Home sales up across the board by Ron Schulz

For the week of April 30, 2018 — Vol. 16, Issue 18

>> Market Update

QUOTATION OF THE WEEK…“You can learn many things from children. How much patience you have, for instance.” –Franklin P. Jones, American journalist

INFO THAT HITS US WHERE WE LIVE… The first good news was that Existing Home Sales rose 1.1% in March to a 5.60 million annual rate. Yeah, they were down a tick from March 2017, but that month had the second highest sales pace last year.

Then, March New Home Sales also surprised to the upside, gaining 4.0%, to a 694,000 annual rate. Sales are 8.8% ahead of a year ago, posting the second highest sales pace since 2007.

Freddie Mac’s chief economist noted, “Despite the increase in borrowing costs, demand… remains solid. The Mortgage Bankers Association reported… activity was up 11% from a year ago.”

BUSINESS TIP OF THE WEEK… When talking to someone, you’ll never be at a loss for words if you use the FORD approach: Family, Occupation, Recreation, Dreams. 

>> Review of Last Week

LITTLE CHANGE… Investors keep balancing optimism about corporate earnings and economic growth against worries over rising interest rates and whether growth will continue. By Friday,  worriers barely prevailed, the S&P 500 ending flat, the Dow and Nasdaq down slightly.

We’re right in the middle of first quarter earnings season and 80% of the S&P 500 companies reporting bested forecasts (though that didn’t necessarily boost share prices).

Q1 GDP slipped to 2.3% (Advance read), but that beat estimates, and real GDP is still up 2.9% from a year ago. Jobless claims fell to their lowest level since 1969, while Michigan Consumer Sentiment came in higher than expected once again.

The week ended with the Dow down 0.6%, to 24311; the S&P 500 flat, at 2670; and the Nasdaq down 0.4%, to 7120.

Bonds edged up as investors feared weak growth in France and the UK might be contagious. The 30YR FNMA 4.0% bond ended UP .12, at $101.81. Still low by historical standards, the national average 30-year fixed mortgage rate continued up in Freddie Mac’s latest Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?… The Census Bureau reports homeownership held steady in Q1 2018, but rental households fell for the fourth straight quarter, “a strong sign households are making the switch from renting to buying,” according to one prominent economist.

>> This Week’s Forecast

PENDING HOME SALES, MANUFACTURING, JOBS GROW; INFLATION AND THE FED STAY QUIET March Pending Home Sales are predicted up, while two factory reads, the Chicago PMI and ISM Index, are forecast in solid growth territory. Most important to housing, jobs are expected up, with new Nonfarm Payrolls back near 200,000, and Hourly Earnings rising. Core PCE Prices inflation should be quiet, and quieter still will be the Fed’s FOMC Rate Decision: no hike.

>> 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 Apr 30 – May 4

Date Time (ET) Release For Consensus Prior Impact
M
Apr 30
08:30 Personal Income Mar 0.4% 0.4% Moderate
M
Apr 30
08:30 Personal Spending Mar 0.4% 0.2% HIGH
M
Apr 30
08:30 Core PCE Prices Mar 0.2% 0.2% HIGH
M
Apr 30
09:45 Chicago PMI Apr 58.0 57.4 HIGH
M
Apr 30
10:00 Pending Home Sales Mar 1.5% 3.1% Moderate
Tu
May 01
10:00 ISM Index Apr 58.5 59.3 HIGH
W
May 02
10:30 Crude Inventories 04/28 NA +2.2M Moderate
W
May 02
14:00 FOMC Rate Decision May 1.50%-1.75% 1.50%-1.75% HIGH
Th
May 03
08:30 Initial Unemployment Claims 04/28 220K 209K Moderate
Th
May 03
08:30 Continuing Unemployment Claims 04/21 NA 1.837M Moderate
Th
May 03
08:30 Productivity – Preliminary Q1 0.8% 0.0% Moderate
Th
May 03
08:30 Unit Labor Costs – Preliminary Q1 3.0% 2.5% Moderate
Th
May 03
08:30 Trade Balance Mar -$49.8B -$57.6B Moderate
Th
May 03
10:00 ISM Services Apr 58.3 58.8 HIGH
F
May 04
08:30 Average Workweek Apr 34.5 34.5 HIGH
F
May 04
08:30 Hourly Earnings Apr 0.2% 0.3% HIGH
F
May 04
08:30 Nonfarm Payrolls Apr 190K 103K HIGH
F
May 04
08:30 Unemployment Rate Apr 4.0% 4.1% HIGH

 

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… Wall Street figures this week’s Fed meet will be a non-event, but it’s a cinch we’ll get a quarter percent bump in June.  Note: In the lower chart, a 7% probability of change is a 93% certainty the rate will stay the same.

Current Fed Funds Rate: 1.50%-1.75%

After FOMC meeting on: Consensus
May 2 1.50%-1.75%
Jun 13 1.75%-2.00%
Aug 1 1.75%-2.00%

 

Probability of change from current policy:

After FOMC meeting on: Consensus
May 2           7%
Jun 13       100%
Aug 1          11%

Ron Schulz
Senior Loan Officer
NMLS# 266128

6060 North Central Exp #438
Dallas, TX 75206

Office: 214-346-5279
Mobile: 214-794-4014
ron.schulz@supremelending.com
www.ronschulz.com

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