Market Update: Consumer Confidence at 16-yr High by Ron Schulz

For the week of May 22, 2017 – Vol. 15, Issue 20

>> Market Update

BULLETIN: Ransomware and other hacker attacks are spreading. Read how to protect your data: r=0

QUOTATION OF THE WEEK… “It does not matter how slowly you go as long as you do not stop.” –Confucius, Chinese teacher, editor, politician and philosopher

INFO THAT HITS US WHERE WE LIVE … It sure looked like the recovery in home building had come to a stop in April, as Housing Starts fell 2.6%, to a 1.172 million annual rate. But wait. Compared to a year ago, starts are still up 0.7% overall. Plus, the April drop was entirely due to a decline in multifamily starts, which are exceedingly volatile on a monthly basis. Single family starts were actually up 0.4% for the month and are now 8.9% ahead of their pace a year ago. New building permits also dipped 2.5%, to a 1.229 million annual rate. Yet permits for single-family units are up 6.2% versus a year ago, while multifamily permits are up 4.8%.

Much of the homebuilding recovery is still ahead of us. Experts say we need to build about 1.5 million units annually just to cover population growth and replace teardowns. And the mood going forward is good. The National Association of Home Builders (NAHB) reported builder confidence in the market for new single family homes went up two points in May, hitting its second highest reading since before the downturn. The NAHB also reported the median size for new single family homes decreased to 2,389 square feet from 2,465 square feet a year ago, because builders are bringing much needed entry-level homes to the market.

BUSINESS TIP OF THE WEEK… To build relationships with prospects and customers, find something outside of business you both like to talk about–parenting, pets, hobbies, sports, coffee, gardening, foods, whatever you’re passionate about.

>> Review of Last Week

ROCKY ROAD… Stocks finished Friday just marginally down for the week, but they certainly traveled a rocky road getting there. The broadly based S&P 500 hit a record high on Monday, then fell big-time on Wednesday, as investors feared the turmoil in Washington might jeopardize the Trump administration’s pro-growth policies. The term “Trump Slump” emerged in the media, although the S&P 500 ended Wednesday less than 2% below Monday’s all-time high. Thursday and Friday, investors re-gained their sanity and stocks re-gained much of their losses, though not enough to end ahead for the five days of trading.

Expectations for tax reform, deregulation and infrastructure spending are certainly generating economic optimism.
The small business confidence survey is at a 13-year high, terrific for the sector that employs most Americans. Consumer confidence is at a 16-year high, fueled by healthy job growth, a pickup in wages, unemployment at a 10-year low, and encouraging housing market indicators. Industrial Production in April rose an unexpected 1.0% overall, the once moribund manufacturing sector growing steadily, along with mining and utilities. Manufacturing sentiment in New York fell, but Capacity Utilization climbed nationally.

The week ended with the Dow down 0.4%, to 20805; the S&P 500 down 0.4%, to 2382; and the Nasdaq down 0.6%, to 6084.

Volatility in the stock market generally bodes well for bonds, and that was demonstrated last week. The 30YR FNMA 4.0% bond we watch finished the week UP .30, at $105.44. National average 30-year fixed mortgage rates edged down, staying near their lows for the year, in Freddie Mac’s Primary Mortgage Market Survey for the week ending May 18. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?… In the latest Mortgage Bankers Association Weekly Mortgage Applications Survey, the average purchase loan size reached a new survey high. 

>> This Week’s Forecast

NEW HOME SALES AND EXISTING HOME SALES RELAX, THE ECONOMY GROWS… Analysts are predicting both New Home Sales and Existing Home Sales will take a breather in April, no doubt caused by dwindling inventories in some regions. But we should get a few more indications that the economy is expanding, with the rising numbers for the Q1 GDP – Second Estimate and April Durable Goods Orders ex transportation, which exclude that volatile sector.

>> 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 May 22 – May 26

 Date Time (ET) Release For Consensus Prior Impact
May 23
10:00 New Home Sales Apr 605K 621K Moderate
May 24
10:00 Existing Home Sales Apr 5.65M 5.71M Moderate
May 24
10:30 Crude Inventories 2/27 NA -1.75M Moderate
May 25
08:30 Initial Unemployment Claims 2/27 238K 232K Moderate
May 25
08:30 Continuing Unemployment Claims 2/20 NA 1.898M Moderate
May 26
08:30 Durable Goods Orders Apr -1.8% 0.7% Moderate
May 26
08:30 Durable Goods Orders – ex transportation Apr 0.4% -0.2% Moderate
May 26
08:30 GDP – 2nd Estimate Q1 0.8% 0.7% Moderate
May 26
10:00 U. of Michigan Consumer Sentiment – Final May 97.5 97.7 Moderate


>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… The probability of a Fed rate hike in June is still highly likely, at well over 50%, but rates should hold there through September. Note: In the lower chart, a 79% probability of change is only a 21% certainty the rate will stay the same.

Current Fed Funds Rate: 0.75%-1.0%

After FOMC meeting on: Consensus
Jun 14 1.0%-1.25%
Jul 26 1.0%-1.25%
Sep 20 1.0%-1.25%

Probability of change from current policy:

After FOMC meeting on: Consensus
Jun 14       79%
Jul 26       80%
Sep 20       86%

Ron Schulz

Senior Loan Officer

Supreme Lending

Direct Phone 214-346-5279

Cell Phone 214-794-4014


13140 Coit Rd # 502

Dallas TX 75240

NMLS # 266128

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 © 2017. This is not an offer to enter into an agreement. Information, rates, & programs are subject to change without prior notice and may not be available in all states. All products are subject to credit & property approval. Supreme Lending is not affiliated with any government agency. Supreme Lending is required to disclose the following license information: 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. GA Mortgage Lender License 22114– Georgia Residential Mortgage Licensee. IL Residential Mortgage License MB.6760323-DBA1– Illinois Residential Mortgage Licensee. NV Division of Mortgage Lending Mortgage Banker License 4063. 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. 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. TX – SML Mortgage Banker Registration – Residential Mortgage Loan Originator. Massachusetts Mortgage Broker License MC2129. Massachusetts Mortgage Lender License MC2129.

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