New Listings Grow, Price Gains Moderate by Ron Schulz

Inside Lending

FOR THE WEEK OF OCTOBER 8, 2018

YOUR WEEKLY SMILE

 I stayed up all night to see where the sun went, and then it dawned on me.

MARKET UPDATE

Realtor.com reports 465,000 new listings hit the market in September, up 8% from the year before, the largest annual gain in five years. The hot sales pace left inventory flat, but it’s expected to increase soon.

Prices are already beginning to moderate, as the August CoreLogic Insights report posted a 5.5% annual gain, the slowest year-over-year home price growth in almost two years.

Even the number of homes selling above list is falling. An online real estate  database reports that in September, 22.9% of homes sold above asking, down from 29% in June.

REVIEW OF LAST WEEK

ECONOMY UP, STOCKS DOWN… Rising stocks usually mean a rising economy (that’s why we watch them), but last week’s good economic data made traders worry the Fed may raise rates faster, which sent stocks down.

Good stuff included the read on the huge services sector of our economy that unexpectedly jumped to its highest level in more than 20 years, while the  manufacturing index fell just a tad from August’s 14-year high.

September saw a lower than expected 134,000 new jobs, but 87,000 were added to July and August numbers, total cash earnings rose 5.4% the past year and the unemployment rate fell to 3.7%, the lowest in 49 years!

The week ended with the Dow down 11 points, to 26447; the S&P 500 down 1.0%, to 2886; and the Nasdaq down 3.2%, to 7788.

Bond prices sank, sending yields up, also making traders worried over rates. The 30YR FNMA 4.0% bond ended down .94, to $99.97. Yet the national average 30-year fixed mortgage rate inched back in Freddie Mac’s latest Primary Mortgage Market SurveyRemember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?… Goldman Sachs economist Daan Struyven claims little chance of recession in the next three years. He said, “the model still classifies the expansion as mid-cycle.”

THIS WEEK’S FORECAST

INFLATION EDGES UP, BUT NOT MUCH… The key reads this week are on inflation. Both the wholesale Producer Price Index and the Consumer Price Indexare expected to drift up, but not much higher than the Fed’s 2% annual target. That should keep the central bank (and Wall Street) calm about rates for now.

NOTE: Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.

FEDERAL RESERVE WATCH

Forecasting Federal Reserve policy changes in coming months… The consensus feels the Fed will sit on the present rate in November, do another quarter percent hike in December, then hold in January. Note: In the lower chart, a 5% probability of change is a 95% probability the rate will stay the same.

Current Fed Funds Rate: 2.00%-2.25%

AFTER FOMC MEETING ON: CONSENSUS
Nov   8 2.00%-2.25%
Dec 19 2.25%-2.50%
Jan  30 2.25%-2.50%

Probability of change from current policy:

AFTER FOMC MEETING ON: CONSENSUS
Nov   8    5%
Dec 19   83%
Jan 30   24%

BUSINESS TIP OF THE WEEK

Communicate with clients and prospects the way they prefer; these days, that’s by texting. People feel phone calls are intrusive, and voice mails and emails take too much effort versus easy-to-respond-to texts.

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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