Market Update for the Week of October 29, 2018


Pending Home Sales (an index of contracts signed on existing homes) went up 0.5% in September. This indicates a modest boost in existing home sales come October.

But September New Home Sales skidded down 5.5%, to a 553,000 annual rate. Yet the trend stays upward, as sales the first nine months of 2018 are still up 3.4% from the same period a year ago.

The Mortgage Bankers Association chief economist feels home sales will grow over the next five years, as mortgage rates peak and 47 million millennials enter their home buying years–“a tremendous support for housing demand.”


TURN THE PAGE… Let us simply move on from this very bad week in the stock market, whose best performance was the 3.0% dive for the Dow. Investors worried about earnings growth, even though the data proved otherwise.

To wit, FactSet reported the blended third quarter corporate earnings growth rate was 22.5%, and the forward 12-month earnings-per-share estimate is up 0.8% over the same period.

Friday, we learned the economy grew 3.5% annually in Q3, after 4.2% growth in Q2, the best consecutive quarters of economic performance since 2005. So, what worries Wall Street? That the Fed will hike too fast and kill the party.

The week ended with the Dow down 3.0%, to 24688; the S&P 500 down 3.9%, to 2659; and the Nasdaq down 3.8%, to 7167.

The weakness in stocks sent traders over to bonds, pushing prices higher. The 30YR FNMA 4.0% bond ended UP .47, at $100.36. Freddie Mac’s latest Primary Mortgage Market Survey had the national average 30-year fixed mortgage rate up just one basis point (0.01%). Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.


A recent report on insights from 3,000 consumers revealed that more video is now consumed on computers, tablets and smartphones than on TV.


INFLATION MILD; EMPLOYMENT COSTS UP; JOBS, FACTORIES STRONG…  The Fed likes the Core PCE Prices take on inflation, so it’s good that a mild read is forecast. But more inflation could come with a climbing Employment Cost Index. In line with that, we should see growth in wages (Average Hourly Earnings) and Nonfarm Payrolls in Friday’s jobs report. Finally, the ISM Index is expected to reveal factories are still humming nicely.

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… The market expects the Fed Funds Rate to hold come November, then bump up a quarter percent in December, but stay there through the beginning of next year. Note: In the lower chart, a 5% probability of change is a 95% probability the rate will stay the same.

Current Fed Funds Rate: 2.00%-2.25%

Nov   8 2.00%-2.25%
Dec 19 2.25%-2.50%
Jan  30 2.25%-2.50%


Probability of change from current policy:

Nov   8    5%
Dec 19   74%
Jan 30   32%
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
Regional Manager
NMLS# 158000

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

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.