Market Update for the Week of September 24, 2018


After a slow June and July, Housing Starts shot up 9.2% in August, to a 1.282 million annual rate. And single-family starts are up 5.7% for the first eight months of 2018 compared to the same period last year.

Existing Home Sales held steady in August, but that’s a positive after four months of declines. Supply is finally turning around, as inventory rose year-over-year for the first time in 38 months!

Freddie Mac‘s chief economist observed, “Amidst this four-week climb in interest rates, the welcoming news is that purchase applications have risen on an annual basis for five consecutive weeks.” Demand stays strong.


BACK TO BREAKING RECORDS… Though the tech-y Nasdaq lagged, the Dow and the S&P 500 hit new heights, driven by improving economic data indicating strong economic growth.

“Trade tensions” sound scary in the media, but tariffs have been mild and investors see they’ve had little effect on the economy. One economist calculated tariffs may add 0.1% overall to wholesale prices.

The Philly Fed index nearly doubled in September, signaling growing optimism from East Coast manufacturers. Initial jobless claims fell to their lowest read since 1969 and the Leading Economic Index suggested solid growth ahead.

The week ended with the Dow UP 2.3%, to 26744; the S&P 500 UP 0.8%, to 2930; but the Nasdaq was down 0.3%, to 7987.

In bonds, longer-dated notes posted losses for the fourth week in a row. The 30YR FNMA 4.0% bond ended down .27, at $100.84. Consequently, the national average 30-year fixed mortgage rate drifted up for the fourth straight week. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.


Despite increasing rates, mortgage applications rose last week, with the unadjusted Purchase Index up 9% from the week before, according to the Mortgage Bankers Association.


NEW HOME SALES, GDP UP, PENDING HOME SALES OFF, INFLATION MILD, THE FED HIKES… August New Home Sales are forecast up, but the Pending Home Sales index for existing homes should slide. The GDP-Third Estimate is predicted to have the economy booming at 4.3% growth, while Core PCE Prices show inflation is still benign. The FOMC Rate Decision is 100% expected to be a hike, so the focus will be on the Fed’s rate forecast, particularly for 2019.

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.


Forecasting Federal Reserve policy changes in coming months… Literally everyone sees a quarter percent rate hike on Wednesday. Then no move is forecast for November, but a final one to end the year. 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%

Sep 26 2.00%-2.25%
Nov 8 2.00%-2.25%
Dec 19 2.25%-2.50%


Probability of change from current policy:

Sep 26 100%
Nov 8     8%
Dec 19    81%


Each day, preferably in the morning, spend one hour prospecting. Take a break before you start, then hunker down to those phone calls, emails and social media connections–and don’t forget the follow-ups!

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Jim Passi
Regional Manager
NMLS# 158000

1284 West Northwest Hwy.
Palatine, IL 60067
Mobile: 847-899-1813

Jim was incredibly supportive

 Jim was incredibly supportive and did a great job ensuring that I was able to obtain my mortgage. His level of professionalism and attention to detail was amazing! Jim answered questions and guided me through the application in a very timely manner and was always there to assist along every step along the way. Additionally, his level of commitment and follow through was outstanding, and Jim was always there to communicate with others involved in the home purchase such as the realtors and attorneys. If you want a true mortgage professional to help you, you will never go wrong when you have Jim in your corner. On a scale of 1 to 10 with 10 being the best score, Jim is a 20. I could not be happier with my new home and Jim made my dream house come true. Thanks Jim – you are the best in your industry without a doubt!
Mike D.