures that are holding small businesses back and making homes less affordable." Their chief economist noted, "overall housing market fundamentals remain strong." The Mortgage Bankers Association Builder Application Survey had mortgage applications for new home purchases up 22% in January and up 9.2% from a year ago. Now that's cause for optimism. Review of Last Week Friday ended with the three major stock indexes setting new records going into the holiday weekend. The blue chip Dow broke records seven sessions in a row, while the broadly-based S&P 500 posted its fourth straight weekly gain, heading up five of the first seven weeks of 2017. The markets are a leading indicator of the economy and investors clearly see stronger growth coming from the new President's proposed economic policies, including tax cuts, deregulation and fiscal stimulus. Even Fed Chair Janet Yellen, a cautious forecaster, told Congress rates may have to go up faster because of a boost in economic growth. Economic reports are indeed starting to portray a more vibrant economy. The Producer Price Index (PPI) showed wholesale prices heating up in January. Plus, the Core Consumer Price Index (Core CPI), excluding volatile food and energy prices, is now up 2.3% the past year. Overall Industrial Production tailed off in January although manufacturing, excluding mining and utilities, was up 0.3%. The New York Empire Manufacturing Index surged from +6.5 to +18.7 in February, while the Philadelphia Fed Index of manufacturing jumped from 23.6 to 43.3. Retail Sales also gained more than expected, and this is terrific since consumer spending is the biggest driver of the economy. The week ended with the Dow UP 1.7%, to 20624; the S&P 500 UP 1.5%, to 2351; and the Nasdaq UP 1.8%, to 5839. With investors focused on stocks, bond prices suffered but they recovered a bit on Friday as stocks digested some of their gains and money flowed back into bonds. The 30YR FNMA 4.0% bond we watch finished the week down just .03, to $104.92. In Freddie Mac's Primary Mortgage Market Survey for the week ending February 16, national average 30-year fixed mortgage rates dipped for the second week in a row. Where are interest rates headed? This Week’s Forecast This week we see a complete picture of how the housing market did in January. Economists expect nice gains in both Existing Home Sales and New Home Sales. We'll also get to examine the FOMC Minutes from the Fed's February 1 meeting. Analysts will be looking for signs of when we'll see the next rate hike. U.S. stock and bond markets are closed today in observance of Presidents' Day. 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 February 20th – February 24th: Feb 22 10:00 Existing Home Sales Feb 22 14:00 FOMC Minutes Feb 23 08:30 Initial Unemployment Claims Feb 23 08:30 Continuing Unemployment Claims Feb 23 11:00 Crude Inventories Feb 24 10:00 U. of Michigan Consumer Sentiment - Final Feb 24 10:00 New Home Sales Federal Reserve Watch Speculative Forecasting Federal Reserve policy changes in coming months: Most economists still do not see a rate hike in March or May but a strong majority does expect a 0.25% jump at the Fed's June 14th meeting. Note: In the lower chart, an 18% probability of change is an 82% certainty the rate will stay the same. Current Fed Funds Rate: 0.5%-0.75% After FOMC meeting on: Mar 15 0.5%-0.75% May 3 0.5%-0.75% Jun 14 0.75%-1.0% Probability of change from current policy: After FOMC meeting on: Mar 15 18% May 3 44% Jun 14 70% Where are interest rates headed? Call me now, 303.668.3350 or click here to apply! Apply Now! Get the Insider Track on Interest Rates! Cheers! Scott Synovic Nations Reliable Lending, LLC Colorado's Mortgage Expert www.scottsynovic.com 303.668.3350 Direct NMLS: 253799 / NRL NMLS: 181407 Regulated by the Division of Real Estate  Good things are happening in the housing market as Fannie Mae's Home Purchase Sentiment Index (HPSI) reported that housing confidence in December reversed its five-month decline, heading up 2 percentage points, with personal finance optimism reaching a seven-year high.
The chief economist noted: "Three months after the presidential election, measures of consumer optimism regarding personal financial prospects and the economy are at or near the highest levels we've seen in the nearly seven-year history of the National Housing Survey." Reflecting that increased housing confidence among consumers the Mortgage Bankers Association reported purchase mortgage applications up 2% for the week ending February 3. The National Association of Realtors (NAR) report for Q4 of 2016 saw the best quarterly sales pace for the year, which drove inventory to record lows but the NAR president pointed out this should boost sales activity now: "There are fewer listings but also a little less competition than what's expected this spring. The prospect of higher mortgage rates and more home shoppers in coming months should be enough of an incentive for those serious about buying to start their search now." Review of Last Week Last Thursday President Donald Trump said he would deliver on his campaign pledge to move quickly on tax reform, promising to announce a "phenomenal" tax policy in a few weeks. What was "phenomenal" immediately was Wall Street's reaction. Investors sent the three main stock indexes to record highs by the end of the day--and followed that by pushing all three indexes up to another set of record highs on Friday. Many observers believe tax reform has the potential to jolt the economy out of the frustratingly slow growth we've seen since the recession by boosting personal incomes, corporate earnings and well-paying jobs. All those things would be good for the housing market. There wasn't a lot of economic data to chew on, but we did have a nice $1.4 billion decrease in the Trade Deficit. The Treasury Budget came in just north of $51 billion in the black in January, though the 12-month budget was almost $584 billion in the red in December. The Preliminary University of Michigan Consumer Sentiment reading for February slipped from January but it's still up there, as we've only seen five higher readings in the last ten years. Initial Unemployment Claims dropped by 13,000 for the week, while Continuing Claims edged up but remain just above the two million level. The week ended with the Dow UP 1.0%, to 20269; the S&P 500 UP 0.8%, to 2316; and the Nasdaq UP 1.2%, to 5734. As investors scurried over to stocks on Thursday, bond prices fell but recovered Friday thanks to some dip-buying. The 30YR FNMA 4.0% bond we watch finished the week UP .06, at $104.95. National average 30-year fixed mortgage rates dropped in Freddie Mac's Primary Mortgage Market Survey for the week ending February 9, their chief economist noting, "rates are at about the same level at which they started the year." Where are interest rates headed? This Week’s Forecast January reports are expected to show Housing Starts off but Building Permits increasing, indicating builders are ramping up for the spring selling season. CPI and Core CPI inflation should rise, but consumers are still spending. Retail Sales are forecast up a tad overall and Retail Sales ex-auto, excluding volatile auto sales, up by a bigger amount. Pretty good for January. Manufacturing has mixed predictions, down by the Philadelphia Fed Index but up or flat in other reports. 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 February 13th – February 17th Feb 14 08:30 Producer Price Index (PPI) Feb 14 08:30 Core PPI Feb 15 08:30 Consumer Price Index (CPI) Feb 15 08:30 Core CPI Feb 15 08:30 NY Empire Manufacturing Index Feb 15 08:30 Retail Sales Feb 15 08:30 Retail Sales ex-auto Feb 15 09:15 Industrial Production Feb 15 09:15 Capacity Utilization Feb 15 10:00 Business Inventories Feb 15 10:30 Crude Inventories Feb 16 08:30 Initial Unemployment Claims Feb 16 08:30 Continuing Unemployment Claims Feb 16 08:30 Housing Starts Feb 16 08:30 Building Permits Feb 16 08:30 Philadelphia Fed Index Feb 17 10:00 Leading Economic Indicators (LEI) Federal Reserve Watch Speculative Forecasting Federal Reserve policy changes in coming months: Most economists can't see a rate hike at the next two meetings, but the majority does expect a quarter percent bump in June. Note: In the lower chart, a 13% probability of change is an 87% certainty the rate will stay the same. Current Fed Funds Rate: 0.5%-0.75% After FOMC meeting on: Mar 15 0.5%-0.75% May 3 0.5%-0.75% Jun 14 0.75%-1.0% Probability of change from current policy: After FOMC meeting on: Mar 15 13% May 3 34% Jun 14 67% Where are interest rates headed? Call me now, 303.668.3350 or click here to apply! Apply Now! Get the Insider Track on Interest Rates! Cheers! Scott Synovic Nations Reliable Lending, LLC Colorado's Mortgage Expert www.scottsynovic.com 303.668.3350 Direct NMLS: 253799 / NRL NMLS: 181407 Regulated by the Division of Real Estate  We seem to be doing pretty well in the housing market so far with what we've been given. Pending Homes Sales closed out 2016 up 1.6% in December and comfortably ahead of a year ago. The National Association of Realtors (NAR) index of contracts signed on existing homes shows well for the level of those closings a couple of months out. As reported last week, existing home sales finished the year at the highest point since 2006. Inventory is still a problem in many areas but the NAR's chief economist expects housing starts will go up 7.9% this year, "especially if construction related regulations are relaxed" and it looks like they will be.
The latest Case-Shiller National Home Price Index was up 5.6% annually. The chair of the Index Committee said, "With the Index rising at about a 5.5% annual rate over the last two-and-a-half years and having reached a new all-time high recently, one can argue that housing has recovered." The EVP of a real estate site added, "The good news is, 2017 is getting off to a slightly better start than 2016, and existing homes sales are staying at a healthy level." The property economist at an economic consultancy observed, "After reaching a 50-year low in mid-2016, the home ownership rate edged up for the second consecutive time in the final quarter." Things are looking up. Review of Last Week Friday's unexpectedly good jobs report along with President Trump's first steps to roll back bank regulations sent stocks upward. The Dow ended above 20,000 again (although down a tad for the week) while the Nasdaq set a new record. The U.S. economy generated 227,000 new jobs in January, the biggest gain in four months and well above the 195,000 average of the past year. The private sector actually added 237,000 jobs but that overall number was reduced by the loss of 10,000 government payrolls. Manufacturing added jobs now two months in a row and construction's 36,000 new payrolls should show well for the spring home selling season. As usual, all was not perfect, with wage growth up only a tick but investors think that will hold off the next rate hike from the Fed, who met last week and kept all as is. The unemployment rate ticked up to 4.8%, though for good reason: a 584,000 boost in the labor force that put the labor participation rate above where it was a year ago. Fannie Mae's chief economist explained: "We view the strength in hiring as consistent with increased optimism from the private sector following the presidential election, with businesses saying they expected to expand and plan to hire more workers." Job growth drives housing, so let's hope we see many more parts of our country enjoying that growth. The week ended with the Dow down 0.1%, to 20071; the S&P 500 UP 0.1%, to 2297; and the Nasdaq UP 0.1%, to 5667. There was some sell off Friday in the bond market after a non-voting Fed member said March was in play for a rate hike however the 30YR FNMA 4.0% bond finished the week UP.09 at $104.89. For the week ending February 2, national average 30-year fixed mortgage rates remained flat in Freddie Mac's Primary Mortgage Market Survey. Where are interest rates headed? This Week’s Forecast As is it usually the case following a week packed with economic reports, this week is quiet. The Trade Balance for December should shrink a bit, but remain too high. The February University of Michigan Consumer Sentiment - Preliminary is also expected to shrink but stay high, which in that case is a good thing. 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 February 6 – February 10 Feb 7 08:30 Trade Balance Feb 8 10:30 Crude Inventories Feb 9 08:30 Initial Unemployment Claims Feb 9 08:30 Continuing Unemployment Claims Feb 10 10:00 University of Michigan Consumer Sentiment - Preliminary Feb 10 14:00 Treasury Budget Federal Reserve Watch Speculative Forecasting Federal Reserve policy changes in coming months: The Fed made enough upbeat comments on the economy in the policy statement from last week's meeting to move the majority of analysts to expect another small rate hike in June. Note: In the lower chart, a 13% probability of change is an 87% certainty the rate will stay the same. Current Fed Funds Rate: 0.5%-0.75% After FOMC meeting on: Mar 15 0.5%-0.75% May 3 0.5%-0.75% Jun 14 0.75%-1.0% Probability of change from current policy: After FOMC meeting on: Mar 15 13% May 3 35% Jun 14 68% Where are interest rates headed? Call me now, 303.668.3350 or click here to apply! Apply Now! Get the Insider Track on Interest Rates! Cheers! Scott Synovic Nations Reliable Lending, LLC Colorado's Mortgage Expert www.scottsynovic.com 303.668.3350 Direct NMLS: 253799 / NRL NMLS: 181407 Regulated by the Division of Real Estate |
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Scott Synovic NMLS #253799 with AnnieMac Home Mortgage NMLS #338923
NMLS Consumer Access. AnnieMac Home Mortgage 950 South Cherry Street, Suite #1515, Denver, Colorado 80246 Equal Housing Lender licensed through NMLS Regulated by the Division of Real Estate. Licensed Mortgage Loan Originator in Colorado and California. Not endorsed or sponsored by either state or any government agencies.
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