![]() This National Association of Realtors (NAR) measure of contracts signed on existing homes declined 2.8% in January, indicating we should expect fewer closings on these homes a couple of months out. Pending Home Sales are still ahead of where they were a year ago and actual existing home sales are forecast to reach 5.57 million this year, up 2.2% from 2016, with the median home price up 4%. Last year saw these sales grow 3.8%, with prices up 5.1%. There is concern about the shortage of listings in many areas which is edging up home prices. The latest Case-Shiller Home Price Index reported a 5.8% annual increase in December, a 30-month high. Yet the Index Committee's Chair pointed out: "Looking at real or inflation-adjusted home prices, the annual increase in home prices is currently 3.8%." His conclusion? "Home prices are rising but the speed is not alarming, and demand is there." The NAR chief economist explained that as households grow more confident in their personal finances and job growth continues throughout the country, home sales increase across the country. Review of Last Week That was the theme of the week in three big ways. First, stocks continued to push higher, as the S&P 500 posted its sixth weekly gain in a row and the Dow passed 21,000 without much effort. The blue chip index crossed the historic 20,000 threshold just a few weeks ago, which makes this 1,000 point advance the Dow's fastest gain in history. Stocks got a big boost Wednesday following President Donald Trump's speech to Congress the night before. Investors liked his commitment to $1 trillion in infrastructure spending, tax cuts for businesses and the middle class and the fact that pundits saw the address as "presidential." Second, February economic readings went higher. The ISM Index of U.S. manufacturing and the Chicago PMI for the Midwest beat expectations, as did the ISM Services index for the sector of the economy that delivers the most jobs. Consumer Confidence hit a 15-year high with Americans more confident about the present and the future. Third, we got a strong indication that an improving economy means interest rates may soon go higher. Friday, Fed Chair Janet Yellen said that if employment and inflation "evolve in line with our expectations, a further adjustment of the Federal funds rate would likely be appropriate" March 15. We'll watch this Friday's jobs report. The week ended with the Dow UP 0.9%, to 21006; the S&P 500 UP 0.7%, to 2383; and the Nasdaq UP 0.4%, to 5871. The Fed's hawkish rate comments hurt bond prices Friday. U.S. Treasuries recovered, ending up little changed, the 30YR FNMA 4.0% bond we watch finished the week down .80, at $104.58. The national average 30-year fixed mortgage rates broke the holding pattern they've been in the past month and moved lower in Freddie Mac's Primary Mortgage Market Survey for the week ending March 2. Where are interest rates headed? This Week’s Forecast We will have a revision on the Productivity reading for Q4, which is forecast to be up, something the Fed wants to see as an indicator of a stronger economy. The big focus will be Friday's February jobs report. Hourly Earnings should be up, showing an important continuing increase in wages. Analysts predict fewer new Nonfarm Payrolls than were added in January, just below the 200,000 threshold. 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 March 6th – March 10th Mar 7 08:30 Trade Balance Mar 8 08:30 Productivity - Rev. Mar 8 08:30 Unit Labor Costs - Rev. Mar 8 10:30 Crude Inventories Mar 9 08:30 Initial Unemployment Claims Mar 9 08:30 Continuing Unemployment Claims Mar 10 08:30 Average Workweek Mar 10 08:30 Hourly Earnings Mar 10 08:30 Nonfarm Payrolls Mar 10 08:30 Unemployment Rate Mar 10 14:00 Federal Budget Federal Reserve Watch Speculative Forecasting Federal Reserve policy changes in coming months: Four out of five economists see the central bank raising rates a quarter of a percent at next week's FOMC meeting but they expect no further hikes the next two meetings. Note: In the lower chart, an 80% probability of change is only a 20% probability the rate will stay the same. Current Fed Funds Rate: 0.5%-0.75% After FOMC meeting on: Mar 15 0.75%-1.0% May 3 0.75%-1.0% Jun 14 0.75%-1.0% Probability of change from current policy: After FOMC meeting on: Mar 15 80% May 3 82% Jun 14 90% 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 Scott Synovic is a top performing mortgage loan originator providing superior levels of service and satisfaction to clients and business partners in Colorado - www.scottsynovic.com NMLS #253799 Fairway Independent Mortgage Corporation #2289
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