Monday revealed that Existing Home Sales took a bit of a breather in June,dipping 1.8%, however,  they are still at a healthy 5.52 million unit annual rate, and up by 0.7% over a year ago. Economists expect real estate to maintain its overall upward trend of the last few years. We do have the headwinds of tight supply and rising prices, with median existing home prices hitting new record highs two months in a row. Demand remains strong, as 54% of the listings sold in June were less than a month old.

Tuesday we learned New Home Sales moved up 0.8% in June to a 610,000 unit annual rate putting them up 9.1% versus a year ago. The supply increased to 5.4 months, aided by a 3,000 unit gain in inventories. The median price of new homes sold was down 3.4% versus last year, indicating builders are moving in the right direction. More evidence of this came with the news the home ownership rate increased in Q2 and is up 0.8% from a year ago, to a three-year high. The chief economist of an national real estate site believes "we may have turned a corner when it comes to the steep dive in home ownership we've seen over the past 10 years."

Review of Last Week

The S&P 500 wound up the week essentially unchanged but did hit a new record on Wednesday, while the Nasdaq finished down just a tick. The Dow, however, posted a nice weekly gain, ending at another all-time high, the 29th new high so far in 2017. In the four months following the election, stocks have rallied an impressive 12%, apparently driven by economic optimism. It's more than hope that's powering equities upward, with more than half the S&P 500 companies reporting Q2 results, earnings are up 9.1% year-over-year. Add to that, a steady stream of improving economic fundamentals.

Feeding that stream, the GDP Advance read for Q2 pegged U.S. economic growth at a 2.6% annual rate. That's up 2.1% over a year ago and clearly above the anemic annual growth rates we've seen in the recovery until now. The Employment Cost Index showed the cost of employing the average U.S. worker was up 0.5% in Q2, another good sign. Picky pundits fretted that these numbers were slightly below expectations. Oh pulease. The Conference Board reported that consumers' confidence in current conditions remains at a 16-year high, while their confidence in the future edged higher. We'll go with consumers over the pundits every time.

The week ended with the Dow UP 1.2%, to 21830; the S&P 500 flat, down less than a point, at 2472; and the Nasdaq down 0.2%, to 6375.

Bond prices benefited from the GDP and Employment Cost Index misses but were beaten back by higher oil prices, better than expected eurozone economic data, and Friday's boost in Michigan Consumer Sentiment. The 30YR FNMA 4.0% bond we watch finished the week down .04, at $105.27. National average 30-year fixed mortgage rates fell again in Freddie Mac's Primary Mortgage Market Survey for the week ending July 27.

Where are interest rates headed?

This Week’s Forecast

June Pending Home Sales are forecast up after slipping in May so expect higher existing home sales in a few months. The Chicago PMI gauge of Midwest manufacturing and the national ISM Index should show factory activity growing, though a little slower. Growth is also predicted for jobs in June, with just under 200,000 new Nonfarm Payrolls, and, best of all, Hourly Earnings up a bit more. The Fed's favorite Core PCE Prices inflation measure should stay low enough to squelch rate hikes 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 July 31st– August 4th


Jul 31     09:45     Chicago PMI
Jul 31     10:00     Pending Home Sales
Aug 1     08:30     Personal Income
Aug 1     08:30     Personal Spending
Aug 1     08:30     Core PCE Price
Aug 1     10:00     ISM Index
Aug 2     10:30     Crude Inventories
Aug 3     08:30     Initial Unemployment Claims
Aug 3     08:30     Continuing Unemployment Claims
Aug 3     10:00     ISM Services
Aug 4     08:30     Average Workweek
Aug 4     08:30     Hourly Earnings
Aug 4     08:30     Nonfarm Payrolls
Aug 4     08:30     Unemployment Rate
Aug 4     08:30     Trade Balance
                                                                                                          
Federal Reserve Watch   

Speculative Forecasting Federal Reserve policy changes in coming months:

After the Fed stood pat on rates at last week's meeting, the markets don't see another hike this year. The probability for one in December is now just south of 50%.

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             5%
Dec 13           49%

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.

Housing Starts came roaring back with an 8.3% gain, to post their largest monthly boost of the year. This put them at a 1.215 million unit annual rate, however, we need 1.5 million new units per year to cover population growth and tear downs, so there is still more recovery to come. Starts overall are up 2.1% compared to a year ago and single-family starts are up 10.3% (multi-families are down). This is a positive sign for the economy since each single-family home contributes to GDP, on average, around twice what a multi-family unit does.

It was also terrific to see housing completions increase by 5.2% in June, bringing them 8.1% ahead of where they were a year ago. Want to know what the future of home building looks like? Building Permits for new structures shot up 7.4% in June, their largest monthly hike since 2015. The greater interest here is also in single-families, as those permits are up 9.2% versus a year ago. Some experts are now saying 2017 could be the best year for new construction in a decade. No wonder builders continue to feel confident. Yes, the National Association of Home Builders sentiment index did slip in July but landed at a still very high 64 reading.

Review of Last Week

Things keep moving ahead on Wall Street as investors remain optimistic about the economy, sensing growth-friendly policies will eventually come out of Washington. There's plenty to feel good about right now with some solid corporate earnings reports, plus indications that monetary policy will remain, (meaning low interest rates) as far as anyone can predict. Both the European Central Bank and the Bank of Japan left interest rates alone last week and our Fed should do the same on Wednesday. The S&P 500 ended ahead for the third week in a row and the Nasdaq hit a new record high, though the Dow slipped a bit.

Economic data was not to bad either. In addition to the excellent home building reports covered above, the Conference Board Leading Economic Index (LEI) went up 0.6% in June after a 0.2% gain in May. The New York Empire Manufacturing Index and Philadelphia Fed Index for July showed factory activity in those regions continues to grow, though at a slightly slower pace. Weekly Initial Unemployment Claims stay in the low 200K range and Continuing Unemployment Claims remain below 2 million. Finally, the price of West Texas crude suffered its biggest drop in two weeks, which nudged some investors over to bonds.

The week ended with the Dow down 0.3%, to 21580; the S&P 500 UP 0.5%, to 2473; and the Nasdaq UP 1.2%, to 6388.

The bond market saw Treasuries hit multi-week highs, sending yields and interest rates down. We also had a rally in eurozone government bonds. The 30YR FNMA 4.0% bond we watch finished the week UP .28, to $105.31. After inching ahead two weeks in a row, national average 30-year fixed mortgage rates dropped in Freddie Mac's Primary Mortgage Market Survey for the week ending July 20. This was in part due to "weak inflation data."

Where are interest rates headed?

This Week’s Forecast

The forecasters say June Existing Home Sales will be off a bit and New Home Sales will come in flat. Not surprising given the tight inventory of existing homes in many areas and the fact builders are still scurrying to catch up with demand. No hike is expected in the FOMC Rate Decision. The predicted slower growth in the Employment Cost Index would indicate inflation is tame, which continues to keep the Fed in check.

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 July 24th – July 28th

Jul 24     10:00     Existing Home Sales
Jul 25     10:00     Consumer Confidence
Jul 25     10:00     New Home Sales
Jul 26     10:30     Crude Inventories
Jul 26     14:00     FOMC Rate Decision
Jul 27     08:30     Initial Unemployment Claims
Jul 27     08:30     Continuing Unemployment Claims
Jul 27     08:30     Durable Goods Orders
Jul 27     08:30     Durable Goods Orders - Ex Transportation
Jul 28     08:30     GDP - Advanced
Jul 28     08:30     Employment Cost Index
Jul 28     10:00     U. of Michigan Consumer Sentiment - Final
                                                                                                          
Federal Reserve Watch   

Speculative Forecasting Federal Reserve policy changes in coming months:

The probability of a rate hike from the Fed is very slim for this week's FOMC meeting and for the next two. Sentiment is rising for a rate increase in December.

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             8%
Nov 1             9%

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.

The National Association of Realtors (NAR) 2017 National Housing Pulse Survey reports 84% of respondents believe buying a home is a wise financial decision. The NAR president summarized the findings: "Building equity, wanting a stable and safe environment and having the freedom to choose their neighborhood remain the top reasons to own a home." The survey also revealed buyers need to be educated about down payment options: 40% think they have to put at least 15% down. Black Knight reported total "lendable" equity increased $695 billion in the last year.

The chief economist at property information firm CoreLogic says "the market continues to benefit from improved economic growth." Their CEO adds, "the rebound in the U.S. housing market continues to gather steam." A national listing site found that the biggest homeowner regret was not choosing a larger home, while the biggest renter regret was continuing to rent instead of buying. Credit scores are rising, as the national average FICO score hit 700 for the first time in history. FICO's Vice President for scores and analytic's said a 700 score is considered "very good credit." Better credit scores can get buyers more favorable mortgage terms.

Review of Last Week

Wednesday Fed Chair Janet Yellen made her semiannual appearance in Congress and Wall Street interpreted her testimony as more dovish than expected, implying rates will stay pretty low. This ignited a rally that held through Friday. The major indexes enjoyed solid gains, the S&P 500 posting its largest weekly increase since the end of May, hitting a new all-time high. Yellen's magic words acknowledged "the federal funds rate would not have to rise all that much further to get to a neutral policy stance." Investors say that means the Fed will keep the longer term neutral level of the fed funds rate lower than it's been in past decades.

Although the economy is doing better, it still isn't booming, so the Fed should go easy on hiking rates. Retail Sales were down 0.2% in June although they're up 2.8% compared to a year ago. Inflation is nowhere near the Fed's 2% annual target rate as the Consumer Price Index (CPI) is up only 1.6% year-over-year. Dallas Fed President Robert S. Kaplan commented that he would need to see signs of higher inflation before voting for another rate increase. Not surprisingly, Wall Street is taking a December hike off the table: the probability that won't happen is now above 50. Industrial Production and Capacity Utilization were up nicely in June.

The week ended with the Dow UP 1.0%, to 21638; the S&P 500 UP 1.4%, to 2459; and the Nasdaq UP 2.6%, to 6312.

Friday's weaker than expected economic data sparked a rally in government notes and bonds. The 30YR FNMA 4.0% bond we watch finished the week UP .19, at $105.03. Freddie Mac's Primary Mortgage Market Survey for the week ending July 13 reported national average 30-year fixed mortgage rates edged up for the second week in a row.

Where are interest rates headed?

This Week’s Forecast

June Housing Starts are expected to move up from the month before to a 1.160 million unit annual rate. Likewise, Building Permits, a good gauge of home builder activity going forward, should rise to 1.196 million. Factory activity is forecast to slip in the two regions measured by the New York Empire Manufacturing Index and the Philadelphia Fed Index, although both in positive growth territory.

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 July 17th – July 21st

Jul 17     08:30     NY Empire Manufacturing Index
Jul 19     08:30     Housing Starts
Jul 19     08:30     Building Permits
Jul 19     10:30     Crude Inventories
Jul 20     08:30     Initial Unemployment Claims
Jul 20     08:30     Continuing Unemployment Claims
Jul 20     08:30     Philadelphia Fed Index
Jul 20     10:00     Leading Economic Index (LEI)
                                                                                                          
Federal Reserve Watch   

Speculative Forecasting Federal Reserve policy changes in coming months:

Fed Chair Janet Yellen's Congressional testimony left Wall Street more certain than ever there will be no rate hike for the next three FOMC meetings.

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             8%
Nov 1           12%

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.

Last week provided a variety of useful news about the housing market. The Mortgage Bankers Association Mortgage Applications Survey for the week ending June 30th reported its seasonally adjusted Purchase Index was up 3% from the week before. Then, an online real estate database reported that, despite rising prices, May had the highest level of home buyer demand since they began tracking it more than four years ago. The CoreLogic Home Price Index was up 1.2% in May and up 6.6% from a year ago however they say price gains will slow, to just 0.9% in June and 5.3% in the coming year.

Encouraging news came with CNBC's report that the three major credit rating agencies (Equifax, Experian and TransUnion) "will drop tax liens and civil judgments from some consumers' profiles if the information is not complete," so FICO scores "could go up by as much as 20 points." The CNBC article also said that Fannie Mae and Freddie Mac, who guarantee conventional mortgages, are raising their debt-to-income ratio limit from 45% to 50% of pretax income. The final decision on a mortgage is with the originating lender's underwriters but CNBC said these changes "could help millions more borrowers quality for a home loan."

Review of Last Week

Stocks started the third quarter headed in the right direction, thanks largely to a big 222,000 jump in new Non farm Payrolls in June. The three major market indexes ended the first week of July posting modest gains over the three and a half days of light trading, as many players took off to celebrate our nation's independence. Those remaining on Wall Street celebrated an Employment Report that included upward revisions to April and May, which added a total of 269,000 new jobs. The Unemployment Rate edged up to 4.4%, but that was due to some good news: 361,000 more people entered the labor force.

Best of all, the report revealed a hike in consumer purchasing power. Average hourly earnings went up 0.2% in June and 2.5% the past year. Total hours worked rose 0.5% for the month and 2.5% the last year. If you multiply hours worked by hourly wages, total earnings are up 4.5% over a year ago. With inflation around 2%, that's a nice bit of extra purchasing power to drive housing and the economy. In fact, June's ISM Manufacturing index reached 57.8, while the ISM Services index scored a 57.4, both well above expectations and well into growth territory, north of 50. We even had the trade deficit decline for May.

The week ended with the Dow UP 0.3%, to 21414; the S&P 500 UP 0.1%, to 2425; and the Nasdaq UP 0.2%, to 6153.

The strong June jobs report proved to be too much for bonds, as investor money scurried back into equities and bond prices slipped. The 30YR FNMA 4.0% bond we watch finished the week down .25, at $104.84. As expected, national average 30-year fixed mortgage rates moved up a tad in Freddie Mac's Primary Mortgage Market Survey for the week ending July 6th.

Where Are Interest Rates Headed?

This Week’s Forecast

Analysts are forecasting Retail Sales to be growing again in June, in positive territory overall and gaining even more when you exclude volatile auto sales. Inflation is also expected to pick up in June, though not as strongly. The overall Consumer Price Index (CPI) should go from negative to flat, while Core CPI, excluding volatile food and energy prices, is predicted to move up more. Inflation remains benign, which benefits us two ways: prices are kept in check, and so is the Fed.

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 July 10th – July 14th

Jul 12     10:30     Crude Inventories
Jul 12     14:00     Fed's Beige Book
Jul 13     08:30     Initial Unemployment Claims
Jul 13     08:30     Continuing Unemployment Claim
Jul 13     08:30     Producer Price Index (PPI)
Jul 13     08:30     Core PPI
Jul 14     08:30     Retail Sales
Jul 14     08:30     Retail Sales ex-auto
Jul 14     08:30     Consumer Price Index (CPI)
Jul 14     08:30     Core CPI
Jul 14     09:15     Industrial Production
Jul 14     09:15     Capacity Utilization
Jul 14     10:00     Business Inventories
Jul 14     10:00     U. of Michigan Consumer Sentiment - Prelim

Federal Reserve Watch   

Speculative Forecasting Federal Reserve Policy Changes in Coming Months:

Last week's FOMC Minutes portrayed Fed members as generally upbeat about economic activity so investors think a rate hike is more likely in December, but not before then.

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           14%
Nov 1           15%

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.