Builder Confidence Post-Recession High by Ron Schulz

>> Market Update

QUOTATION OF THE WEEK…“Have you ever noticed that anybody driving slower than you is an idiot, and anyone going faster than you is a maniac?” –George Carlin, American comedian, actor and author

INFO THAT HITS US WHERE WE LIVE… Coming off their best year in a decade, Housing Starts surprisingly rose 9.7% in January, as home building heated up to a 1.326 million annual rate. The future looks good too, with Building Permits up to a 1.396 million annual rate.

Small wonder the National Association of Home Builders (NAHB) found builder confidence in future sales expectations is now at a post-recession high. The NAHB Chair put this to “the pro-business political climate that will strengthen the housing market.”

Finally, a recent study reports the median age at which consumers buy their first home is 29.1 years. Yet some three quarters of millennials are not currently homeowners. What an opportunity.

BUSINESS TIP OF THE WEEK… The goal is always to give clients an amazing experience. But make sure the prospects are worth that extra effort. If not, don’t take them on.

>> Review of Last Week

REBOUND… After falling sharply the prior two weeks, the stock market rebounded last week, recovering about half its losses, and the three major indexes are again ahead for the year. It now seems the big dip on Wall Street was just a correction.

That’s not to say we won’t have more volatility this year than last, when stocks gained more than 20% while never posting even a 3% loss. This year, investors worry about inflation driving the Fed to more rate hikes, and last week saw a hotter than expected Consumer Price Index (CPI).

But the economy doesn’t seem in danger of overheating. Its strength is growing, with corporate earnings up more than 15% and revenues up nearly 8% the past year, plus historically low unemployment. It’s no surprise Michigan Consumer Sentiment hit 99.9, its second highest print in 14 years.

The week ended with the Dow UP 4.3%, to 25219; the S&P 500 also UP 4.3%, to 2732; and the Nasdaq UP 5.3%, to 7239.

In the bond market, prices generally softened, as investors shifted money back into equities. The 30YR FNMA 4.0% bond we watch dipped .08, to $102.47. Freddie Mac’s latest Primary Mortgage Market Survey reported national average 30-year fixed mortgage rates continue to climb, reaching the level they posted in April 2014. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?… Mortgage rates are expected to rise, but the market can take it. A recent survey of home buyers by a real estate database reports only 6% of respondents said they would cancel their purchase plans if mortgage rates exceeded 5%.

>> This Week’s Forecast

EXISTING HOME SALES STILL GROWING… Forecasters expect to see continued growth in Existing Home Sales in January, hitting an annual rate well above 5.5 million. Not much else gets reported during this four-day week, but we’ll keep an eye on Unemployment Claims, predicted to remain historically low.

The U.S. stock and bond markets were closed yesterday in observance of Presidents’ Day.

>> 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 Feb 19 – Feb 23

Feb 21
10:00 Existing Home Sales Jan 5.62M 5.57M Moderate
Feb 22
08:30 Initial Unemployment Claims 02/17 233K 230K Moderate
Feb 22
08:30 Continuing Unemployment Claims 02/10 NA 1.942M Moderate
Feb 22
10:00 Leading Economic Index (LEI) Jan 0.8% 0.6% Moderate
Feb 22
11:00 Crude Inventories 02/17 NA 1.8M Moderate

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… The futures market sees an even higher probability the Fed will hike rates a month from now, leave things alone in May, but bump up again 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        22%
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 ( 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.

Leave a Reply