Mortgage Blog - August 28, 20178/28/2017 Last Wednesday, New Home Sales came in down 9.4% in July at a 571,000 annual rate. Sales for the month were not strong but the dip looked worse, measured against June's upwardly revised annual selling pace. The 8.9% drop in sales from a year ago compares this July's performance to July 2016 which ranked as that year's largest monthly gain for new home sales. An executive of a firm that provides housing information added, "housing starts are currently outpacing closings, signaling a growing market." That same executive reported, "job growth is the number one fundamental fuel of new home development," noting that the recent increase in high quality, higher paying jobs, is moving more Americans closer to home ownership. Existing Home Sales in July fared better, off just 1.3%, to a 5.44 million annual rate, and 2.1% ahead of where they were a year ago. Demand stays strong - July was the fourth month in a row a typical listing sold in under 30 days. Realtor.com's chief economist said, "continued buyer interest in the face of more than five years of price growth is a sign of strong demand and bodes well for the health of the housing market." Review of Last Week After the market slid two weeks in a row, stocks last week surged back solidly, the Dow, S&P 500 and Nasdaq all finishing with nice gains. Investors focused on the Fed's Jackson Hole Symposium, where Chair Janet Yellen said any changes to financial regulations should be modest and didn't mention monetary policy. European Central Bank President Mario Draghi also spoke, pushing for open trade and output growth. These speeches gave Wall Streeters the impression rate hikes are a good way off. Also comforting, Treasury Secretary Steven Mnuchin reiterated the debt ceiling will be raised in time to keep the government functioning. The positive investor mood has sparked strong market performance this year, with the three major indexes near record levels. Low interest rates have helped as well as rising corporate earnings. Most importantly, the U.S. economy is improving and about to deliver more growth. The Atlanta Fed's "GDP Now" model projects the economy expanding in Q3 at a 3.8% annual rate. The labor market is healthier, with an average 184,000 new jobs a month, the 4.3% unemployment rate is at a 16-year low and economists think tighter employment conditions will lead to stronger wage growth. The week ended with the Dow UP 0.6%, to 21812; the S&P 500 UP 0.7%, to 2443; and the Nasdaq UP 0.8%, to 6266. Bond traders loved that Fed Chair Yellen's Jackson Hole speech didn't mention any reduction in their bond buying program, which would send prices down and rates up. The 30YR FNMA 4.0% bond we watch finished the week UP .04, at $105.45. The national average 30-year fixed mortgage rate fell for the fourth week in a row in Freddie Mac's Primary Mortgage Market Survey for the week ending August 24. Where are interest rates headed? This Week’s Forecast Not a bad set of economic data is forecast. Pending Homes Sales should keep growing in July. The Fed's favorite PCE Prices measure of inflation is expected up just 0.1%, a 1.2% annual rate, far below their 2% target for a rate hike. The Chicago PMI and ISM Index should keep showing solid expansion in manufacturing. Just under 200,000 Nonfarm Payrolls are projected to have been added in July, while Q2 GDP should climb closer to a 3% economic growth rate. 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 August 28th – September 1st Aug 29 10:00 Consumer Confidence Aug 30 08:30 GDP - 2nd Estimate Aug 30 10:30 Crude Inventories Aug 31 08:30 Initial Unemployment Claims Aug 31 08:30 Continuing Unemployment Claim Aug 31 08:30 PCE Prices Aug 31 08:30 Core PCE Prices Aug 31 08:30 Personal Income Aug 31 08:30 Personal Spending Aug 31 09:45 Chicago PMI Aug 31 10:00 Pending Home Sales Sep 1 08:30 Average Hourly Earnings Sep 1 08:30 Average Workweek Sep 1 08:30 Nonfarm Payrolls Sep 1 08:30 Unemployment Rate Sep 1 10:00 ISM Index Sep 1 10:00 U. of Michigan Consumer Sentiment Federal Reserve Watch Speculative Forecasting Federal Reserve policy changes in coming months: The Fed Funds Futures market shows no chance of a rate hike through the end of this year and into the spring. Note: In the lower chart, a 0% probability of change is a 100% certainty the rate will stay the same. Current Fed Funds Rate: 1.0%-1.25% After FOMC meeting on: Sep 20 1.0%-1.25% Nov 1 1.0%-1.25% Dec 13 1.0%-1.25% Probability of change from current policy: After FOMC meeting on: Sep 20 0% Nov 1 8% Dec 13 42% 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. Mortgage Blog - August 21, 20178/21/2017 Housing Starts dipped 4.8% last month, to a 1.155 million annual rate, while Building Permits slipped 4.1%, to a 1.223 million yearly rate. Before we get caught up in talk about the end of the housing recovery, let's note that most all the drop was in multi-unit starts, which, because of the size of those projects, are very volatile, month to month. Single-family starts were off just 0.5% in July but their trend continues to rise, up 10.9% year-over-year. Multi-family starts are off 33.7% from a year ago but that just reflects a shift in the mix. In 2015, 35.7% of starts were multi-family. Last month, multi-family made up just 25.9% of all starts. This is good for the economy since each single-family home contributes about twice what a multi-family unit does to GDP. Finally, the EVP of an online real estate company explained why today's home prices are not near bubble-era: "while prices nominally have surpassed the 2006 peak, we're not talking about 2006 dollars. We've had 9 years of inflation. Home prices today have basically recovered to about where they were in 2004". Review of Last Week The news was dominated by the sound of political controversy in the U.S. and the fury of yet another instance of Islamic State terrorism, this time in Spain. Those things left investors a bit jittery, which, along with low summertime trading volumes, set the stock market up for a selloff. The Dow, S&P 500 and Nasdaq all slipped for the week. We monitor market performance because investor sentiment is a pretty good leading indicator for the economy. Some analysts felt last week showed that Wall Streeters are becoming impatient waiting for major elements of the President's pro-growth agenda. Pro-growth measures are happening and although the promised tax cuts are not here yet, the economy is obviously improving. Retail Sales kicked up 0.6% in July and are up 4.2% compared to a year ago. The NY Empire Manufacturing Index shot up from 9.2 in July to 25.2 in August, its highest read in almost three years. Consumer discretionary spending is up solidly in areas from amusement parks and campgrounds to motorcycles and boats. Q2 corporate earnings are up 10.2% year-over-year, hitting double-digit growth for the second quarter in a row--plus, revenues are up 5.1%, their strongest performance in 11 quarters! The week ended with the Dow down 0.8%, to 21675; the S&P 500 down 0.6%, to 2426; and the Nasdaq down 0.6%, to 6217. It was an up and down week for bonds with prices finally settling little changed from the Friday before. The 30YR FNMA 4.0% bond we watch finished the week down .06, to $105.41. In Freddie Mac's Primary Mortgage Market Survey for the week ending August 17, national average 30-year fixed mortgage rates edged lower again. Where are interest rates headed? This Week’s Forecast The big news for us will be the home sales reports for July. Wednesday, New Home Sales are expected to come in up for the month. Thursday, Existing Home Sales are forecast to be up nicely as well. Durable Goods Orders are predicted down from the prior month's gain but when you exclude the volatile transportation segment, they should show growth. 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 August 21st – August 25th Aug 23 10:00 New Home Sales Aug 23 10:30 Crude Inventories Aug 24 08:30 Initial Unemployment Claims Aug 24 08:30 Continuing Unemployment Claims Aug 24 10:00 Existing Home Sales Aug 25 08:30 Durable Goods Orders Aug 25 08:30 Durable Goods Orders - Ex Transportation Federal Reserve Watch Speculative Forecasting Federal Reserve Policy Changes in Coming Months: There's a very slight probability the Fed will cut rates at one of the next few meetings. The probability of a December hike is now off the table, with the March meeting being the earliest forecast for higher rates. Note: In the lower chart, a 4% probability of change is a 96% certainty the rate will stay the same. Current Fed Funds Rate: 1.0%-1.25% After FOMC meeting on: Sep 20 1.0%-1.25% Nov 1 1.0%-1.25% Dec 13 1.0%-1.25% Probability of change from current policy after FOMC meeting on: Sep 20 4% Nov 1 6% Dec 13 43% 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. Mortgage Blog - August 14, 20178/14/2017 In markets across the United States you hear that high home prices and low inventory are slowing things down. It was nice to see the report that almost 300 markets throughout the country registered an increase in economic and housing activity from the first quarter to the second. The CEO of the National Association of Home Builders, which co-authored the study, said, "This report shows that the housing and economic recovery is widespread across the nation and that housing has made significant gains since the Great Recession." Yet we are not at full strength with "the lagging single-family permit indicator." One answer to the supply shortage was seen in a realtor.com study, which found that 35% of Millennial homeowners are planning to sell their homes in the next year. Another 6% are unsure, but may do so. These are the starter homes that are at the most sought-after price point in today's market. The realtor.com chief economist said, "Our survey data reveals that we may see more of these homes hitting the market in the next year." Increased demand is clearly helping new home sales. The Mortgage Bankers Association reports, "through July, applications for new homes remain up by more than 7% compared to the same period last year." Review of Last Week Geopolitical news was dominated by the spat between the U.S. and North Korea over Pyongyang's threats to take action against us. Fortunately, this amounted to nothing more than a war of words, but it provided a convenient excuse for investors to sell and take the profits they made during the recent record-breaking rallies. All three major market indexes finished down for the week, yet the economic data remains decent. Initial jobless claims stayed well under 250,000, while continuing claims fell to 1.95 million. The Producer Price Index (PPI) of wholesale inflation fell 0.1% in July, but is up 1.9% over a year ago. Consumer inflation is a different story. The Consumer Price Index (CPI) and Core CPI, excluding volatile food and energy prices, each advanced a minuscule 0.1% in July. This is just a 1.2% annual rate, well below the 2% inflation level the Fed wants to see. Friday, the Dallas and Minneapolis Fed Presidents said they'd like to see more progress toward hitting their 2% inflation target before voting for another rate hike. It's worth noting that the Fed funds futures market now shows a 4.1% probability for a September rate cut! This won't likely happen, but it is the first time we've seen the presence of bets on the Fed lowering rates. The week ended with the Dow down 1.1%, to 21858; the S&P 500 down 1.4%, to 2441; and the Nasdaq down 1.5%, to 6257. Bond prices were helped by both the low inflation reports and the geopolitical concerns that typically bring investor money into this safe haven. The 30YR FNMA 4.0% bond we watch finished the week UP .06, to $105.47. National average 30-year fixed mortgage rates inched lower in Freddie Mac's Primary Mortgage Market Survey for the week ending August 10. This dropped them to their lowest level in six weeks. Where are interest rates headed? This Week’s Forecast We should see some much needed growth in home building in July with both Housing Starts and Building Permits up. July Retail Sales are expected to rebound into growth territory, showing consumers are back helping the economy. Factories are humming, though expansion should slow a bit by the Philadelphia Fed Index. Finally, FOMC Minutes will reveal the Fed's view of rates at their last meeting. 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 August 14th – August 18th Aug 15 08:30 Retail Sales Aug 15 08:30 NY Empire Manufacturing Index Aug 15 10:00 Business Inventories Aug 16 08:30 Housing Starts Aug 16 08:30 Building Permits Aug 16 10:30 Crude Inventorie Aug 16 14:00 FOMC Minutes Aug 17 08:30 Initial Unemployment Claims Aug 17 08:30 Continuing Unemployment Claims Aug 17 08:30 Philadelphia Fed Index Aug 17 09:15 Industrial Production Aug 17 09:15 Capacity Utilization Aug 17 10:00 Leading Economic Index (LEI) Aug 18 10:00 U. of Michigan Consumer Sentiment - Preliminary Federal Reserve Watch Speculative Forecasting Federal Reserve policy changes in coming months: Market sentiment points to no rate hike in September, with a small likelihood for a rate cut. It now looks more certain the rate will hold for the rest of the year. Note: In the lower chart, a 4% probability of change is a 96% certainty the rate will stay the same. Current Fed Funds Rate: 1.0%-1.25% After FOMC meeting on: Sep 20 1.0%-1.25% Nov 1 1.0%-1.25% Dec 13 1.0%-1.25% Probability of change from current policy: After FOMC meeting on: Sep 20 4% Nov 1 6% Dec 13 38% 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. Mortgage Blog - August 7, 20178/7/2017 The National Association of Realtors (NAR) Pending Home Sales Index is a measure of contracts signed on existing homes. It's a forward-looking indicator of where sales may be a few months out when those contracts go to closing. Monday we received good news that Pending Home Sales in June were 1.5% ahead of May's upwardly revised reading. This reverses a three month decline and the NAR now predicts existing home sales will end the year at about 5.56 million, up 2.6% from 2016's 5.45 million. The median existing home price is forecast to end the year up 5%, just below 2016's 5.1% gain. The NAR's chief economist commented: "Market conditions in many areas continue to be fast paced, with few properties to choose from, which is forcing buyers to act almost immediately on an available home that fits their criteria." Freddie Mac's chief economist concurred, "the spoiler is the lean inventory. Nationally, just over five months of supply." Yet he remains positive "a decade after the Great Recession, the housing market is rebounding. House prices today are higher than they were at the peak in the summer of 2006, near record low mortgage rates have boosted housing demand, and sales volume is robust." Review of Last Week A super strong jobs report Friday kept the stock market working just fine. Equities were doing well with the Dow breaking through 22,000 for the first time on Wednesday but June's way better than expected 209,000 new Non farm Payrolls pushed the blue-chip index to end the week at a new high, its 34th record close of the year if you're counting. The 4.3% jobless rate matched a 16-year low, even as 349,000 workers were added to the labor force. Hourly earnings were up 0.3% in July, up 2.5% the past year, and since total hours worked are up 2%, total earnings are up 4.6% from a year ago. The economic scene remains positive. With around 75% of S&P 500 companies reporting second quarter results, earnings are up 10.1% year-over-year, effortlessly beating June's 6.4% estimates. Plus, these bottom line profits aren't just from corporate penny-pinching, as top line revenues are growing nicely too. Even the trade deficit narrowed in June, to a smaller than expected $43.6 billion. Negative types bemoaned slight slips in the ISM Manufacturing and ISM Services indexes for July. These quick-draw pundits ignored the fact that both measures of our economic health are still signaling solid growth, with readings well north of 50. The week ended with the Dow UP 1.2%, to 22093; the S&P 500 UP 0.2%, to 2477; and the Nasdaq down 0.4%, to 6352. Friday's good jobs hurt U.S. Treasuries but other bonds stayed the course. The 30YR FNMA 4.0% bond we watch finished the week UP .14, to $105.41. In Freddie Mac's Primary Mortgage Market Survey for the week ending August 3, national average 30 year fixed mortgage rates held steady. Positive economic data normally lowers bond prices (and raises rates) but Freddie feels "markets are erring on the side of caution." This Week’s Forecast Not a lot of economic data this week however there are two items the Fed likes to watch. The Productivity - Preliminary reading for Q2 is forecast to come in up a bit, something the central bankers want to see. They would also like to see more inflation, which the Consumer Price Index (CPI) is expected to deliver. However, most economists don't feel these numbers will be strong enough to get the Fed hiking rates for a while. 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 August 07 – August 11 Aug 09 08:30 Productivity - Prelim. Q2 Aug 09 08:30 Unit Labor Costs - Prelim. Q2 Aug 09 10:30 Crude Inventories Aug 10 08:30 Initial Unemployment Claims Aug 10 08:30 Continuing Unemployment Claims Aug 10 08:30 Producer Price Index (PPI) Aug 10 08:30 Core PPI Aug 11 08:30 Consumer Price Index (CPI) Aug 11 08:30 Core CPI Federal Reserve Watch Speculative Forecasting Federal Reserve Policy Changes in Coming Months: Not much change in financial market sentiment although there is a greater probability for a rate hike from the Fed in December. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same. Current Fed Funds Rate: 1.0%-1.25% After FOMC meeting on: Sep 20 1.0%-1.25% Nov 1 1.0%-1.25% Dec 13 1.0%-1.25% Probability of change from current policy: After FOMC meeting on: Sep 20 1% Nov 1 7% Dec 13 48% 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. Archives
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