We keep hearing concerns that tight existing home inventories and rising prices will shrink sales, but the latest data lays those worries to rest. October Existing Home Sales increased 2.0%, to a 5.48 million annual rate. Sales grew in every major region with single family homes leading the way, although condos/coops went up a bit too. Yes, sales are down (less than 1%) versus a year ago, but we're still seeing the effects of Hurricanes Harvey and Irma, which sidelined home buyers. Once we start getting reports not colored by these storms, many expect an upward sales trend.

Nearly half the homes sold In October were on the market less than a month, indicating demand is there. This is due to increasing incomes, a strengthening economy, near historically low mortgage rates and a growing appetite for home ownership. Freddie Mac's November 2017 Outlook expects this to be the best year for housing in a decade, with 6.13 million homes sold and 1.2 million housing starts. Their chief economist said, "construction will gradually pick up, helping to supply more homes in inventory-starved markets." The Fed's latest data reveals home equity hit $13.9 trillion in mid-2017, an all-time high.

Review of Last Week

The holiday season kicked off nicely on Wall Street, with the three main indexes returning to their winning ways. The broadly-based S&P 500 and the tech-heavy Nasdaq, in fact, finished Thanksgiving week at new all-time highs, while the Dow ended less than half a percent off its all-time record. There's no question stock prices are up both because a high percentage of corporate earnings reports are beating expectations, and because the economy appears to be in solid territory. The evidence? Higher wages, lower unemployment, high consumer confidence and rising home values.

Consumers are even continuing their big-ticket spending on things such as vehicles, appliances and home renovations. Last week's economic data pretty much surprised to the upside, including the Leading Economic Index (LEI), Existing Home Sales covered above, and University of Michigan Consumer Sentiment. Durable Goods Orders Excluding Transportation moved up too, 0.4% in October, following an upwardly revised 1.1% September gain. Some analysts expect household holiday spending to be up about 4% over last year. Believe it or not, online shoppers spent $1.52 billion, just on Thanksgiving Day!

The week ended with the Dow UP 0.9%, to 23558; the S&P 500 UP 0.9%, to 2602; and the Nasdaq UP 1.6%, to 6889.

In the bond market, Treasuries ended lower but other bonds inched ahead. The 30YR FNMA 4.0% bond we watch finished the week UP .05, at $104.78. In Freddie Mac's Primary Mortgage Market Survey for the week ending November 22, national average 30-year fixed mortgage rates dipped slightly. This  put them below their year-ago level for the first time in 2017.

Where are interest rates headed?

This Week's Forecast

A week full of data will kick off with New Home Sales, forecast a but off for October, but after that, analysts expect a series of key "up" reads, including Pending Home Sales, Personal Spending, and Core PCE Prices, the Fed's favorite gauge of inflation. The Chicago PMI and the ISM Index, two important manufacturing measures, are also predicted to remain solidly in growth territory, well above 50.

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 November 27th - December 1st

Nov 27    10:00    New Home Sales    Oct    629K    667K    Moderate
Nov 28    10:00    Consumer Confidence    Nov
Nov 29    08:30    GDP - 2nd Estimate
Nov 29    10:00    Pending Home Sales
Nov 29    10:30    Crude Inventories
Nov 29    14:00    Fed's Beige Book
Nov 30    08:30    Initial Unemployment Claims
Nov 30    08:30    Continuing Unemployment Claims
Nov 30    08:30    Personal Income
Nov 30    08:30    Personal Spending
Nov 30    08:30    Core PCE Prices
Nov 30    09:45    Chicago PMI
Dec 1    10:00    ISM Index

Federal Reserve Watch

Speculative Forecasting Federal Reserve policy changes in coming months:

There's literally no chance the Funds Rate will stay where it is in December, according to the Fed futures market, andd there's now a 50.1% probability we'll see another small hike in March.

Note: In the lower chart, a 100% probability of change is a 100% certainty the rate will rise, while a 9% probability of change is a 91% certainty the rate will stay the same.

Current Fed Funds Rate: 1.00%-1.25%

After FOMC meeting on:   

Dec 13    1.25%-1.50%
Jan 31    1.25%-1.50%
Mar 21    1.50%-1.75%

Probability of change from current policy:

After FOMC meeting on:    

Dec 13         100%
Jan 31             9%
Mar 21           50%

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 home building sector of the housing market has roared back into action as Housing Starts surged 13.7% in October to a very nice sounding 1.29 million unit annual rate. About 1.5 million units a year are what we need to meet population growth and replace tear-downs, so we're making progress in the right direction. Single family starts rose 5.3% for the month, to an 877,000 annual rate, and housing completions grew 12.6% to a 1.23 million yearly rate. The National Association of Realtors chief economist averred, "Overall, the total activity for the country is moving in the right path."

Housing analysts find it even more encouraging that Building Permits bumped up a solid 5.9% in October to a 1.3 million annual rate. Permits are viewed as a leading indicator of future starts, so this suggests the upward trend in home building should continue. Home builders certainly feel that way, as Builder Confidence hit an index level of 70 this month, the second highest read since July 2005. The National Association of Home Builders chief economist sees "continued upward movement of the single-family housing market." Freddie Mac forecasts new home sales will be the main driver of total home sales going into 2018.

Review of Last Week

Stocks finished lower for the second week in a row, but down only moderately after quietly moving in both directions over five days of trading. Actually, we haven't seen extreme volatility for a while, the VIX index that measures it staying well below average for the past year. This tranquility is happening while stocks deliver a nearly 20% return year-to-date, the market has been up 10 of the last 13 weeks, and we have not seen a monthly loss since October 2016. Investors await tax reform as two proposals grind through Congress but some now feel there's a good chance a bill will be passed.

Analysts say investor optimism is supported by a growing economy, rising corporate earnings and relatively low interest rates. Plus, they point to the kind of economic data we saw last week. October Retail Sales grew 0.2% (0.5% including upward revisions to prior months), and they are now up 4.6% over a year ago. The Core Consumer Price Index (CPI) put inflation up 0.2% in October and up 1.8% in the last year. This is near the 2% inflation target the Fed says shows a solidly growing economy. Rising incomes are vital to the housing market, so it was good to see overall worker earnings up, at around a 4% annual rate.

The week ended with the Dow down 0.3%, to 23358; the S&P 500 down 0.1%, to 2579; and the Nasdaq UP 0.5%, to 6783.

Bonds experienced a mixed week but analysts do not feel this reflects any growth concerns. The 30YR FNMA 4.0% bond we watch finished the week UP.10, at $104.73. National average 30-year fixed mortgage rates reversed course and ticked up in Freddie Mac's Primary Mortgage Market Survey for the week ending November 16.

Where are interest rates headed?

This Week's Forecast

Tuesday we'll get the first read on Existing Home Sales that was not negatively affected by the August and September hurricanes. The forecast is for those sales to be in growth mode for October. Just before Tuhanksgiving the Fed will share FOMC Minutes from its November 1 meeting. Rates held then, but everyone sees a hike coming next month, so we'll look for signs confirming that in the minutes.

The financial markets will be closed Thursday for Thanksgiving Day. Friday, the stock market will close at 1:00 pm, the bond market at 2:00 pm.

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 November 20th - November 24th

Nov 20    10:00    Leading Economic Index (LEI)
Nov 21    10:00    Existing Home Sales
Nov 22    08:30    Initial Unemployment Claims
Nov 22    08:30    Continuing Unemployment Claims
Nov 22    08:30    Durable Goods Orders
Nov 22    10:00    U. of Michigan Consumer Sentiment - Final
Nov 22    10:30    Crude Inventories 
Nov 22    14:00    FOMC Minutes

Federal Reserve Watch

Speculative Forecasting Federal Reserve policy changes in coming months:

The Fed futures market sees the Funds Rate going up for sure at next month's meeting, and there's growing sentiment we'll see a second small hike in March.

Note: In the lower chart, a 100% probability of change is a 100% certainty the rate will rise, while a 5% probability of change is a 95% certainty the rate will stay the same.

Current Fed Funds Rate: 1.00%-1.25%

After FOMC meeting on:    

Dec 13    1.25%-1.50%
Jan 31    1.25%-1.50%
Mar 21    1.25%-1.50%

Probability of change from current policy:

After FOMC meeting on: 

Dec 13         100%
Jan 31             5%
Mar 21           48%

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 news media is filled with coverage of tax reform proposals from the Administration and both houses of Congress. Politicians and pundits offer opinions on what should be done about deductions for mortgage interest, property taxes, and taxes on capital gains from the sale of a home, however, the fact is, there is no new tax law yet. When one emerges, we'll scope out its impact on the housing market. Meanwhile, the National Association of Realtors (NAR) forecast 2017 will end with 5.47 million existing home sales, up 0.4% from 2016 and the fastest sales pace since 2006.

Even better, the NAR expects 2018 sales up a solid 3.7%, to 5.67 million units. The median home price should be up 5.5% this year and next. Some fret over affordability, but recently, both the Urban Institute and the First American Real House Price Index found affordability historically high. Last week, mortgage data firm Black Knight reported "affordability in most areas, while tightening, remains favorable to long-term norms." The CEO of real estate data firm CoreLogic explained, "a strengthening economy, healthy consumer balance sheets and low mortgage interest rates are supporting the continued strong demand."

Review of Last Week

If you are ever wondering how investors respond to uncertainty, look no further than last week's stock market performance. What's uncertain is when the Administration's promised corporate tax cuts will happen. The thinking is that those cuts will support company earnings and boost wages, jobs and the economy. Problem is, the Senate version of a tax bill, released Thursday, delays cutting the corporate rate from 35% to 20% by one year, differing from the House version the week before. It's now unclear when a tax bill will pass and cuts will be implemented, so, a result, the three major stock indexes lost ground for the week.

It wasn't all about taxes. Many investors were simply taking profits after the Dow and S&P 500 went up eight weeks in a row and the Nasdaq delivered a six-week run-up. On the plus side, there were some strong corporate earnings to feel good about, and, following October's 100.7 final read, November's preliminary University of Michigan Consumer Sentiment slipped to 97.8 but the consumers' anticipated wage gains part of the survey logged the highest two-month level in a decade. Even oil prices rallied, West Texas crude finishing at $56.75 per barrel, its highest level in more than two years.

The week ended with the Dow down 0.4%, to 23422; the S&P 500 down 0.2%, to 2582; and the Nasdaq down 0.2%, to 6751.


Bonds performed well earlier in the week but gains were erased as Treasuries ended the week lower. Most U.S. banks were closed Friday for Veterans Day, which may have trimmed participation. The 30YR FNMA 4.0% bond we watch finished the week down .43, at $104.63. Freddie Mac's Primary Mortgage Market Survey for the week ending November 9 showed a slight dip in national average 30-year fixed mortgage rates, which hadn't budged the week before.

Where are interest rates headed?

This Week's Forecast

Home builders continue to dial up their activities, sending Housing Starts and Building Permits north for October. Consumers keep shelling out more, as Retail Sales grew in October, albeit at a more modest pace. It seems, price hikes aren't slowing things down, the Consumer Price Index (CPI) up barely a blip. Nice to see manufacturing back on track, with the Philadelphia Fed Index and other factory measures growing.

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 November 13th - November 17th

Nov 14 08:30 Producer Price Index (PPI)
Nov 14 08:30 Core PPI
Nov 15 08:30 Consumer Price Index (CPI)
Nov 15 08:30 Core CPI
Nov 15 08:30 NY Empire Manufacturing Index
Nov 15 08:30 Retail Sales Oct
Nov 15 08:30 Retail Sales ex-auto
Nov 15 10:00 Business Inventories
Nov 15 10:30 Crude Inventories
Nov 16 08:30 Initial Unemployment Claims
Nov 16 08:30 Continuing Unemployment Claims
Nov 16 08:30 Philadelphia Fed Index
Nov 16 09:15 Industrial Production
Nov 16 09:15 Capacity Utilization
Nov 17 08:30 Housing Starts
Nov 17 08:30 Building Permits

Federal Reserve Watch

Speculative Forecasting Federal Reserve policy changes in coming months:

Expect a quarter percent hike in the Fed Funds Rate next month, then steady as she goes through March.

Note: In the lower chart, a 100% probability of change is a 100% certainty the rate will rise.

Current Fed Funds Rate: 1.00%-1.25%

After FOMC meeting on:

Dec 13 1.25%-1.50%
Jan 31 1.25%-1.50%
Mar 21 1.25%-1.50%

Probability of change from current policy:

After FOMC meeting on:

Dec 13      100%
Jan 31      100%
Mar 21      100%

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

In spite of rising home prices in many markets, homes remain affordable. A report from the Urban Institute highlighted it's housing affordability index, which measures median household income against a standard mortgage for a median-priced home. It found that the median household today can afford a house that's $70,000 above the median price. The First American Real House Price Index, which factors home prices, rates and income, found real home prices are 38.4% below the 2006 peak.

Their chief economist confirmed, "affordability, remains high by historic standards."

Many people are indeed finding homes affordable. The Census Bureau reports the home ownership rate rose in Q3 to its highest level since 2014. It's now risen for several quarters, so it appears growth is back. What is definitely back is the American Dream. Now 82% of Americans "say they have achieved the American Dream or are on their way to achieving it," according to the Pew Research Center, a nonpartisan fact tank subsidiary of The Pew Charitable Trusts.

Review of Last Week

We watch Wall Street because the stock market is a reliable forward-looking indicator of the economy, and as the economy goes, so goes jobs, wages and the housing market, so we're happy to report that last week, once again, all three major stock indexes set new records. It was the eighth straight weekly gain for the Dow and S&P 500, while the Nasdaq's 63rd record close this year was the most in any calendar year. Ever. The ISM Index showed manufacturing activity slowing, but at 58.7, it's still, at well above 50, expanding at a healthy rate. Other economic news was even better.

Inflation was up 0.1% in September and 1.3% annually, well below the Fed's 2% target. The Fed met, didn't hike, but hinted they might soon, because "the labor market has continued to strengthen and economic activity has been rising at a solid rate despite hurricane-related disruptions." Hurricanes disrupted the October jobs report, with a lower-than-forecast 261,000 new Nonfarm Payrolls and no wage growth. Yet prior month revisions netted 351,000 new jobs, and the 4.1% Unemployment Rate was the lowest since 2000. ISM Services hit 60.1, its highest level in 12 years, corresponding to 4.3% growth in real GDP.  

The week ended with the Dow UP 0.4%, to 23516; the S&P 500 UP 0.3%, to 2588; and the Nasdaq UP 0.9%, to 6764.

Bond traders focused on the lower than expected October jobs numbers and sent prices up. The 30YR FNMA 4.0% bond we watch finished the week UP .25, at $105.06. National average 30-year fixed mortgage rates didn't budge in Freddie Mac's Primary Mortgage Market Survey for the week ending November 2. This followed their uptick the week before.

Where are interest rates headed?

This Week's Forecast

Not much economic data on the way, a nice breather from last week's avalanche of reports. Weekly Initial Unemployment Claims and Continuing Unemployment Claims are both forecast to be historically low. That's probably part of the reason why the University of Michigan Consumer Sentiment read for November is forecast to be historically high.

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 November 6th - November 10th

Nov 8    10:30    Crude Inventories    11/04
Nov 9    08:30    Initial Unemployment Claims
Nov 9    08:30    Continuing Unemployment Claims
Nov 10    10:00    U. of Michigan Consumer Sentiment - Prelim    Nov
Nov 10    14:00    Treasury Budget    Oct    NA    -$45.8B    Moderate


Federal Reserve Watch

Speculative Forecasting Federal Reserve policy changes in coming months:

The financial market sees the Fed raising the Funds Rate a quarter percent next month but doesn't expect another hike for the next two FOMC meetings.

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

Current Fed Funds Rate: 1.00%-1.25%

After FOMC meeting on:  
 
Dec 13    1.25%-1.50%
Jan 31    1.25%-1.50%
Mar 21    1.25%-1.50%

Probability of change from current policy:

After FOMC meeting on:

Dec 13           97%
Jan 31         100%
Mar 21         100%

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.