The Fannie Mae Home Purchase Sentiment Index rose in January to a new all-time high. More people say that now is a good time to buy and a good time to sell, home prices should rise and mortgage rates fall, and job loss is not a concern.
The National Association of Realtors latest Housing Opportunities and Market Experience survey reports, 72% of respondents think now is a good time to buy and 71% think now is a good time to sell, "good news for possible gains heading into 2018."
The NAR's chief economist feels, "housing demand in 2018 will be fueled by more Millennial's finally deciding to marry and have kids, and, the expectations that solid job growth and the strengthening economy will push incomes higher." That's pretty good.
Review of Last Week
If you like wild rides, you would have loved the one investors took last week. The Dow fell steeply (1,000 points) on two different days, then climbed back up Tuesday and Friday, though not enough to keep the major indexes positive for the year.
We heard lots of talk that the stock drop was caused by fears of higher inflation and more short-term rate hikes from the Fed, which is okay, but those concerns come from the expectation of stronger economic growth, which ultimately is good for stocks.
Many experts called this a "correction" after stocks shot up 7.5% the first four weeks of 2018 following last year's 19.4% surge. They say there's little concern for housing or the economy, with more Americans working than ever, the highest inflation-adjusted wages, and near historically low interest rates.
The week ended with the Dow down 5.2%, to 24191; the S&P 500 also down 5.2%, to 2620; and the Nasdaq down 5.1%, to 6874.
Bonds were kept in check by concerns over more federal spending. The 30YR FNMA 4.0% bond we watch fell .28, to $102.55. National average 30-year fixed mortgage rates hit their highest level since December 2016 in Freddie Mac's latest Primary Mortgage Market Survey, but, "initial readings indicate housing markets are sustaining their momentum so far."
This Week's Forecast
Returning to a feast of economic data, we should see a tasty Housing Starts number, up for January. Not so tasty is the predicted move up for inflation measured by the Consumer Price Index (CPI). Retail Sales, along with Philadelphia Fed Index manufacturing, are expected to keep cooking, just at a slightly slower pace
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 12th through February 16th
Feb 12 14:00 Treasury Budget
Feb 14 08:30 Consumer Price Index (CPI)
Feb 14 08:30 Core CPI
Feb 14 08:30 Retail Sales
Feb 14 08:30 Retail Sales ex-auto
Feb 14 10:00 Business Inventories
Feb 14 10:30 Crude Inventories
Feb 15 08:30 Initial Unemployment Claims
Feb 15 08:30 Continuing Unemployment Claims
Feb 15 08:30 Producer Price Index (PPI)
Feb 15 08:30 Core PPI
Feb 15 08:30 NY Empire Manufacturing Index
Feb 15 08:30 Philadelphia Fed Index
Feb 15 09:15 Industrial Production
Feb 15 09:15 Capacity Utilization
Feb 16 08:30 Housing Starts
Feb 16 08:30 Building Permits
Feb 16 10:00 U. of Michigan Consumer Sentiment - Prelim
Federal Reserve Watch
Speculative Forecasting Federal Reserve policy changes in coming months:
Some say recent stock market volatility could restrain the Fed, but, the futures market still sees a quarter percent rate hike in March, and another in June.
Note: In the lower chart, a 72% probability of change is a 72% certainty the rate will move.
Current Fed Funds Rate: 1.25%-1.50%
After FOMC meeting on:
Mar 21 1.50%-1.75%
May 2 1.50%-1.75%
Jun 13 1.75%-2.00%
Probability of change from current policy:
After FOMC meeting on:
Mar 21 72%
May 2 31%
Jun 13 58%
Where are interest rates headed?
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