Just like Housing Starts the prior week, New Home Sales closed out 2017 at their highest annual total in a decade, 14.1% ahead of a year ago. They were down 9.3% in December, but the post-hurricanes boost is over. Click here to read more.

Existing Home Sales ended the year in even better shape, posting their best totals since 2006. They slipped 3.6% in December, but still finished 1.1% up from a year ago. Demand stays strong, but inventories are a concern in many markets.

The latest Mortgage Bankers Association Weekly Applications Survey reported the seasonally adjusted Purchase Index up 6%, to its highest level since April 2010.

Review of Last Week

Investors pushed stocks to new record highs, as the Dow, S&P 500 and Nasdaq all boasted 2% gains for the week, powered by companies' stronger-than-expected earnings reports, with 81% beating sales expectations!

The Q4 GDP-Advance estimate showed 2.6% economic growth, lower-than-expected, but a nice improvement over the 1.8% Q4 growth a year ago. Plus, consumer spending (about 70% of GDP) was up 3.8%, while business spending on equipment shot up 11.4%.

That investment in equipment was reflected in December's Durable Goods Orders, up an unexpected 2.9%, which economists said confirms an improving economy. Finally, both weekly initial jobless claims and continuing claims remain historically low.

The week ended with the Dow UP 2.1%, to 26617; the S&P 500 UP 2.2%, to 2873; and the Nasdaq UP 2.3%, to 7506.

Many bonds ended in negative territory, though the damage wasn't too bad to the 30YR FNMA 4.0% bond we watch, down just .02, to $103.56. Freddie Mac's latest Primary Mortgage Market Survey had national average 30-year fixed mortgage rates up for the third week in a row, but still below rates a year ago.

Where are interest rates headed?

This Week's Forecast

No change is expected with the FOMC Rate Decision. The Pending Home Sales index of contracts signed on existing homes is forecast up, foretelling higher sales a few months out. Jobs are key to housing, so predicted gains in Non-farm Payrolls and Hourly Earnings are welcome. The ISM Index and Chicago PMI may slip, but still show strong manufacturing 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 January  29th Through February 2, 2018

Jan 29    08:30    Personal Income  
Jan 29    08:30    Personal Spending
Jan 29    08:30    Core PCE Prices
Jan 30    10:00    Consumer Confidence
Jan 31    08:30    Employment Cost Index
Jan 31    09:45    Chicago PMI
Jan 31    10:00    Pending Home Sales
Jan 31    10:30    Crude Inventories
Jan 31    14:00    FOMC Rate Decision
Feb 1    08:30    Initial Unemployment Claims
Feb 1    08:30    Continuing Unemployment Claims
Feb 1    08:30    Productivity - Prelim.    Q4
Feb 1    08:30    Unit Labor Costs
Feb 1    10:00    ISM Index
Feb 2    08:30    Average Workweek
Feb 2    08:30    Hourly Earnings
Feb 2    08:30    Non-farm Payroll
Feb 2    08:30    Unemployment Rate
Feb 2    10:00    U. of Michigan Consumer Sentiment

Federal Reserve Watch

Speculative Forecasting Federal Reserve policy changes in coming months:

The probability for a rate hike at this Wednesday's Fed meeting remains very low, however the futures market sees a hike in March, but no move in May.

Note: In the lower chart, a 4% probability of change is a 96% certainty the rate will stay the same.

Current Fed Funds Rate: 1.25%-1.50%

After FOMC meeting on:    

Jan 31    1.25%-1.50%
Mar 21    1.50%-1.75%
May 2    1.50%-1.75%

Probability of change from current policy:

After FOMC meeting on:  

Jan 31             4%
Mar 21           80%
May 2           24%

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.coloradosmortgageexpert.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.

CoreLogic reports November home prices were up 7.0% over a year ago, but forecasts a slowing of that pace, seeing only a 4.2% hike in prices by November 2018. Thanks to price gains, a major real estate listing site put the total value of the U.S. housing market at a record $31.8 trillion in 2017, up from $29.6 trillion in 2016. The site also says renters spent a record $485.6 billion in 2017, $4.9 billion more than in 2016. This was with the rental population decreasing for the first time since 2004, according to an apartment listing service.

Freddie Mac's Deputy Chief Economist reports, "Despite increases in short-term interest rates, long-term rates remain subdued. The 30-year mortgage rate is down a quarter of a percentage point from where it was a year ago, with the FOMC minutes showing continued support for gradual increases in policy rates. Inflation rates remaining low, there isn't much upward pressure on long-term rates." He did caution, that could change.

Review of Last Week

The blue-chip Dow broke through 25000 for the first time in history, capping a spectacular week on Wall Street. The broadly-based S&P 500 closed at new records the first four trading days of the new year, for the first time since 1964. The tech heavy Nasdaq also set four straight closing records. The December jobs report came in with 148,000 new Non farm payrolls, less than expected. Investors liked that it's a good number, yet shows the economy isn't overheated, which should keep the Fed from raising rates too fast.

November's number was revised up to 252,000 new jobs and the three-month average remains above 200,000. The unemployment rate, at 4.1%, a 17-year low, is testimony to the ongoing health of the labor market, important to the housing market. Also important, last month's 30,000 new construction jobs meant 2017 ended with 35% more construction jobs added than the year before. This should start to relieve the supply challenges seen in many markets. Finally, the ISM manufacturing index averaged the highest reading for a calendar year since 2004!               

The week ended with the Dow UP 2.3%, to 25296; the S&P 500 UP 2.6%, to 2743; and the Nasdaq UP 3.4%, to 7137.

There was enough positive economic data to keep bond prices in check. The 30YR FNMA 4.0% bond we watch finished the week down .06, at $104.53. Freddie Mac's Primary Mortgage Market Survey for the week ending January 4 showed national average 30-year fixed mortgage rates dropping to kick off the year.

Where are interest rates headed?

This Week's Forecast

Inflation data is all the rage these days, because the Fed says it will be slow to hike rates until there's a stronger pickup in prices. This week's Consumer Price Index (CPI) is forecast to edge up, but probably not as much as the central bank would like. However, Retail Sales are expected to go up nicely in December, after a very strong November performance.

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 January 8, 2018 - January 12, 2018

Jan 10    10:30    Crude Inventories
Jan 11    08:30    Initial Unemployment Claims
Jan 11    08:30    Continuing Unemployment Claims
Jan 11    08:30    Producer Price Index (PPI)
Jan 11    08:30    Core PPI
Jan 12    14:00    Treasury Budget
Jan 12    08:30    Consumer Price Index (CPI)
Jan 12    08:30    Core CPI
Jan 12    08:30    Retail Sales
Jan 12    08:30    Retail Sales ex-auto
Jan 12    10:00    Business Inventories

Federal Reserve Watch

Speculative Forecasting Federal Reserve policy changes in coming months:

The probability of another quarter percent raise in March has increased, but there is little likelihood of any further upward movement in May.

Note: In the lower chart, a 2% probability of change is a 98% certainty the rate will stay the same.

Current Fed Funds Rate: 1.25%-1.50%

After FOMC meeting on:   

Jan 31    1.25%-1.50%
Mar 21    1.50%-1.75%
May 2    1.50%-1.75%

Probability of change from current policy:

After FOMC meeting on:   

Jan 31             2%
Mar 21           63%
May 2           40%

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.coloradosmortgageexpert.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.

The last week of the year gave us the encouraging report that Pending Home Sales, the National Association of Realtors (NAR) index of contracts signed on existing homes, edged ahead 0.2% in November. The chief economist of a major financial services firm said this suggests that "December existing sales will also rise, to their highest annual sales pace since 2006." Indeed, even though the monthly gain was modest, the index notched its highest read since June, and is 0.8% ahead of last year.

The NAR chief economist concurred: "The housing market is closing the year on a stronger note, backed by solid job creation and an economy that has kicked into a higher gear." The NAR predicts existing home sales will end the year at 5.54 million, up 1.7% from 2016's 5.45 million sales. But they see 2018 sales at 5.52 million, with price growth moderating to around 2%. However, the senior economist of a national listing site expects continued demand: "An economy that keeps adding jobs, and wages that continue to grow, both have consumers feeling confident."

Review of Last Week

Four days of trading on Wall Street ended with the three major market indexes down for the week, largely from a late-Friday sell-off at very light volumes, as many investors took off for the holidays. This ended a year that was anything but down. In 2017, the Dow went up 25.1% after setting 71 closing records the past twelve months, a record in itself. The S&P 500 went up 19.4% during the year, while the Nasdaq gained 28.2%. This was its sixth straight yearly increase, its longest streak since the one from 1975 to 1980.

We follow where stock prices go because over the years market performance has proven to be a leading indicator of where the U.S. economy is headed, and as the economy goes, especially jobs and incomes, so goes the housing market. We also have economic data to consider. Last week saw Consumer Confidence hit a 17-year high and the Chicago PMI measure of Midwest manufacturing reach 67.6, the best read in more than six years. INew Orders Index was the highest in three and a half years and its Production Index the highest since 1983!

The week ended with the Dow down 0.1%, to 24719; the S&P 500 down 0.4%, to 2674; and the Nasdaq down 0.8%, to 6903.

Bonds, led by Treasuries, ended the year broadly higher. The 30YR FNMA 4.0% bond we watch finished the week UP .31, at $104.59. National average 30-year fixed mortgage rates edged higher in Freddie Mac's Primary Mortgage Market Survey for the week ending December 28, however,  their deputy chief economist noted, "rates are still below the levels we saw at the end of last year and early part of 2017. Mortgage rates have remained relatively low all year."

Where are interest rates headed?

This Week's Forecast

Both sectors of the economy are expected to show growth in December, with the ISM Index of manufacturing and the ISM Services index well above 50, indicating expansion. Jobs should also continue to expand, with just under 200,000 new Nonfarm Payrolls forecast for December and the Unemployment Rate dipping to 4.0%. Yesterday the stock and bond markets were closed for New Year's 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 January 1st through January 5th:

Jan 3    10:00    ISM Index
Jan 4    08:30    Initial Unemployment Claims
Jan 4    08:30    Continuing Unemployment Claims
Jan 4    11:00    Crude Inventories
Jan 5    08:30    Average Workweek
Jan 5    08:30    Hourly Earnings
Jan 5    08:30    Nonfarm Payrolls
Jan 5    08:30    Unemployment Rate
Jan 5    08:30    Trade Balance
Jan 5    10:00    ISM Services

Federal Reserve Watch

Speculative Forecasting Federal Reserve policy changes in coming months:

The Fed's December rate hike should hold until the March 21 meeting. Then, another quarter percent raise is anticipated, but the rate should stay at that level through the May meeting.

Note: In the lower chart, a 2% probability of change is a 98% certainty the rate will stay the same.

Current Fed Funds Rate: 1.25%-1.50%

After FOMC meeting on:    

Jan 31    1.25%-1.50%
Mar 21    1.50%-1.75%
May 2    1.50%-1.75%

Probability of change from current policy:

After FOMC meeting on:  

Jan 31             2%
Mar 21           57%
May 2           45%

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.coloradosmortgageexpert.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.