Existing home sales slip again by Ron Schulz

For the week of February 26, 2018 — Vol. 16, Issue 9

>> Market Update

QUOTATION OF THE WEEK…“Those are my principles, and if you don’t like them… well, I have others.” –Groucho Marx, American comedian, writer and stage, film, radio and television star

INFO THAT HITS US WHERE WE LIVE… Following their December decline, Existing Home Sales dipped again in January by 3.2%, to a 5.38 million annual rate. Though volatile month to month, home sales in 2017 racked up their best year since 2006 and are expected to maintain that upward trend.

An IRS bulletin explains interest on home equity loans may still be deductible. The loan must be used to “buy, build or substantially improve” a home. And to deduct interest, all loans on the home cannot exceed a $750,000 limit ($350,000 if married filing separately).

As with all tax matters, always consult a tax professional before making any tax-related decision.

BUSINESS TIP OF THE WEEK… Spend a half hour to an hour each day prospecting on the phone. Book the time on your schedule–and just do it. Why? People who consistently prospect earn more. Simple as that.

>> Review of Last Week

FED FOLLIES… A crazy week on Wall Street, thanks to the Fed. Stocks went south on Wednesday after the Fed’s Minutes from its last meeting revealed most members see stronger growth in the economy and inflation. This could necessitate more rate hikes, which investors don’t much like.

But Friday, the Fed’s semi-annual monetary policy report also noted broad improvement in the economy and increasing inflation, but did not suggest that rising prices dictated more aggressive rate hikes. Happy with that, the market rallied to another weekly gain.

GDP averaged 2.9% the last three quarters (after averaging 2.1% since 2010), unemployment is at a 17-year low, and wages, consumer confidence and business investment are rising. A few rate hikes (which, remember, are starting from a very low level) may be a small price to pay for this progress.

The week ended with the Dow UP 0.4%, to 25310; the S&P 500 UP 0.6%, to 2747; and the Nasdaq UP 1.4%, to 7337.

Bond prices suffered from the inflation worries, but recovered a bit on Friday. The 30YR FNMA 4.0% bond we watch ended unchanged, at $102.47. National average 30-year fixed mortgage rates in Freddie Mac’s latest Primary Mortgage Market Survey edged up. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?… Zillow reports the U.S. housing market has completely recovered its $9 trillion of value lost in the downturn. The average U.S. home is now worth $55,200 more than when prices hit bottom.  

>> This Week’s Forecast

NEW AND PENDING HOME SALES, THE ECONOMY, INFLATION ALL GROW Expect to see New Home Sales up in January, along with the Pending Home Sales index of contracts signed on existing homes. The Q4 GDP-2nd Estimate should show the economy growing at a 2.5% annual rate, enough to spur additional growth in Core PCE Prices, the Fed’s favorite inflation read.

>> 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 Feb 26 – Mar 2

M
Feb 26
08:30 New Home Sales Jan 645K 625K Moderate
Tu
Feb 27
08:30 Durable Goods Orders Jan -2.0% 2.9% Moderate
Tu
Feb 27
10:00 Consumer Confidence Feb 126.5 125.4 Moderate
W
Feb 28
08:30 Q4 GDP – 2nd Estimate Q4 2.5% 2.6% HIGH
W
Feb 28
09:45 Chicago PMI Feb 64.5 65.7 HIGH
W
Feb 28
10:00 Pending Home Sales Jan 0.4% 0.5% Moderate
W
Feb 28
10:30 Crude Inventories 02/24 NA -1.6M Moderate
Th
Mar 1
08:30 Initial Unemployment Claims 02/24 227K 222K Moderate
Th
Mar 1
08:30 Continuing Unemployment Claims 02/17 NA 1.875M Moderate
Th
Mar 1
08:30 Personal Income Jan 0.3% 0.4% Moderate
Th
Mar 1
08:30 Personal Spending Jan 0.2% 0.4% HIGH
Th
Mar 1
08:30 Core PCE Prices Jan 0.3% 0.2% HIGH
Th
Mar 1
10:00 ISM Index Feb 58.4 59.1 HIGH
F
Mar 2
10:00 U. of Michigan Consumer Sentiment – Final Feb 99.5 99.9 Moderate

 

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… In the Fed futures market, they still see a March rate hike as a near certainty. May gets a hold, then we go up another quarter percent in June. Note: In the lower chart, an 83% probability of change is an 83% certainty the rate will move higher.

Current Fed Funds Rate: 1.25%-1.50%

After FOMC meeting on: Consensus
Mar 21 1.50%-1.75%
May 2 1.50%-1.75%
Jun 13 1.75%-2.00%

 

Probability of change from current policy:

After FOMC meeting on: Consensus
Mar 21        83%
May 2        22%
Jun 13        69%

 

This post is an advertisement for Ron Schulz. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice, or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in this message is the property of Supreme Lending and cannot be reproduced for any use without prior written consent. This message is intended for business professionals only and is not intended for distribution to consumers or other third parties. The material does not represent the opinion of Supreme Lending. EVERETT FINANCIAL, INC. D/B/A SUPREME LENDING NMLS ID #2129 (www.nmlsconsumeraccess.org) 14801 Quorum Dr., #300, Dallas, TX 75254. 877-350-5225. Copyright © 2018. Not an offer or agreement. Information, rates, & programs are subject to change without prior notice. Not available in all states. Subject to credit & property approval. Not affiliated with any government agency. AZ Mortgage Banker License 0925918, AZ Principal Office: 25030 S 190th Street, Queen Creek, AZ 85142. Licensed by the Department of Business Oversight under the CA Residential Mortgage Lending Act License 4130655. CO Mortgage Company – Regulated by the Division of Real Estate. Delaware Lender License 10885. GA Mortgage Lender License 22114– Georgia Residential Mortgage Licensee. IL Residential Mortgage License MB.6760323-DBA1– Illinois Residential Mortgage Licensee. MA Mortgage Broker License MC2129. MA Mortgage Lender License MC2129. Licensed by the N.J. Department of Banking and Insurance – New Jersey Residential Mortgage Lender License. Licensed Mortgage Banker-NYS Department of Financial Service. NY Mortgage Banker License B501049. Ohio Mortgage Broker Act Certificate of Registration MB.804158.000. Ohio Mortgage Loan Act Certificate of Registration SM.501888.000. OR Mortgage Lending License ML-4265. Licensed Mortgage Banker by the PA Department of Banking – Pennsylvania Mortgage Lender License 45048. Rhode Island Licensed Lender 20142998LL.

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