MARKET UPDATE
Black Knight reports that in Q2 this year, tappable equity for homeowners with mortgages passed $6 trillion for the first time in history. And this happened even with the recent slowdown in home price growth.
Freddie Mac‘s chief economist thinks the “spectacular stretch of solid job gains and low unemployment should help keep homebuyer interest elevated. However, mortgage rates will likely also move up.”
This doesn’t worry the chief economist at a large regional real estate firm, since “low unemployment rates encourage employers to raise wages,” which can cover higher loan costs. He also sees “more homes coming on the market.”
REVIEW OF LAST WEEK
STOCKS REBOUND OFF BOOMING ECONOMY… Stocks returned to their winning ways as investors saw tariff threats as negotiating tactics and focused instead on growth in corporate earnings and the overall economy.
Industrial Production set a new record high, Retail Sales are up a strong 6.6% from a year ago, and Americans’ confidence in the U.S. economy and in their own well-being stands near a 14-year high.
Plus, workers are actually doing better than corporations. Since the end of last year, total wages have increased by a $200 billion annual rate, while corporate profits were up by just $100 billion annualized!
The week ended with the Dow UP 0.9%, to 26155; the S&P 500 UP 1.2%, to 2905; and the Nasdaq UP 1.4%, to 8010.
Bond prices dipped for the week after all the good economic data. The 30YR FNMA 4.0% bond ended down .34, at $101.11. Freddie Mac’s latest Primary Mortgage Market Survey saw the national average 30-year fixed mortgage rate up for the third 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?
PropertyShark reports 83% of Generation Z (born1995 to 2010) plans to buy a home in the next five years and get this: the ‘Instagram Generation’ would sacrifice location and commuting distance for size and amenities.
THIS WEEK’S FORECAST
NEW HOMES GOING UP, EXISTING HOMES SELLING… August Housing Starts are expected to shoot past a 1.2 million annual rate. Existing Home Sales should also spring back to a 5.37 million yearly pace.
NOTE: Weaker than expected 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… The Fed futures market is dead certain about a rate hike a week from Wednesday, but it sees no moves again until December. Note: In the lower chart, a 100% probability of change is a 0% probability the rate will stay the same.
Current Fed Funds Rate: 1.75%-2.00%
| AFTER FOMC MEETING ON: | CONSENSUS |
| Sep 26 | 2.00%-2.25% |
| Nov 8 | 2.00%-2.25% |
| Dec 19 | 2.25%-2.50% |
Probability of change from current policy:
| AFTER FOMC MEETING ON: | CONSENSUS |
| Sep 26 | 100% |
| Nov 8 | 6% |
| Dec 19 | 80% |
BUSINESS TIP OF THE WEEK
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