With economic data, we actually look backwards to form a vision of what lies ahead. In May, Existing Home Sales grew 1.8% to a solid 5.53 million unit annual rate, their highest sales pace in more than nine years. Many see demand building in the future, based on that strength last month. Homes typically were on the market only 32 days, the shortest duration since the National Association of Realtors started tracking that data back in 2011. Even better, 49% of existing homes sold in less than a month.


This level of demand helped send the median price 4.7% higher than a year ago, the 51st month in a row of annual price gains.

Price gains should help boost existing home supply, as sellers who were on the fence put their homes on the market to take advantage of higher prices, and then trade up. New home sales took a rest last month following their April surge, off 6.0%, logging a 551,000 unit annual rate. But that's a very decent 8.7% ahead of where they were a year ago. This level was also the second strongest read since February 2008 -- so to say the trend is positive is an understatement. The median new home sales price fell for the month, but is still 1.0% higher than a year ago. The sales drop also reflected a good development -- the mix of homes sold tilted toward the lower end of the market.

Review of Last Week

Thursday, the British people voted to leave the European Union and go their own way without having to listen to 40,000 unelected Brussels bureaucrats. This divides the island nation from its continental counterparts. It's the type of disruptive move that's celebrated in technology but spurned on Wall Street because investors do not like changes that come with uncertainties. So after stocks frolicked higher for four days, the market sank on Friday to finish down, not just for the week, but for the year. Whether the 'Brexit' will have any long-term negative effect on U.K. or global economies remains to be seen and many clear-headed observers believe it will not.

But experts say it may take a few years for what was just voted to be fully realized, and that's where uncertainties come in. 'Uncertainties' was the word Fed Chair Janet Yellen used incessantly in her post-meeting presser the week before, where she alluded to the Brexit vote and hinted she's in no hurry to raise rates. Today, Fed watchers don't see a rate hike through next February. This makes Brexit good news for mortgage rates, which is great news for the housing market. Other news wasn't so good. May Durable Goods Orders fell 2.2%, showing manufacturing's continued struggles, no surprise there. June Michigan Consumer Sentiment slipped to 93.5 from May's 94.7.

The week ended with the Dow down 1.6%, to 17401; the S&P 500 down 1.6%, to 2037; and the Nasdaq down 1.9%, to 4708.

After investors heard the Brexit vote overnight, Friday morning saw them high-tailing it to the safe haven of bonds. Treasuries soared and mortgage bonds did OK too. The 30YR FNMA 4.0% bond we watch finished the week UP .08, at $107.11. For the week ending June 23, Freddie Mac's Primary Mortgage Market Survey reported national average 30-year fixed mortgage rates largely unchanged, near three-year lows. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

Did you know?

The U.S. Census reports that in 2015, 53% of new single-family homes sold had four-plus bedrooms and 41% had three or more bathrooms. This is an over 30-year high, believed to be fueled by the rise in multi generational housing.  

This Week’s Forecast

Pending home sales dip, consumers spend, inflation, manufacturing hold. For May, analysts are predicting Pending Home Sales will recede after their April surge. Personal Spending should be up, though not as much as in April. But it's good to see consumers opening their wallets and Core PCE inflation still mild. Not so good to see manufacturing in a holding pattern, with the Midwestern Chicago PMI and the national ISM Index hovering near the no-growth 50 level.

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 Jun 27 – Jul 1

Tu Jun 28    08:30    GDP - 3rd Estimate
Tu Jun 28    10:00    Consumer Confidence
W Jun 29     08:30    Personal Income
W Jun 29     08:30    Personal Spending
W Jun 29     08:30    Core PCE Price Index
W Jun 29     10:00    Pending Home Sales
W Jun 29     10:30    Crude Inventories
Th Jun 30    08:30    Initial Unemployment Claims
Th Jun 30    08:30    Continuing Unemployment Claims
Th Jun 30    09:45    Chicago PMI
F Jul 1          10:00    ISM Index
                                                                                                           
Federal Reserve Watch    

Forecasting Federal Reserve policy changes in coming months... After the Brexit vote, most economists think the Fed won't touch the current Funds Rate clear into next year. There is even a 7% probability the Fed will actually lower the rate in July, September or November, with that last month also registering a 2% probability the rate will go up. Note: In the lower chart, a 7% probability of change is a 93% certainty the rate will stay the same.

Current Fed Funds Rate: 0.25%-0.5%
After FOMC meeting on:

Jul 27    0.25%-0.50%
Sep 21    0.25%-0.50%
Nov 2    0.25%-0.50%

Probability of change from current policy:

After FOMC meeting on:

Jul 27             7%
Sep 21             7%
Nov 2            9%

Have a great week and please contact me direct if you have any questions I can answer!

The Nobel Prize winner quoted above would no doubt have been encouraged by the somewhat contradictory findings of Fannie Mae's latest survey.

Home Purchase Sentiment Index (HPSI) hit an all-time high in May, as more people than ever said it would be a good time to sell their homes.

Unfortunately, fewer of those consumers felt it was a good time to buy. This seeming paradox can be resolved by noting that home prices, nationally, continue to climb.

This is appealing to sellers, but when they then become buyers, many are hampered by the slow wage growth that continues to plague the U.S. economy.

In fact, the HPSI revealed that only 18% of respondents reported their income was significantly higher than it was a year ago. Fannie Mae's chief economist pointed out, "The current low mortgage rate environment has helped...and fewer than half of consumers expect rates to go up in the next year." The CoreLogic Home Price Index posted a 6.2% annual increase in April, but projected the gain would slow to 5.3% in the year ahead. Buyers are still showing up, evidenced by the Mortgage Bankers Association report that purchase applications went up 12% for the week ending June 3. That includes an adjustment made for the Memorial Day holiday.

Review of Last Week

Friday, stock prices went south for the second day in a row, as investors became jittery about the June 23 vote which could see the U.K. exit the European Union. Many analysts worry this so-called Brexit could shock the global economy, but those who don't believe it would matter much in the long run got falling oil prices to fret over anyway. The S&P 500 ended down a tick, the Nasdaq down a bit more, but the Dow ended ahead. Pollsters in Britain say the Brexit vote is too close to call, which is why the Fed is expected to leave rates alone at this week's meeting, waiting for the U.K. result before they risk disturbing things further.

A thin week of economic reports didn't offer much to calm Wall Street nerves. The final read on Productivity in the first quarter showed it declined at a 0.6% annual rate. In the past year, Productivity is up a barely visible 0.7%. Friday saw the University of Michigan Consumer Sentiment index fall to 94.3 in June, landing below its reading a year ago. At least we got Initial Unemployment Claims well under 300,000 for another week. The Federal Deficit came in at $52.5 billion in May versus the $84.1 billion we ran a year ago. The twelve-month deficit "narrowed" to $479.3 billion last month, down from $510.9 billion in April. In Washington, this passes for good news.

The week ended with the Dow UP 0.3%, to 17865; the S&P 500 down 0.1%, to 2096; and the Nasdaq down 1.0%, to 4895.

Falling stock prices and inflation expectations sent investor money straight into bonds. The 30YR FNMA 4.0% bond we watch finished the week UP .04, at $107.02. National average 30-year fixed mortgage rates dropped in Freddie Mac's Primary Mortgage Market Survey for the week ending June 9. This extends the window for home buyers to take advantage of near historically low borrowing costs. Remember, mortgage rates can be extremely volatile, so call me today for up-to-the-minute information.

Did you know?

According to a leading provider of data to lenders, total cash home sales fell to 35% of all closings in the first quarter of this year.

This Week’s Forecast

Retail sales up, home building off, inflation quite and more Fed fun. Another week dominated by Fed yak, this time courtesy of a central bank meeting where the FOMC Rate Decision is universally expected to be a non-event. Retail Sales should be up but growing slower, while Housing Starts are forecast to slide a bit. The Consumer Price Index (CPI) inflation reading is predicted to be up only a tad, one more thing to keep the Fed's foot off the gas.

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 Jun 13 – Jun 17

Jun 14    08:30    Retail Sales
Jun 14    10:00    Business Inventories
Jun 15    08:30    Producer Price Index (PPI)
Jun 15    08:30    Core PPI
Jun 15    08:30    NY Empire Manufacturing Index\
Jun 15    09:15    Industrial Production
Jun 15    09:15    Capacity Utilization
Jun 15    10:30    Crude Inventories
Jun 15    14:00    FOMC Rate Decision
Jun 16    08:30    Initial Unemployment Claims
Jun 16    08:30    Continuing Unemployment Claims
Jun 16    08:30    Consumer Price Index (CPI)
Jun 16    08:30    Core CPI
Jun 16    08:30    Philadelphia Fed Index
Jun 17    08:30    Housing Starts
Jun 17    08:30    Building Permits
                                                                                                           
Federal Reserve Watch    

Forecasting Federal Reserve policy changes in coming months... Now the majority of economists expect no rate hike from the Fed at this week's meet and clear through September. Would be nice if they're right. Note: In the lower chart, a 2% probability of change is a 98% certainty the rate will stay the same.

Current Fed Funds Rate: 0.25-0.5%

After FOMC meeting on:

Jun 15    0.25-0.5%
Jul 27    0.25-0.5%
Sep 21    0.25-0.5%

Probability of change from current policy:

After FOMC meeting on:

Jun 15             2%
Jul 27           21%
Sep 21          35%

Please contact me direct with any questions at 303.668.3350 or Apply Now!

People continue to buy homes and prices keep moving ahead. The Case-Shiller Home Price Index was up 0.1% in March, and is up 5.2% in the last year - a bigger annual gain than the 4.3% logged for the year ending March 2015.

The index has been driven by some hot metros (Denver, Portland, Seattle), but also by the tight supply in markets across the country. The Case-Shiller Index Committee's managing director said, "The low inventory means that would-be sellers seeking to trade up are having a hard time finding a new, larger home."

But he added, "This may be starting to change: starts of single family homes in February were the highest since November 2007. The single-family home share of total housing starts was...approaching the 75%-80% range seen before the housing crisis." The chief economist at an online real estate site observed, "Despite facing some broader economic headwinds, market demand remains healthy." This enthusiasm in many regions may entice more owners to bring their homes onto the market. One source of comprehensive housing data reported Q1 saw the highest rate of home flips in two years and the biggest profits since the end of 2005. There are values out there.

Review of Last Week

Just when people seemed to be getting used to this stubbornly slow economic recovery with its monthly parade of economic reports which are neither terrific nor terrible, out come the May jobs numbers on Friday and, wow, are they terrible. A mere 38,000 new Nonfarm Payrolls were added last month, the weakest level of hiring in more than five years. Including downward revisions of 59,000 jobs to the March and April reports, the U.S. saw a net loss of 21,000 jobs in May. Investors took solace in the fact this would delay a Fed rate hike, but sent stocks south, worrying about a slowdown in the pace of job creation.

The Unemployment Rate dropped to 4.7%, but this was because almost half a million people stopped looking for work, sending the labor force participation rate back down to 62.6%. Those seeking a silver lining in the jobs report found it in the continued increase in hourly earnings, up 0.2% for the month, and 2.5% ahead of a year ago. Those with jobs are putting that extra money back into the economy, with Personal Spending up a hot 1.0% in April. Too bad Friday's very bad jobs report was followed by ISM Services falling to a two-year low, although it remains above 50, showing that this vital sector of our economy is still showing growth.

The week ended with the Dow down 0.4%, to 17807; the S&P 500 flat, at 2099; and the Nasdaq UP 0.2%, to 4943.

Friday's horrible jobs numbers sent investors scurrying to the safe haven of bonds, boosting prices. The 30YR FNMA 4.0% bond we watch finished the week UP .31, at $106.98. National average 30-year fixed mortgage rates edged up for the third week in a row in Freddie Mac's Primary Mortgage Market Survey for the week ending June 2. But their chief economist noted that rates are still near three-year lows. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

This Week’s Forecast

Productivity down, labor costs up, consumers tread water. Analysts expect another weird week of data. The Q1 Productivity revised number is forecast to stay negative, while Unit Labor Costs - Revised keep growing. Small wonder the University of Michigan Consumer Sentiment - Preliminary reading is predicted to stay pretty much where it's been. Will it surprise anyone that the May Federal Deficit should reveal that the government spent more money than it took in?

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 Jun 6 – Jun 10

Jun 7    08:30    Productivity - Rev.u
Jun 7    08:30    Unit Labor Costs - Rev.    Q1
Jun 8    10:30    Crude Inventories   
Jun 9    08:30    Initial Unemployment Claims
Jun 9    08:30    Continuing Unemployment Claims
Jun 10    10:00    U. of Michigan Consumer Sentiment - Prelim.
Jun 10    14:00    Federal Deficit    May    NA    -$84.1B    Moderate
                                                                                                           
Federal Reserve Watch    

Forecasting Federal Reserve policy changes in coming months...

After the May jobs report, the majority of economists now think the Fed will leave rates alone clear through September. Note: In the lower chart, a 4% probability of change is a 96% certainty the rate will stay the same.

Current Fed Funds Rate: 0.25%-0.5%

After FOMC meeting on:   

Jun 15    0.25%-0.50%
Jul 27    0.25%-0.50%
Sep 21    0.25%-0.50%

Probability of change from current policy:

After FOMC meeting on:     

Jun 15             4%
Jul 27           31%
Sep 21          44%

Call me today with any questions, 303.668.3350 or apply now!

ILast week you didn't need to consult even one economist to be able to evaluate the state of the housing market. You just had to read the reports.

New Home Sales shot up 16.6% in April reaching a 619,000 unit annual rate, well above what the experts expected. This is the fastest pace we've seen in eight years.


The U.S. Census Bureau's new home sales data is extremely volatile month to month, so it's important to look at the trend, which has stayed positive. In fact, sales are 23.8% ahead of where they were a year ago, clearly showing a strong climb back to normal for the new homes market.

On the existing homes front, we were treated to the latest National Association of Realtors (NAR) reading on contracts signed for the purchase of those homes. The NAR Pending Home Sales index zoomed up 5.1% for the month to hit a ten-year high, landing 4.6% above April a year ago. Pending home sales have now registered year-over-year gains for 20 months in a row. The NAR's chief economist opined, "the prospect of facing higher rents and mortgage rates down the road appears to be bringing more interested buyers into the market." Lending support to this view, the Mortgage Bankers Association reported purchase mortgage applications up 5% over the week before.

Review of Last Week

There were more hints from the Fed about a rate hike this summer, but investors brushed them aside, sending all three stock indexes ahead for the week. The S&P 500 even nailed its biggest weekly gain in two months. Thursday, Fed governor Jerome Powell said rates could rise "fairly soon." Friday, Fed Chair Janet Yellen told a Harvard audience the central bank is ready to raise rates "gradually and cautiously...over time" unless economic data takes a turn for the worse. Well, monthly economic data keeps turning in both directions. Yellen herself alluded to this, noting that wage growth is not accelerating, showing there's still slack in the labor market.

Most economists figure the Fed will skip a June hike, then act in July. Meanwhile, everyone could feel encouraged by the excellent housing data covered above, as well as by the unexpectedly strong numbers for Durable Goods Orders in April. As usual, this good stuff got balanced by some not so good items. The second estimate of first quarter GDP pegged economic growth at a very weak 0.8% annual rate, while the University of Michigan Consumer Sentiment survey for May missed estimates. Sniffing around for more good stuff, last week's Initial Unemployment Claims dropped by 10,000, to 268,000, chalking up 64 weeks in a row that number's been below 300,000.

The week ended with the Dow UP 2.1%, to 17873; the S&P 500 UP 2.3%, to 2099; and the Nasdaq UP 3.4%, to 4934.

Upward moving stocks and the Fed Chair's hints of an impending rate hike hurt bond prices, especially Treasuries. Nonetheless, the 30YR FNMA 4.0% bond we watch finished the week unchanged, at $106.67. National average 30-year fixed mortgage rates were up only slightly in Freddie Mac's Primary Mortgage Market Survey for the week ending May 26. Their chief economist added that May posted "the lowest monthly average in three years." Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.

Last week, stocks surged on the heels of the terrific New Home Sales data, pushing the Dow and the S&P 500 into positive territory for the month. Clearly, housing market strength is important to investors.

This Week’s Forecast

The Fed's favorite measure of inflation is Core PCE Prices and Fed hawks will be watching it like said bird this week. Unfortunately, it's forecast up, which could encourage the central bankers to hike rates in June. Meanwhile, manufacturing slogs along, barely showing growth (above 50) in both the nationwide ISM Index and the Midwest region's Chicago PMI. Friday sees the May jobs report, and the experts expect more hanging on with a tepid 160,000 new Non farm Payrolls forecast, though Hourly Earnings should show a gain, so those working get a bit more to spend.

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 May 30 – Jun 3

May 31    08:30    Personal Income
May 31    08:30    Personal Spending
May 31    08:30    Core PCE Prices
May 31    09:45    Chicago PMI
May 31    10:00    Consumer Confidence
Jun 1    10:00    ISM Index
Jun 1    14:00    Fed's Beige Book
Jun 2    08:30    Initial Unemployment Claims
Jun 2    08:30    Continuing Unemployment Claims
Jun 2    11:00    Crude Inventories
Jun 3    08:30    Average Workweek
Jun 3    08:30    Hourly Earnings
Jun 3    08:30    Non farm Payrolls
Jun 3    08:30    Unemployment Rate
Jun 3    08:30    Trade Deficit
Jun 3    10:00    ISM Services
                                                                                                           
Federal Reserve Watch    

Forecasting Federal Reserve policy changes in coming months... Despite Janet Yellen's comments last week, most economists do not think there will be rate gain in June, though small hikes in July and September are expected. Note: In the lower chart, a 28% probability of change is a 72% certainty the rate will stay the same.

Current Fed Funds Rate: 0.25%-0.5%

After FOMC meeting on:    

Jun 15    0.25%-0.50%
Jul 27    0.50%-0.75%
Sep 21    0.75%-1.00%

Probability of change from current policy:

After FOMC meeting on:    

Jun 15    28%
Jul 27    61%
Sep 21    68%

Call me today 303.668.3350 for answers to any of your mortgage questions, or Apply Now!