Last Wednesday we got the nice surprise that New Home Sales unexpectedly shot up 18.9% in September, hitting a 667,000 unit annual rate, a solid 17% ahead of where they were a year ago. The median price was up just 1.6% from a year ago so builders are paying attention to affordability. September's gain was the fastest monthly pace in the last 25 years and the highest annual level since 2007. Keep in mind new home numbers are volatile month-to-month and a big part of the gain came from the South, where hurricanes hit sales hard the month before, however, many analysts expect the upward trend to continue.

Thursday we learned Pending Homes Sales were unchanged in September, leaving them 3.5% below their level the year before, according to the National Association of Realtors (NAR). This measure of contracts signed on existing homes foretells a drop in those sales, though that should be offset by the strong New Home Sales reported above. The NAR chief economist said, "most of the country except for the South, did see minor gains." activity lags "because new listings aren't keeping up with what's being sold." Nonetheless, the Mortgage Bankers Association's chief economist forecasts purchase mortgage volume to go up 7% next year.

Review of Last Week

The week on Wall Street began with investors taking profits on Monday following the prior week's record highs, but, by the end of the week, an impressive batch of earnings from technology companies pushed the S&P 500 and the Nasdaq to new record highs. The good news went beyond the geeks -  last week more than 35% of S&P 500 companies reported Q3 earnings, and, as one analyst put it, "announcements so far have been fairly solid, providing the support for the recent market gains." Though not setting a record, the Dow finished ahead for the seventh week in a row, its longest winning streak in almost three years.

Even better than the earnings was the economic data, starting with the unexpected surge in New Home Sales covered above, and ending on Friday when the GDP - Advanced read showed the economy growing in the third quarter at a 3.0% annual rate. This is up 2.3% from a year ago and the second straight quarterly read at 3% or above. This growth came despite two hurricanes, expected to push some economic activity into the fourth quarter. Finally, with the U.S. economy starting to pick up the pace, it shouldn't be too surprising that the University of Michigan reported consumer sentiment in October at the strongest level in 13 years.

The week ended with the Dow UP 0.5%, to 23434; the S&P 500 UP 0.2%, to 2581; and the Nasdaq UP 1.1%, to 6701.

A down week in the bond market finished on a bit of an upswing prompted by reports that President Trump is leaning toward appointing someone who favors low rates as the new head of the Fed. The 30YR FNMA 4.0% bond we watch finished the week down .07, at $104.81. After falling the week before, national average 30-year fixed mortgage rates ticked up in Freddie Mac's Primary Mortgage Market Survey for the week ending October 26.

Where are interest rates headed?

This Week's Forecast

This week features a pile of data. Inflation measured by Core PCE Prices should be up mildly and Personal Spending up considerably. The Employment Cost Index is expected to show labor costs up in Q3, another harbinger of higher inflation. Manufacturing is forecast to continue expanding by both the Chicago PMI and the national ISM Index. Finally, they're predicting the October jobs report will show Nonfarm Payrolls exploding but Hourly Earnings up only a bit.

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 October 30th - November 3rd

Oct 30    08:30    Personal Income
Oct 30    08:30    Personal Spending
Oct 30    10:00    Core PCE Prices
Oct 31    08:30    Employment Cost Index
Oct 31    09:45    Chicago PMI
Oct 31    10:00    Consumer Confidence
Nov 1     10:00     ISM Index
Nov 1     10:30    Crude Inventories   
Nov 1     14:00    FOMC Rate Decision
Nov 2     08:30    Initial Unemployment Claims
Nov 2     08:30    Continuing Unemployment Claims
Nov 2     08:30    Productivity - Prelim.
Nov 2     08:30    Unit Labor Costs
Nov 3     08:30    Average Workweek
Nov 3     08:30    Hourly Earnings
Nov 3     08:30    Nonfarm Payrolls
Nov 3     08:30    Unemployment Rate
Nov 3     08:30    Trade Balance
Nov 3     10:00    ISM Services

Federal Reserve Watch

Speculative Forecasting Federal Reserve policy changes in coming months:

The Fed futures market doesn't expect a rate hike on Wednesday, but sees a quarter percent gain in December and no change in January.

Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 1.00%-1.25%

After FOMC meeting on:

Nov 1    1.00%-1.25%
Dec 13    1.25%-1.50%
Jan 31    1.25%-1.50%

Probability of change from current policy:

After FOMC meeting on:  

Nov 1             1%
Dec 13           98%
Jan 31           98%

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.

Housing Starts were predicted to dip in September, just not as much as they did. Starts fell 4.7% for the month to a 1.127 million annual rate, although they are expected to bounce back sharply the next few months. The drop was blamed on a 5.1% slide in normally volatile multi-family starts, plus a 15.3% decline in single-family starts in the South after Hurricanes Harvey and Irma. Single-family starts gained in every other region and are up 6.1% over a year ago. The National Association of Home Builders confidence index rebounded from September's reversal, to a healthy 68 read for October.

Friday, the National Association of Realtors (NAR) reported that Existing Home Sales unexpectedly headed up 0.7% in September, to a 5.39 million annual rate. This follows three straight monthly declines, plus the NAR chief economist said, "sales activity likely would have been somewhat stronger if not for the fact that parts of Texas and South Florida...saw temporary but notable declines." Those, again, were from the hurricanes. Sales, however, are down 1.5% from a year ago and inventories remain low in many regions. Hopefully, as more Baby Boomers enter the rental market, more homes will be offered for sale.

Review of Last Week

Thursday, the Senate passed a budget blueprint for the next fiscal year. Friday, investors sent the three main stock benchmarks to simultaneous record closes for the 24th time in 2017. Why? Analysts say the budget blueprint is a key step on the way to the tax cuts many investors feel are vital to keeping the bull market going. Stocks are also getting plenty of help from rising corporate earnings. We'll see the bulk of these in the next two weeks, but of the companies who've reported, three out of four beat expectations. Add in some very decent economic data, and the Dow hit 23,000 for the first time in history.

In addition to the surprise gain in Existing Home Sales covered above, we saw Industrial Production head up 0.3% in September, with Capacity Utilization reaching 76%. Staying with the manufacturing sector, the New York Empire State index shot up from 24.4 in September to 30.2 in October. The Philly Fed index, measuring sentiment among East Coast manufacturers, went from +23.8 to +27.9 in October, indicating further optimism. The best news was on the employment front, where Initial Unemployment Claims dropped by 22,000 to 222,000, the lowest level in more than 40 years. Plus, Continuing Claims diminished by 16,000, to 1.89 million.

The week ended with the Dow UP 2.0%, to 23329; the S&P 500 UP 0.9%, to 2575; and the Nasdaq UP 0.4%, to 6629.

It was a down week in the bond market, with rallying stocks and good economic news creating bad news, as usual, for bond prices. The 30YR FNMA 4.0% bond we watch finished the week down .37, at $104.88. In Freddie Mac's Primary Mortgage Market Survey for the week ending October 19, national average 30-year fixed mortgage rates ticked down after edging up two weeks in a row.

Where are interest rates headed?

This Week's Forecast

Hurricanes Harvey and Irma are expected to inflict damage on New Home Sales too, though there's only a 5,000 unit falloff forecast for September. Consumers remain optimistic, however, as the University of Michigan Consumer Sentiment - Final read for October is predicted to land at a very high 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 October 23rd - October 27th

Oct 25    08:30    Durable Goods Orders
Oct 25    08:30    Durable Goods Orders - ex transportation
Oct 25    10:00    New Home Sales
Oct 25    10:30    Crude Inventories 
Oct 26    08:30    Initial Unemployment Claims
Oct 26    08:30    Continuing Unemployment Claims
Oct 26    10:00    Pending Home Sales
Oct 27    08:30    GDP
Oct 27    10:00    U. of Michigan Consumer Sentiment - Final

Federal Reserve Watch

Speculative Forecasting Federal Reserve policy changes in coming months:

Virtually no one on Wall Street expects a rate hike at the Fed's November 1st meeting however almost everyone sees a quarter percent rise at the December 13th confab.

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

Current Fed Funds Rate: 1.00%-1.25%

After FOMC meeting on:  

Nov 1    1.00%-1.25%
Dec 13    1.25%-1.50%
Jan 31    1.25%-1.50%

Probability of change from current policy:

After FOMC meeting on:  

Nov 1             2%
Dec 13         93%
Jan 31         94%

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.

Hurricane damage continues to appear in the housing market. The latest example, last week’s report that New Home Sales dropped 3.4% in August to a 560,000 unit annual rate. This monthly glitch sent sales 1.2% below where they were a year ago. New home sales are counted at contract signing, not closing and it’s likely Hurricane Harvey delayed many buyers ready to sign in August. It’s expected Hurricane Irma will have a similar effect on September’s numbers. The Census Bureau say areas hit by the storms accounted for 14% of single-family homes authorized in 2016.

August’s Pending Home Sales measure of contract signings on existing homes showed similar storm damage, slipping 2.6%. This points to a September sales skid, although analysts expect a Q4 rebound. A National Association of Realtors survey reports - the share of homeowners who say now is a good time to sell hit 80%, a new high; the share of renters who think now is a good time to buy went from 52% in Q2 to 62% in Q3; and the share of households who feel the economy is improving grew to 57%, from 48% a year ago. The chief economist noted, “the typical household looks as healthy as it’s been since the recession.”

Review of Last Week

The long-awaited tax reform announcement from President Trump’s administration contained the anticipated features of significantly lower taxes for corporations and the middle class. The proposal promises to grow businesses and jobs, especially small businesses that support the majority of our payrolls and to boost consumer spending which drives 70% of our economy. Wall Street felt this bodes well for faster economic growth, so stocks went higher. The three major indexes scored weekly, monthly and quarterly gains, with the S&P 500 hitting its 39th record high this year, and the Nasdaq posting its 50th new benchmark.

Even though lower taxes are not yet the law of the land, the economy steadily improves. The final GDP read showed economic growth in Q2 “exploded,” as one report put it, to a 3.1% annual rate. We also had the Chicago PMI showing Midwest manufacturing surged in September, while the Philadelphia Fed index reported a similar boost in manufacturing activity in that region. Durable Goods Orders rose 1.7% in August. Personal Income and Personal Spending also improved. The Fed’s favorite measure of inflation, Core PCE Prices, went up only 0.1% in August and is up just 1.3% the past year, a long way from the central bankers’ 2% inflation target.

The week ended with the Dow UP 0.2%, to 22405; the S&P 500 UP 0.7%, to 2519; and the Nasdaq UP 1.1%, to 6496.

It was a down week again in the bond market as Fed Chair Janet Yellen gave a speech Tuesday that bolstered expectations for a December rate hike. The 30YR FNMA 4.0% bond finished the week down .09, at $105.22. National average 30-year fixed mortgage rates were unchanged from the week before in Freddie Mac’s Primary Mortgage Market Survey for the week ending September 28.

Where are interest rates headed?

This Week’s Forecast

Monday we get the ISM Index of manufacturing activity for September. That sector continues to strengthen with the read predicted to stay well north of 50, indicating solid expansion. The services sector, which generates most of our jobs, should also look good, with the ISM Services Index forecast well above 50. Friday’s September Employment Report is expected to deliver a smaller Nonfarm Payrolls number, thanks to Irma’s impact on the major Florida market. Hourly Earnings should keep creeping up.

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 October 2th – October 6th

Oct 2 10:00 ISM Index
Oct 4 10:00 ISM Services Index
Oct 4 10:30 Crude Inventories
Oct 5 08:30 Initial Unemployment Claims
Oct 5 08:30 Continuing Unemployment Claims
Oct 5 08:30 Trade Balance
Oct 6 08:30 Average Workweek
Oct 6 08:30 Hourly Earnings
Oct 6 08:30 Nonfarm Payrolls
Oct 6 08:30 Unemployment Rate

Federal Reserve Watch

Speculative forecasting Federal Reserve policy changes in coming months:

The Fed futures market is still looking for a quarter percent rate hike in December but nothing more come January.

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

Current Fed Funds Rate: 1.00%-1.25%

After FOMC meeting on:

Nov 1 1.00%-1.25%
Dec 13 1.25%-1.50%
Jan 31 1.25%-1.50%

Probability of change from current policy:

After FOMC meeting on:

Dec 13 78%
Jan 31 78%

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.