Info That Hits Us Where We Live
CoreLogic reports January home prices gained 6.6% annually, noting: “Entry-level homes have been in particularly short supply, leading to more rapid home-price growth compared with more expensive homes.”
Yet Trulia says affordability has grown. They found that today, the median household can afford a home that’s 1.5 times more expensive than the median home price, while in 1980, that household could only afford a home that was about 75% of the median price.
The difference lies with today’s historically low mortgage rates. Trulia reports that at today’s income levels, mortgage rates would have to reach 9.4% before the median home price became unaffordable nationally.
Business Tip of the Week
Trust your gut. Your instincts usually let you know when something is a good, or a bad, idea. To access your instincts, simply sit quietly and listen to yourself.
Review of Last Week
Tariff and trade war worries evaporated after investors were blind-sided by a blockbuster February jobs number–313,000 new Nonfarm Payrolls. The blue-chip Dow shot back up over 25,000 and the tech-y Nasdaq catapulted to a new record high.
That unexpectedly large jobs total was reported as “a reflection of the strongest labor market in two decades.” Party poopers pooh-poohed the 0.1% gain in hourly wages, but those are still up 2.6% for the year, and that’s not counting bonus and commission income.
Thursday, the President signed a proclamation for tariffs on steel and aluminum. But he exempted Canada and Mexico and left open possible exemptions for other countries willing to renegotiate current deals. Investors liked that, though not as much as Friday’s jobs report.
The week ended with the Dow UP 3.3%, to 25336; the S&P 500 UP 3.5%, to 2787; and the Nasdaq UP 4.2%, to 7561.
In the bond market, Treasuries finished modestly lower, but the 30YR FNMA 4.0%, bond we watch ended the week unchanged, at $102.38. In Freddie Mac’s latest Primary Mortgage Market Survey, national average 30-year fixed mortgage rates edged up for the ninth week in a row. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
Did You Know?
The New York Fed reports mortgage debt increased by $139 billion the last quarter, but still remains 4.4% below its peak level. So, more recovery to come.
This Week’s Forecast
February Housing Starts are forecast off a tad, just under the 1.3 million mark. Analysts predict inflation has slowed, gauged by the February Consumer Price Index (CPI). But Retail Sales are expected to show growth, along with manufacturing, according to the Philadelphia Fed Index and other key factory measures.
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 Mar 12 – Mar 16
| M Mar 12 |
14:00 | Treasury Budget | Feb | -$216.0B | -$192.0B | Moderate |
| Tu Mar 13 |
08:30 | Consumer Price Index (CPI) | Feb | 0.2% | 0.5% | HIGH |
| Tu Mar 13 |
08:30 | Core CPI | Feb | 0.2% | 0.3% | HIGH |
| W Mar 14 |
08:30 | Retail Sales | Feb | 0.3% | -0.3% | HIGH |
| W Mar 14 |
08:30 | Retail Sales ex-auto | Feb | 0.4% | 0.0% | HIGH |
| W Mar 14 |
08:30 | Producer Price Index (PPI) | Feb | 0.1% | 0.4% | Moderate |
| W Mar 14 |
08:30 | Core PPI | Feb | 0.2% | 0.4% | Moderate |
| W Mar 14 |
10:00 | Business Inventories | Jan | 0.6% | 0.4% | Moderate |
| W Mar 14 |
10:30 | Crude Inventories | 03/10 | NA | +2.4M | Moderate |
| Th Mar 15 |
08:30 | Initial Unemployment Claims | 03/10 | 226K | 231K | Moderate |
| Th Mar 15 |
08:30 | Continuing Unemployment Claims | 03/03 | NA | 1.870M | Moderate |
| Th Mar 15 |
08:30 | Empire Manufacturing Index | Mar | 15.0 | 13.1 | Moderate |
| Th Mar 15 |
08:30 | Philadelphia Federal Index | Mar | 23.7 | 25.8 | HIGH |
| F Mar 16 |
08:30 | Housing Starts | Feb | 1.283M | 1.326M | Moderate |
| F Mar 16 |
08:30 | Building Permits | Feb | 1.330M | 1.396M | Moderate |
| F Mar 16 |
09:15 | Industrial Production | Feb | 0.3% | -0.1% | Moderate |
| F Mar 16 |
09:15 | Capacity Utilization | Feb | 77.7% | 77.5% | Moderate |
| F Mar 16 |
10:00 | U. of Michigan Consumer Sentiment Index – Prelim. | Mar | 99.5 | 99.7 | Moderate |
Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months… A week from this Wednesday, the Fed futures market expects the first rate hike of the year. But a second one isn’t seen until June. Note: In the lower chart, an 89% probability of change is an 89% 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 | 89% |
| May 2 | 16% |
| Jun 13 | 77% |
Statistics source: www.markettrends.com
Material in this article from: Inside Lending Market Snapshot
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