New and pending home sales dip by Ron Schulz

For the week of March 5, 2018 — Vol. 16, Issue 10

>> Market Update

QUOTATION OF THE WEEK…“I want my children to have all the things I couldn’t afford. Then I want to move in with them.” –Phyllis Diller, American comedian

INFO THAT HITS US WHERE WE LIVE… The National Association of Realtors Pending Home Sales, an index of contracts signed on existing homes, fell 4.7% in January. Low inventory was the culprit, but the NAR’s chief economist sees hope, as starts near the “historical annual average of 1.5 million.”

Housing reports tend to be volatile month-to-month, so the NAR is sticking to its forecast of 5.5 million existing home sales this year, virtually identical to 2017’s 5.51 million.

New Home Sales took a 7.8% January tumble, to a 593,000 yearly rate. But, hey, last year these sales hit their highest total in a decade. One property economist offered: “With inventory levels at nine-year highs, and demand supported by rising household incomes, new home sales are set for a decent 2018.”

BUSINESS TIP OF THE WEEK… Technology levels the playing field, so it’s vital to focus on your unique brand–that’s the quality of the client experience you provide, the emotional connection you make with clients and what they tell others about you.

>> Review of Last Week

DOUBLE WHAMMY… After moving ahead the two prior weeks, stocks went lower last week, as investors got the double whammy of Fed Chair Jerome Powell’s Congressional testimony, and the President’s trade tariffs, 25% on steel and 10% on aluminum. Both point to the possibility of more rate hikes.

Powell testified that his economic projections have improved, making investors fear there might be four rate hikes this year. And though tariffs likely won’t give us the trade wars and economic hits others  bemoan, they could hike inflation–and interest rates. Please note: the tariffs aren’t yet set in stone!

At least consumers are sanguine about rates. January’s University of Michigan Consumer Sentiment reported consumers show little concern about growing interest rates, as the Index shot up to its second highest level in 14 years.

The week ended with the Dow down 3.0%, to 24538; the S&P 500 down 2.0%, to 2691; and the Nasdaq down 1.1%, to 7258.

Bonds proved volatile, with advances following declines and vice versa. The 30YR FNMA 4.0% bond we watch lost .09, to $102.38. Freddie Mac’s latest Primary Mortgage Market Survey had national average 30-year fixed mortgage rates up, now eight weeks in a row. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?… The share of buyers willing to make an offer on a home sight unseen is growing. An online real estate database reports 35% of recent buyers made an offer without first visiting the home.  

>> This Week’s Forecast

SERVICES SECTOR GROWS, ALONG WITH JOBS It’s good to see the February ISM Services index is still up there. A read above 50 indicates growth, and we’re staying well north of that threshold. The services sector of the economy provides the bulk of our jobs, so it makes sense that new Nonfarm Payrolls are forecast at more than 200,000, while the Unemployment Rate ticks down again.

>> 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 5 – Mar 9

M
Mar 5
10:00 ISM Services Feb 58.8 59.9 Moderate
W
Mar 7
08:30 Productivity-Rev. Q4 -0.1% -0.1% Moderate
W
Mar 7
08:30 Unit Labor Costs-Rev. Q4 2.1% 2.0% Moderate
W
Mar 7
08:30 Trade Balance Jan -$55.0B -$53.1B Moderate
W
Mar 7
10:30 Crude Inventories 03/03 NA +3.0M Moderate
Th
Mar 8
08:30 Initial Unemployment Claims 03/03 220K 210K Moderate
Th
Mar 8
08:30 Continuing Unemployment Claims 02/27 NA 1.931M Moderate
F
Mar 9
08:30 Average Workweek Feb 34.4 34.3 HIGH
F
Mar 9
08:30 Hourly Earnings Feb 0.2% 0.3% HIGH
F
Mar 9
08:30 Nonfarm Payrolls Feb 210K 200K HIGH
F
Mar 9
08:30 Unemployment Rate Feb 4.0% 4.1% HIGH

 

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… The probability of a March rate hike is growing in the Fed futures market, but nothing more until another quarter percent hike 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        20%
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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