Jan 022020

(& a Happy New Year!)

New single-family home sales rose 1.3% in November, up 16.9% from a year ago. The 719,000 unit annual rate was a tick off expectations, but the average pace of sales for the past three months hit a post-recession
high. Freddie Mac‘s December forecast sees home sales at 6 million this
year, 6.2 million in 2020, and 6.3 million in 2021. Their chief economist
adds, “the outlook is bright,” thanks to “low mortgage rates and the
improving economy.”Fannie Mae also predicts low rates will continue.
While they’re not forecasting the rate drop we saw this year, they expect the average fixed rate mortgage will maintain record low levels.

REVIEW OF LAST WEEK

MORE HOLIDAY GIFTS… The holiday-shortened trading week delivered a fresh pile of presents for investors. The tech-y Nasdaq ended
north of 9,000 for the first time ever, while the Dow and S&P 500
also hit new highs.There was plenty to celebrate. From November 1 to December 24, total retail sales, excluding autos, went up 3.4% year-over-year, with online sales up 18.8%, indicating the consumer is
healthy, good news for the housing market.We had reports a Phase One trade deal is close to being signed with China, which lowered
import tariffs on about 850 commodity products, while weekly
jobless claims keep showing a strong labor market, also great for real
estate. The week ended with the Dow UP 0.7%, to 28,645; the S&P 500 UP 0.6%, to 3,240; and the Nasdaq UP 0.9%, to 9,007. The bond market
featured a holiday trading theme, with light volume but enough
year-end momentum to send the 30YR FNMA 4.0% bond UP .07, to
$103.95.  Freddie Mac’s Primary Mortgage Market Survey saw the national average 30-year fixed mortgage rate little changed.
Remember, mortgage rates can be extremely volatile, so check
with your mortgage professional for up-to-the-minute
information.DID YOU KNOW?… The NAHB reports 83% of Millennials care about the impact on the environment of building a home. But only
16% will pay for an environmentally friendly one, though more say they’ll pay for green features that cut their utility bills.

THIS WEEK’S FORECAST

PENDING HOME SALES, MANUFACTURING GAIN, CONSUMERS UPBEAT… For November, Pending Home Sales should increase, the ISM Manufacturing index is forecast up but shy of showing growth, while Consumer Confidence is expected to keep going through the roof.

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.

FEDERAL RESERVE WATCH

 Forecasting Federal Reserve policy changes in coming months… Nothing
has changed Wall Street’s view that the Fed will keep rates where they
are for all of next year. Note: In the lower chart, a 4% probability of
change is a 96% probability the rate will stay the same.Current Fed Funds Rate: 1.50%-1.75% AFTER FOMC MEETING ON:CONSENSUS Jan 291.50%-1.75% Mar 18 1.50%-1.75% Apr 2 91.50%-1.75% Probability of change
from current policy:AFTER FOMC MEETING ON: CONSENSUS
Jan 29    4% Mar 18     8% Apr 29    16%

via CB Loans


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