Pending Home Sales Up, Fed Rate Down by Ron Schulz



For the week of november 4, 2019




  Stop chasing the money and start chasing the passion.–Tony Hsieh, Zappos CEO  





The measure of contracts signed on existing homes, Pending Home Sales [], gained 1.5% in September after a 1.4% increase in August. So expect a boost in Existing Home Sales for October.

The Fed met and, to no one’s surprise, dropped the short-term Funds Rate a quarter percent. This does not yet affect long-term mortgage rates, although it does help perpetuate today’s low-rate lending environment.

Low rates pushed home ownership to 64.8% in Q3, and should send mortgage originations [] to the highest level in 12 years. Factoring in consumer house buying power, First American says home prices are 41% below their 2006 peak.






GOOD NEWS GALORE… Happy investors sent the S&P 500 and Nasdaq to new highs, and the Dow close to one, on a bunch of good news, starting with the 128,000 jobs added in October even after the UAW strike subtracted 46,000 workers.

August and September revisions added another 95,000 jobs, and earnings are now up 3.0% from a year ago. Personal Income is up 4.9% annually and consumer spending, which drives about 70% of the economy, is up 3.9%.  

Fed Vice Chair Richard Clarida summed it up: “The consumer has never been in better shape.” Companies too: 75% of the S&P 500 reporting earnings have beaten estimates. Growth may be temporarily slowing, but it’s still pretty good.

The week ended with the Dow UP 1.4%, to 27,347; the S&P 500 UP 1.5%, to 3,067; and the Nasdaq UP 1.7%, to 8386.

All the positive economic news drove investors into riskier equities and sent many bond prices south. But the 30YR FNMA 4.0% bond ended UP .19, at $103.75.  Freddie Mac’s Primary Mortgage Market Survey reported the national average 30-year fixed mortgage rate inched up, yet stayed more than 1% lower than a year ago. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?… A new survey from Solidifi [] reports that although 70% of consumers would like a more digital closing process, 81% say they still prefer to do a mortgage closing in person, not digitally.






SERVICES SECTOR GROWS, CONSUMERS FEEL FINE… The services sector of the economy provides the vast majority of our jobs and is expected to keep growing in October, according to the ISM Non-Manufacturing Index. Consumers’ strong positive feelings about the economy continue, with the University of Michigan Consumer Sentiment Index in the nice mid-nineties.

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






Forecasting Federal Reserve policy changes in coming months… The message from Fed Chair Powell after last week’s rate cut was one-and-done, “if the current outlook holds.” The futures market thinks it will. Note: In the lower chart, a 9% probability of change is a 91% probability the rate will stay the same.

Current Fed Funds Rate: 1.50%-1.75%

Dec 11 1.50%-1.75%
Jan 29 1.50%-1.75%
Mar 18 1.50%-1.75%


Probability of change from current policy:

Dec 11     9%
Jan 29    33%
Mar 18    43%






  If your productivity is falling off, try this trick. Pretend every day is the day before vacation. Along with regular work, the number of things people complete the day before they go on vacation is nothing short of phenomenal.  


  Ron Schulz
Senior Loan Officer
NMLS# 266128

6060 North Central Exp #462
Dallas, TX 75206

Office: 214-346-5279
Mobile: 214-794-4014 []







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