Inside Lending Newsletter
For the week of March 6, 2017 – Vol. 15, Issue 9
QUOTATION OF THE WEEK… “High expectations are the key to everything.” –Sam Walton, American businessman
INFO THAT HITS US WHERE WE LIVE … The founder of the world’s largest retailer would have preferred a higher level of expectations from the latest Pending Home Sales Index. This National Association of Realtors (NAR) measure of contracts signed on existing homes declined 2.8% in January. But this was a drop from an upwardly revised number for December. Plus, 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 of the country, which is edging up home prices. Indeed, 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.
BUSINESS TIP OF THE WEEK… Get in the habit of taking action, instead of just thinking about it. Don’t be rash, of course, but do spend less time reflecting–and more time doing. You’ll be surprised at how much you’ll accomplish.
>> Review of Last Week
CATCHING THE WAVE... The week featured some better than expected economic data, plus a bit of a recovery in oil prices, whose decline had the year.
The week’s good economic data featured a sharp rebound in Durable Goods Orders, up 4.9% in January following their drop in December. Initial Unncome ca rate hike.
The week ended with the Dow UP 1.5%, to 16640; the S&P 500 UP 1.6%, to 1948; and the Nasdaq UP 1.9%, to 4590.
Friday’s positive economic news hurt bond prices, as investor money left the safety play to get in on the action in equities.
The 30YR FNMA 4.0% bond we watch finished the weekUP .46, at $105.38.
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. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW?… Billionaire investor Warren Buffett says manufactured homes account for about 70% of new American homes that cost less than $150,000. His Berkshire Hathaway firm owns the largest U.S. builder of such homes.
>>This Week’s Forecast
PRODUCTIVITY GAINS AND SO DO JOBS… This week should
>> 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 Mar 6 – Mar 10
|08:30||Productivity – Rev.||Q4||%||1.3%||Moderate|
|08:30||Unit Labor Costs – Rev.||Q4||%||1.7%||Moderate|
|08:30||Initial Unemployment Claims||3/4||2K||223K||Moderate|
|08:30||Continuing Unemployment Claims||2/25||NA||2.066M||Moderate|
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months… Three out of four economists see the central bank raising rates a quarter of a percent at next week’s FOMC meeting. But they expect no more hikes for the next two meetings. Note: In the lower chart, an 80% probability of change is only a 20% certainty the rate will stay the same.
Current Fed Funds Rate: 0.5%-0.75%
|After FOMC meeting on:||Consensus|
Probability of change from current policy:
|After FOMC meeting on:||Consensus|
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