Market Update for the Week of October 1, 2018

MARKET UPDATE

New Home Sales went up 3.5% in August, though most of the gain came from a downward revision to July. Yet the trend is higher: sales the first eight months of this year are up 6.8% from the same period in 2017.

But Pending Homes Sales slipped 1.8% in August. Supply is the prob, as folks hang onto their homes. The median age of homes went from 31 years in 2005 to 37 years in 2016.

Despite rising mortgage rates, First American‘s chief economist feels the strong economy will support demand: “While the pace of sales may initially slow, home buyers typically adjust to the new rate environment.”

REVIEW OF LAST WEEK

HOT QUARTER, COOL WEEK… Stocks wrapped up Q3 posting their hottest quarterly gains since 2013, though the Dow and the S&P 500 cooled for the week, while the Nasdaq stayed warm.

Dampening the festivities were trade worries, rising oil prices and Italy’s projected deficit increasing to 2.4% of GDP. We also had the expected quarter percent hike from the Fed who say they’ll proceed at a moderate pace.

Meanwhile, the economy booms: GDP growth at 4.2% in Q2 and on track for the best year since 2005; personal income up 4.7% the past year; and the National Federation of Independent Business optimism index at a 35-year high.

The week ended with the Dow down 1.1%, to 26458; the S&P 500 down 0.5%, to 2914; but the Nasdaq was UP 0.7%, to 8046.

Bonds benefited with the flight to quality from Italy’s molto grande deficit. The 30YR FNMA 4.0% bond ended UP .07, at $100.91. Freddie Mac’s Primary Mortgage Market Survey reported the national average 30-year fixed mortgage rate up again. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?

The National Association of Realtors reports that in 2017 only 9% of buyers found their agents online, the same as in 2008. Despite their growing online activities, 91% of buyers still hire agents through personal referrals.

THIS WEEK’S FORECAST

THE BEAT GOES ON: MANUFACTURING, SERVICES, JOBS ALL GAIN…  Economists predict the ISM Manufacturing and ISM Services indexes will show strong expansion in September, though slightly less than the month prior. They also expect Hurricane Florence to temporarily trim growth in Nonfarm Payrolls, but still see more than 180,000 new jobs created.

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 futures market expects last week’s rate hike to hold in November, with another small hike in December which will hold in January. Note: In the lower chart, a 1% probability of change is a 99% probability the rate will stay the same.

Current Fed Funds Rate: 2.00%-2.25%

AFTER FOMC MEETING ON: CONSENSUS
Nov   8 2.00%-2.25%
Dec 19 2.25%-2.50%
Jan  30 2.25%-2.50%

 

Probability of change from current policy:

AFTER FOMC MEETING ON: CONSENSUS
Nov   8    1%
Dec 19   79%
Jan 30   24%

BUSINESS TIP OF THE WEEK

Today begins the last quarter of the year. Review your goals for 2018 and determine what you need to do now to reach them. Then start thinking about the best way to kick off 2019.

The Jim Passi Team at Citywide Home Loans proudly serves Illinois, Wisconsin, Michigan, Indiana, Georgia and Flordia. If you are looking to buy a home or refinance, we have you covered. Apply Now to get started.
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Jim Passi - Citiwide Home Loans

Jim Passi
Regional Manager
NMLS# 158000

1300 East Woodfield Road, Suite 302
Schaumburg, IL 60173
Mobile: 847-899-1813
Office: 847-273-3265

What a way to start

What a way to start off for 2019! Thank you Jim and your team of experts on providing financing for my new home! While this may not be the first home I have purchased, it was the smoothest! From the first time we met, I knew I made the right choice. You explained the process and you kept your word on staying in touch with me and answering all my questions. Your knowledge and patience is to be admired. The professionalism you displayed by showing up on time to the closing, when no one else did, AND you stayed to the end. Thank you for your support. I will gladly recommend you to anyone I know. A great experience and a new friend! Thank you again Jim, for everything.

Blair S.