May Existing Home Sales went up 1.1% to a 5.62 million unit annual rate, up 2.7% over a year ago. Sales of condominiums and coops were up however most of the growth came from single family homes. The median price of an existing home came in 5.8% ahead of a year ago, hitting its highest level on record. Demand remained strong, with the typical property on the market just 27 days, the shortest time frame since they began tracking it in 2011. The months' supply edged up to 4.2, all due to more inventory.

Also in May, New Home Sales pushed up 2.9%, going solidly over the 600,000 threshold to a sales rate of 610,000 units per year. This was above expectations,  sending sales 8.9% ahead of a year ago. Figures for prior months were revised upward and that trend should prevail. Job gains are pushing wages higher and the low home ownership rate should deliver more buyers as the economy improves. The median price of new homes sold was up an oddly high 16.8% over a year ago, but last May saw an unusually big price drop. The FHFA Index of prices for homes financed with conforming mortgages is up just 6.8% from a year ago.

Review of Last Week

The blue chip Dow and the broadly-based S&P 500 had flattish performances although both ended up for the week, the Dow by fewer than a dozen points and the S&P by just 0.2%, but our "techy" Nasdaq friends soared to a 1.8% weekly gain. Investors seemed to lack the conviction to move the market up or down, except for certain technology, biotech and energy issues. Beyond the housing reports covered above, there wasn't a whole lot of economic news to chew on. Crude fell for the fifth week in a row, below $43 a barrel for the first time in 18 months, which should help us all at the gas pump.

Take note of some interesting financial developments: The Fed announced the results of its latest stress tests on the nation's largest banks. All 34 institutions passed the quantitative portion of this year's test, meaning they all have "strong" levels of capital and would be able to keep lending even during a severe recession. St. Louis Fed President James Bullard told a convention in Nashville that the Fed can afford to stop raising short-term rates and wait and see where the economy is headed. Cleveland Fed President Loretta Mester said the Fed must continue raising rates to avoid inflation. We like Bullard, don't you?

Where Are Rates Headed?

The week ended with the Dow up just 11 points, to 21395; the S&P 500 UP 0.2%, to 2438; and the Nasdaq UP 1.8%, to 6265.

Bond prices held up well despite Friday's better than expected May New Home Sales. Good economic reports tend to drive investors back into riskier stocks but many still liked the safety of bonds. The 30YR FNMA 4.0% bond we watch finished the week UP .06, at $105.48. Freddie Mac's Primary Mortgage Market Survey for the week ending June 22 saw national average 30 year fixed mortgage rates dip down a tick, remaining near their lows for the year.

This Week’s Forecast

It will be nice to see Pending Home Sales come back up if forecasts hold true. Likewise, the Core PCE Prices inflation measure should be up, though not enough to curtail Personal Spending. The Chicago PMI read on Midwest manufacturing is forecast solidly over the 50 mark. And the GDP-3rd Estimate is predicted to stay at 1.2%, modest but typical of Q1 performance the last few years.

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 June 26th – June 30th

Jun 26     09:45     Durable Goods Orders
Jun 27     10:00     Consumer Confidence
Jun 28     10:00     Pending Home Sales
Jun 28     10:30     Crude Inventories
Jun 29     08:30     Initial Unemployment Claims
Jun 29     08:30     Continuing Unemployment Claims
Jun 29     08:30     GDP - 3rd Estimate
Jun 29     08:30     GDP Deflator - 3rd Estimate
Jun 30     08:30     Personal Income
Jun 30     08:30     Personal Spending
Jun 30     08:30     Core PCE Prices
Jun 30     09:45     Chicago PM
Jun 30     10:00     U. of Michigan Consumer Sentiment - Final    
                                                                 
Federal Reserve Watch   

Speculative Forecasting Federal Reserve policy changes in coming months:

After this month's hike, the expectation is that the Fed will keep the Funds Rate where it is through the November meeting.

Note: In the lower chart, a 3% probability of change is a 97% certainty the rate will stay the same.

Current Fed Funds Rate: 1.0%-1.25%

After FOMC meeting on:

Jul 26     1.0%-1.25%
Sep 20     1.0%-1.25%
Nov 1     1.0%-1.25%

Probability of change from current policy:

After FOMC meeting on: 

Jul 26             3%
Sep 20           18%
Nov 1           20%

Where are interest rates headed?

Call me now, 303.668.3350 or click here to apply!

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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.

The National Association of Home Builders (NAHB) reports builder confidence came in at 67 in June. Any number over 50 indicates most builders see conditions as good. The reading was not quite as high as May's however the NAHB chairman reassured us, "builder confidence levels have remained consistently sound this year, reflecting the ongoing gradual recovery of the housing market."

Friday, one might have wondered why all that builder confidence did not translate into better looking housing reports. Housing Starts were down 5.5% in May at a lower than expected 1.092 million annual rate, while Building Permits also missed forecasts, dipping to a 1.168 million annual rate. Builder confidence could have been bolstered by the fact that single-family starts are still up 8.5% the past year. Plus, housing completions are up 14.6% the last year, while homes under construction have been trending down since February. This shows builders are busy finishing projects before starting new ones, driven to meet the heightened demand.

Review of Last Week

Investors had plenty to chew on last week with the Fed hiking the Funds Rate amidst a slew of economic reports. The three major stock indexes sent mixed messages as the blue chip Dow wound up with its 21st record close of the year, the broadly based S&P 500 finished the week flat, and the tech-heavy Nasdaq ended down. As expected, our central bank announced it would raise the target range for its Fed Funds Rate by 0.25%, to 1.00%-1.25%. This was the second hike of the year and Wall Street now thinks that will be the last, despite the Fed's earlier call for three hikes in 2017.

In the week's economic data, weekly Initial Jobless Claims fell by 8,000, dropping for the second week in a row, to just 237,000. Economists say this is evidence of growing strength in the job market, which is a good sign for real estate. Other reports came in below expectations, including headline housing numbers, inflation, the Philly Fed index of manufacturing in that region, and Retail Sales, off 0.3% for May. The Retail drop was due to lower gas prices, a good thing, and experts tell us economic reports can be quite volatile month to month. The fact is, economic data averages for 2017 so far are still higher than last year's averages.

The week ended with the Dow UP 1.0%, to 21384; the S&P 500 UP 0.1%, to 2433; and the Nasdaq down 0.9%, to 6152.

Over in bonds, Treasuries rallied on Friday from the economic reports that missed their forecasts. Other bonds also did well but the 30YR FNMA 4.0% bond we watch finished the week down .16, at $105.42. National average 30 year fixed mortgage rates moved up just a bit in Freddie Mac's Primary Mortgage Market Survey for the week ending June 15.

Where Are Rates Headed?

This Week’s Forecast

Taking a breather from last week's heavy dose of economic data and Fed news, we will only have a few things to watch. Wednesday, Existing Home Sales for May are expected to be off, though still above a 5.5 million unit annual pace. Friday, we'll see New Home Sales, forecast to move up nicely, to just a bit below 600,000 units a year.

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 June 19th – June 23rd

Jun 21     10:00     Existing Home Sales
Jun 21     10:30     Crude Inventories
Jun 22     08:30     Initial Unemployment Claims
Jun 22     08:30     Continuing Unemployment Claims
Jun 23     10:00     New Home Sales
                                                                                                          
Federal Reserve Watch   

Speculative Forecasting Federal Reserve policy changes in coming months:

Now that the Fed hiked the rate for the second time this year, investors feel no additional moves will be made until next March.

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:  

Jul 26     1.0%-1.25%
Sep 20     1.0%-1.25%
Nov 1     1.0%-1.25%

Probability of change from current policy:

After FOMC meeting on:

Jul 26             0%
Sep 20           16%
Nov 1           18%

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.