Market Update: Frenzied Spring Home Buying Season by Ron Schulz

For the week of April 10, 2017 – Vol. 15, Issue 14

>> Market Update

QUOTATION OF THE WEEK… “When you have confidence, you can have a lot of fun. And when you have fun, you can do amazing things.” –Joe Namath, American football quarterback and actor

INFO THAT HITS US WHERE WE LIVE … Well, there are some good reasons for us to feel confident about the housing market, so fun and amazing things may be soon upon us. The latest market analysis from reveals this spring will be the hottest buying season yet. The median number of days homes are staying on the market is 69, eight fewer than a year ago. And experts predict buying will accelerate, with homes remaining on the market just 22 days as the spring selling season ramps up. The manager of economic research says, “we’re already in the thick of the most frenzied spring home buying season on record.”

There’s also good reason to be confident about home buying among the important Millennial generation. A leading provider of loan origination software released a tracking study on that group’s activities. The firm’s EVP of corporate strategy noted: “Purchase loans are increasing, indicating that Millennials are continuing to enter the first-time homebuyer market.” In fact,
the Mortgage Bankers Association reported purchase applications up 1.0% for the week ending March 31. Plus, purchase demand is up, as the average loan size for purchase applications set a new record, coming in at $318,200. Seems like amazing things are already happening.

BUSINESS TIP OF THE WEEK… To be successful as a business–and as a professional–it’s helpful to have a mission statement. Write down the things you and your business are committed to achieving for your clients and employees.

>> Review of Last Week

FREAKY FRIDAY… Last week’s last trading day began with two out-of-the-ordinary reports. The first was the news of a surprise U.S. missile attack on the Syrian air base believed responsible for a chemical attack earlier in the week. The second was the Bureau of Labor Statistics reveal that a way less than expected 98,000 jobs were added in March. Additional geopolitical concerns included another North Korean missile test, and the diplomatic talks between President Trump and his Chinese counterpart Xi Jinping in Florida. Investors were by no means panicking, but all three major stock market indexes closed fractionally lower for the week.

Wall Streeters stayed calm as the Syrian action garnered support from several U.S. partners, while the President said he had made “tremendous progress” with Xi. Even the jobs report contained comforting items. The Unemployment Rate dropped to 4.5%–its lowest level in almost 10 years. Hourly Earnings continued on an upward trend, rising 0.2% for the month and 2.7% annually. Total hours worked are up 1.4%, so total wages are up 4.1% versus a year ago–good for the housing market, which needs incomes to keep up with home prices. Finally, folks realized March storms had put a big dent in construction and retail jobs.

The week ended with the Dow down seven points, to 20656; the S&P 500 down 0.3%, to 2356; and the Nasdaq down 0.6%, to 5878.

Geopolitics and the lower than expected jobs number helped some bond prices. The 30YR FNMA 4.0% bond we watch finished the week UP .12, at $105.06. In Freddie Mac’s Primary Mortgage Market Survey for the week ending April 6, national average 30-year fixed mortgage rates dropped for the third week in a row, nearing their low for the year.  Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?… The National Association of Realtors reports 32% of home sales in February were to first-time buyers, their median down payment was 6%, and 9% financed their purchase with a VA loan. 

>> This Week’s Forecast

RETAIL SALES OK, INFLATION TAME… Consumer spending is a big driver of the economy, so we keep an eye on Retail Sales. The overall number is forecast to come in a tick down for March, but when you exclude volatile auto sales, growth should continue. The Consumer Price Index (CPI) is predicted to show overall inflation flat in March, although the Core CPI, which excludes volatile food and energy prices, is predicted to be up 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 Apr 10 – Apr 14

 Date Time (ET) Release For Consensus Prior Impact
Apr 12
10:30 Crude Inventories 4/8 NA +1.57M Moderate
Apr 13
08:30 Initial Unemployment Claims 4/8 251K 234K Moderate
Apr 13
08:30 Continuing Unemployment Claims 4/8 NA 2.028M Moderate
Apr 13
08:30 Producer Price Index (PPI) Mar 0.0% 0.3% Moderate
Apr 13
08:30 Core PPI Mar 0.2% 0.3% Moderate
Apr 13
10:00 U. of Michigan Consumer Sentiment – Prelim. Apr 96.3 96.9 Moderate
Apr 14
08:30 Retail Sales Mar -0.1% 0.1% HIGH
Apr 14
08:30 Retail Sales ex-auto Mar 0.2% 0.2% HIGH
Apr 14
08:30 Consumer Price Index (CPI) Mar 0.0% 0.1% HIGH
Apr 14
08:30 Core CPI Mar 0.2% 0.2% HIGH
Apr 14
10:00 Business Inventories Feb 0.3% 0.3% Moderate


>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… Expectations have firmed a little more for another hike from the Fed in June. Note: In the lower chart, a 5% probability of change is a 95% certainty the rate will stay the same.

Current Fed Funds Rate: 0.75%-1.0%

After FOMC meeting on: Consensus
May 3 0.75%-1.0%
Jun 14 1.0%-1.25%
Jul 26 1.0%-1.25%

Probability of change from current policy:

After FOMC meeting on: Consensus
May 3         5%
Jun 14       71%
Jul 26       74%
 Ron Schulz
Senior Loan Officer
NMLS# 266128
13140 Coit Rd # 502
Dallas, TX 75240
Office: 214-346-5279
Mobile: 214-794-4014
Fax: 972-284-0715
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