Home Starts Down But Builders Upbeat by Ron Schulz

For the week of July 23, 2018 — Vol. 16, Issue 30

>> Market Update

QUOTATION OF THE WEEK…“Insanity is hereditary. You get it from your children.” –Sam Levenson, American humorist

INFO THAT HITS US WHERE WE LIVE… After rising in May at their fastest pace in 11 years, Housing Starts fell 12.3% in June, to a 1.173 million annual rate. Yet the National Association of Home Builders reports strong buyer demand keeps builder optimism historically high.

The fact is, housing starts data is quite volatile month to month. To allow for this, compare the first six months of 2018 with the same period in 2017 and you’ll find starts are up 7.4% versus a year ago.

Similarly, building permits were down 2.2% in June, to a 1.273 million annual rate. Yet the three-month average is close to its highest level since 2007. Also, Q2 saw builders completing units at the fastest quarterly pace since the recession.

BUSINESS TIP OF THE WEEK… Four great lead sources: present clients; past clients; prospects you haven’t contacted in a while; and cold called prospects who like your pitch but don’t need you now–ask if they can refer you to someone who might.

>> Review of Last Week

HEADLINES, SHMEDLINES… Headlines screamed tariff and interest rate warnings, but investors took them in stride, as climbing corporate profits and steady economic data left the three major stock indexes little changed for the week.

Retail Sales rose in June for the fifth month in a row, a strong 0.5%. Economists linked this to lower taxes and higher employment, as weekly jobless claims fell to their lowest level in more than 48 years.

And let’s remember, the Fed only hikes short-term interest rates. Long-term mortgage rates don’t necessarily rise by the same amount as the Fed Funds Rate, or at the same time.

The week ended with the Dow UP 0.2%, to 25058; the S&P 500 UP 0.52, to 2802; and the Nasdaq down 0.1%, to 7820.

After outperforming for weeks, longer dated Treasuries and mortgage bonds finished a bit lower on Friday. The 30YR FNMA 4.0% bond ended down .17, to $101.81. The national average 30-year fixed mortgage rate inched backward in Freddie Mac’s latest Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?… Freddie Mac‘s chief economist says the lack of movement in mortgage rates is “good news for price sensitive home shoppers, given that this stability in borrowing costs gives them a little extra time to find the right home.”

>> This Week’s Forecast

EXISTING HOME SALES UP, NEW HOMES OFF, AS THE ECONOMY SPIKES Economists predict Existing Home Sales to recover in June, New Home Sales to slip a bit, and economic growth to hit 4.1% in the GDP-Advanced read for Q2.

>> 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 Jul 23 – Jul 27

Date Time (ET) Release For Consensus Prior Impact
Jul 23
10:00 Existing Home Sales Jun 5.45M 5.43M Moderate
Jul 25
10:00 New Home Sales Jun 670K 689K Moderate
Jul 25
10:30 Crude Inventories 07/21 NA +5.8M Moderate
Jul 26
08:30 Initial Unemployment Claims 07/21 215K 207K Moderate
Jul 26
08:30 Continuing Unemployment Claims 07/14 NA 1.751M Moderate
Jul 26
08:30 Durable Goods Orders Jun 3.2% -0.6% Moderate
Jul 26
08:30 Durable Goods Orders – ex transportation Jun 0.4% -0.3% Moderate
Jul 27
08:30 GDP – Advanced Q2 4.1% 2.0% HIGH
Jul 27
10:00 U. of Michigan Consumer Sentiment – Final Jul 97.1 97.1 Moderate


>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months…For all the worries voiced lately over rate hikes, the Fed Funds futures market sees no move in August and just a small blip in September, then nothing again in November. Note: In the lower chart, a 3% probability of change is a 97% certainty the rate will stay the same.

Current Fed Funds Rate: 1.75%-2.00%

After FOMC meeting on: Consensus
Aug   1 1.75%-2.00%
Sep 26 2.00%-2.25%
Nov   8 2.00%-2.25%


Probability of change from current policy:

After FOMC meeting on: Consensus
Aug   1            3%
Sep 26          89%
Nov   8          18%


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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