 Existing Home Sales are up 5.4% over last year even after dipping 3.7% in February, following January's numbers, which hit at a ten-year high. The 5.48 million unit annual rate shows healthy demand but in most markets we need more listings. The National Association of Realtors chief economist pointed out, "Realtors are reporting stronger foot traffic from a year ago but low supply." Hopefully more sellers will list as prices edge up. The FHFA Index of homes financed with conforming mortgages is 5.7% ahead of a year ago.
Demand for new homes strengthened. February New Home Sales gained 6.1%, coming in just shy of a 600,000 annual rate. Sales are now up 12.8% over a year ago showing strength in spite of monthly volatility and marginally higher mortgage rates since late last year. The number of unsold new homes increased by 4,000 but that shouldn't slow down future construction since inventories stay historically low. A provider of settlement services said their Potential Home Sales model posted a 5.7 million annual rate, as "demand from Millennial's and first-time home buyers remains robust." Review of Last Week Traders spent the week warily watching Washington for signs of whether the American Health Care Act (AHCA) would pass in the House. The impending vote for the Obamacare replacement kept everyone cautious. Hopes diminished as the week wore on and were extinguished completely on Friday when Congressional leaders yanked the bill, a few votes shy of what's needed for passage. All three major stock indexes ended down for the week. Investors are not that concerned about health care reform, they just don't want wrangling over it to delay the tax reforms they do want, to boost the economy. The President said he would immediately turn his attention to getting "big tax cuts" through Congress, so Wall Streeters should feel better going forward. The few economic reports we got were pretty good. There was the decent housing market data reported above. Then we had the Initial Unemployment Claims four-week moving average at just 240,000, and Continuing Claims down to 2.000 million. Durable Goods Orders were up 1.7% overall, but up just 0.4% excluding the volatile transportation sector. Analysts caution that this indicates relatively weak business spending. The week ended with the Dow down 1.5%, to 20597; the S&P 500 down 1.4%, to 2344; and the Nasdaq down 1.2%, to 5829. Friday, investors felt negative enough to seek out the safe haven of bonds, moving prices higher. The 30YR FNMA 4.0% bond we watch finished the week UP .22, at $104.63. After two weeks of increases, national average 30-year fixed mortgage rates dropped in Freddie Mac's Primary Mortgage Market Survey for the week ending March 23, "the greatest week-over-week decline in over two months," according to their chief economist. Where are interest rates headed? This Week’s Forecast People got back to signing contracts for existing homes in February as the Pending Home Sales index is expected to return to growth territory. Consumer Personal Spending and the Core PCE Prices measure of inflation are also forecast to be growing, something the Fed wants to see. The Chicago PMI reading of factory activity in the Midwest should show expansion in March, though slightly less than the month before. 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 March 27th – March 31st Mar 28 10:00 Consumer Confidence Mar 29 10:00 Pending Home Sales Mar 29 10:30 Crude Inventories Mar 30 08:30 Initial Unemployment Claims Mar 30 08:30 Continuing Unemployment Claim Mar 30 08:30 GDP - 3rd Estimate Mar 31 08:30 Personal Income Mar 31 08:30 Personal Spending Mar 31 08:30 Core PCE Prices Mar 31 09:45 Chicago PMIF Mar 31 10:00 U. of Michigan Consumer Sentiment Federal Reserve Watch Speculative Forecasting Federal Reserve policy changes in coming months: Economists expect no rate hike at the next meet but a majority sees another quarter percent increase in June, holding through July. Note: In the lower chart, a 6% probability of change is a 94% certainty the rate will stay the same. Current Fed Funds Rate: 0.75%-1.0% After FOMC meeting on: May 3 0.75%-1.0% Jun 14 1.0%-1.25% Jul 26 1.0%-1.25% Probability of change from current policy: After FOMC meeting on: May 3 6% Jun 14 54% Jul 26 61% 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 The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial services and other professionals only. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without errors.  Housing Starts increased 3.0% in February to a 1.288 million unit annual rate, 6.2% ahead of where they were a year ago. The monthly gain was led by a hike in single family starts, which surged to their highest level since before the recession. Single Family Building Permits hit the highest level since 2007, gaining 3.1% for the month. Yes, permits fell a bit overall but this was only from a dip in the volatile multifamily sector. Observers expect single family home building to grow at a steady pace into the future.
The pickup in home building is encouraging since we still have some ground to cover to reach the 1.5 million unit annual rate economists see as complete recovery. Hope abounds as the National Association of Home Builders confidence index shot up this month to its highest reading in 12 years. Consumers are feeling better too. The latest National Association of Realtors survey reveals that 62% of households polled believes the economy is improving, the highest share in the last five quarters. Lenders haven't been left out either. The Mortgage Bankers Association reports mortgage applications on the rise three weeks in a row. Review of Last Week The Fed pushed short-term interest rates up by a quarter point to 0.75%-1.0%. The good news is they did it because they see the economy heading up. Fed Chair Janet Yellen said in her presser, "I think people can feel pretty good about the economic outlook." It's important to remember the Fed Funds Rate is not directly tied to mortgage rates, although they do tend to go up as the economy improves. Investors anticipated this Fed move so they focused instead on the positive economic data and sent all three major stock indexes back up for the week after their drop the week before. There was in fact no shortage of decent data. Philly Fed and New York Empire State indexes of manufacturing in those regions both dipped in March but still posted their second highest reads since 2014. Retail Sales? Up 0.1% in February and up 5.7% over a year ago. Housing Starts are up, as reported above. The Consumer Price Index (CPI) was up 0.1% in February which the Fed sees as a positive sign. University of Michigan Consumer Sentiment shot up to 97.6 in March from 96.3 in February and the Conference Board Leading Economic Index (LEI) went up 0.6% in February to it's highest level in more than ten years. The week ended with the Dow UP 0.1%, to 20915; the S&P 500 UP 0.2%, to 2378; and the Nasdaq UP 0.7%, to 5901. Bond prices ended the week up too as financial stocks sank, while utilities (a bond surrogate) gained. The 30YR FNMA 4.0% bond we watch finished the week up .47, at $104.41. National average 30-year fixed mortgage rates rose for the second week in a row in Freddie Mac's Primary Mortgage Market Survey for the week ending March 16th. This came from the positive February jobs report pushing bond prices down and loan rates up. Where are interest rates headed? This Week’s Forecast February closings are projected to come in at a slightly lower annual rate for Existing Home Sales and a slightly higher one for New Home Sales. Levels for both remain in good territory. We'll also watch Initial Unemployment Claims, which are expected to recede for another week. 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 March 20th – March 24th Mar 22 10:00 Existing Home Sales Mar 22 10:30 Crude Inventories Mar 23 08:30 Initial Unemployment Claims Mar 23 08:30 Continuing Unemployment Claims Mar 23 10:00 New Home Sales Mar 24 08:30 Durable Goods Orders Federal Reserve Watch Speculative Forecasting Federal Reserve policy changes in coming months: After last week's hike, the Fed said there would likely be two more this year. A slight majority of economists expect the next rate rise as early as June. Note: In the lower chart, a 6% probability of change is a 94% certainty the rate will stay the same. Current Fed Funds Rate: 0.75%-1.0% After FOMC meeting on: May 3 0.75%-1.0% Jun 14 1.0%-1.25% Jul 26 1.0%-1.25% Probability of change from current policy: After FOMC meeting on: May 3 6% Jun 14 58% Jul 26 66% 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 The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial services and other professionals only. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without errors.  Fannie Mae's February Home Purchase Sentiment Index reports consumer confidence in housing at an all-time high. This follows January's report in which consumer confidence improved for the first time in five months. Americans who feel now is a good time to buy rose 11 percentage points, while those believing it's a good time to sell rose by seven. Fannie Mae's chief economist added, "Millennials showed especially strong increases in job confidence and income gains."
He continued, "this is a necessary precursor for increased housing demand from first-time homebuyers." Those looking for more reasons to be confident found it offered up by the CEO of a major provider of real estate data. He unequivocally stated: "the spring home buying season is shaping up to be one of the strongest in recent memory." Another property data provider reported, "the median down payment for loans secured by single family homes and condos was 6% of the median sales price nationwide, the lowest percentage since 2012." Finally the Mortgage Bankers Association pegged purchase applications up 2% for the week ending March 3 with the average purchase loan size at its highest level since 1990. Buyers are clearly more confident. Review of Last Week Since the election, traders have been wildly optimistic about prospects for growth in jobs, wages and the economy, sending stocks to record highs but last week, after six up weeks in a row, the S&P 500 and the Nasdaq ended down, along with the Dow, which had seen four straight weeks of gains. Wall Street's enthusiasm was dampened after crude oil dropped below $50 a barrel, thanks to increases in active rigs and inventory. Plus, it looks like the President's proposal to replace Obamacare might take longer to get through Congress, which would delay the corporate and personal tax reform investors are eager to see enacted. Productivity, Trade Deficit and Federal Budget data came in OK but the jobs report was an absolute winner again. The economy added 235,000 new Non-farm Payrolls in February and the Unemployment Rate sank to 4.7%, even with more than 300,000 more people entering the labor force. The biggest gains were in construction, which helps housing and manufacturing, which spurs job growth in other industries. Best of all, wages are now up 2.8% over last year. All of this great news makes a rate hike Wednesday more likely however job and wage gains are good for real estate and some economists feel slightly higher rates may slow the rise in home prices. Bonds held their own as the strong jobs report and a Fed rate hike were already priced into the market. Concerns over European monetary policy helped Treasuries on Friday though the 30YR FNMA 4.0% bond we watch finished the week down .64, at $103.94. In Freddie Mac's Primary Mortgage Market Survey for the week ending March 9, national average 30-year fixed mortgage rates edged up, though they remain near historical lows. Where are interest rates headed? This Week’s Forecast Analysts predict upward motion in this week's key data. Housing Starts are expected up for February though Building Permits may tail off. Up a tick are forecasts for inflation, according to the Consumer Price Index (CPI), and February Retail Sales but the big focus of the week will be the Fed meeting. A vast majority of economists say the FOMC Rate Decision will be a quarter percent hike. 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 March 13th – March 17th Mar 14 08:30 Producer Price Index (PPI) Mar 14 08:30 Core PPI Mar 15 08:30 Consumer Price Index (CPI) Mar 15 08:30 Core CPI Mar 15 08:30 Retail Sales Mar 15 08:30 NY Empire Manufacturing Index Mar 15 10:00 Business Inventories Mar 15 10:30 Crude Inventories Mar 15 14:00 FOMC Rate Decision Mar 16 08:30 Initial Unemployment Claims Mar 16 08:30 Continuing Unemployment Claims Mar 16 08:30 Housing Starts Mar 16 08:30 Building Permits Mar 16 08:30 Philadelphia Fed Index Mar 17 09:15 Industrial Production Mar 17 09:15 Capacity Utilization Mar 17 10:00 Leading Economic Indicators Mar 17 10:00 U. of Michigan Consumer Sentiment Federal Reserve Watch Speculative Forecasting Federal Reserve policy changes in coming months: Most Fed watchers see the central bankers hiking rates on Wednesday. Rates should hold in May but there's now a 53% probability of another quarter percent hike in June. Note: In the lower chart, an 89% probability of change is only an 11% probability the rate will stay the same. Current Fed Funds Rate: 0.5%-0.75% After FOMC meeting on: Mar 15 0.75%-1.0% May 3 0.75%-1.0% Jun 14 1.0%-1.25% Probability of change from current policy: After FOMC meeting on: Mar 15 89% May 3 90% Jun 14 95% 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  This National Association of Realtors (NAR) measure of contracts signed on existing homes declined 2.8% in January, indicating we should expect fewer closings on these homes a couple of months out. Pending Home Sales are still ahead of where they were a year ago and actual existing home sales are forecast to reach 5.57 million this year, up 2.2% from 2016, with the median home price up 4%. Last year saw these sales grow 3.8%, with prices up 5.1%. There is concern about the shortage of listings in many areas which is edging up home prices. The latest Case-Shiller Home Price Index reported a 5.8% annual increase in December, a 30-month high. Yet the Index Committee's Chair pointed out: "Looking at real or inflation-adjusted home prices, the annual increase in home prices is currently 3.8%."
His conclusion? "Home prices are rising but the speed is not alarming, and demand is there." The NAR chief economist explained that as households grow more confident in their personal finances and job growth continues throughout the country, home sales increase across the country. Review of Last Week That was the theme of the week in three big ways. First, stocks continued to push higher, as the S&P 500 posted its sixth weekly gain in a row and the Dow passed 21,000 without much effort. The blue chip index crossed the historic 20,000 threshold just a few weeks ago, which makes this 1,000 point advance the Dow's fastest gain in history. Stocks got a big boost Wednesday following President Donald Trump's speech to Congress the night before. Investors liked his commitment to $1 trillion in infrastructure spending, tax cuts for businesses and the middle class and the fact that pundits saw the address as "presidential." Second, February economic readings went higher. The ISM Index of U.S. manufacturing and the Chicago PMI for the Midwest beat expectations, as did the ISM Services index for the sector of the economy that delivers the most jobs. Consumer Confidence hit a 15-year high with Americans more confident about the present and the future. Third, we got a strong indication that an improving economy means interest rates may soon go higher. Friday, Fed Chair Janet Yellen said that if employment and inflation "evolve in line with our expectations, a further adjustment of the Federal funds rate would likely be appropriate" March 15. We'll watch this Friday's jobs report. The week ended with the Dow UP 0.9%, to 21006; the S&P 500 UP 0.7%, to 2383; and the Nasdaq UP 0.4%, to 5871. The Fed's hawkish rate comments hurt bond prices Friday. U.S. Treasuries recovered, ending up little changed, the 30YR FNMA 4.0% bond we watch finished the week down .80, at $104.58. The national average 30-year fixed mortgage rates broke the holding pattern they've been in the past month and moved lower in Freddie Mac's Primary Mortgage Market Survey for the week ending March 2. Where are interest rates headed? This Week’s Forecast We will have a revision on the Productivity reading for Q4, which is forecast to be up, something the Fed wants to see as an indicator of a stronger economy. The big focus will be Friday's February jobs report. Hourly Earnings should be up, showing an important continuing increase in wages. Analysts predict fewer new Nonfarm Payrolls than were added in January, just below the 200,000 threshold. 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 March 6th – March 10th Mar 7 08:30 Trade Balance Mar 8 08:30 Productivity - Rev. Mar 8 08:30 Unit Labor Costs - Rev. Mar 8 10:30 Crude Inventories Mar 9 08:30 Initial Unemployment Claims Mar 9 08:30 Continuing Unemployment Claims Mar 10 08:30 Average Workweek Mar 10 08:30 Hourly Earnings Mar 10 08:30 Nonfarm Payrolls Mar 10 08:30 Unemployment Rate Mar 10 14:00 Federal Budget Federal Reserve Watch Speculative Forecasting Federal Reserve policy changes in coming months: Four out of five economists see the central bank raising rates a quarter of a percent at next week's FOMC meeting but they expect no further hikes the next two meetings. Note: In the lower chart, an 80% probability of change is only a 20% probability the rate will stay the same. Current Fed Funds Rate: 0.5%-0.75% After FOMC meeting on: Mar 15 0.75%-1.0% May 3 0.75%-1.0% Jun 14 0.75%-1.0% Probability of change from current policy: After FOMC meeting on: Mar 15 80% May 3 82% Jun 14 90% 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 Fairway Independent Mortgage NMLS #2289
NMLS Consumer Access. Fairway Independent Mortgage Corporation 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 licensed in Colorado and California. Not endorsed or sponsored by either state or any government agencies. |
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