Market Update for the Week of December 10, 2018


Folks worry about housing affordability, but the rate of home price growth is actually slowing, according to FHFA, CoreLogic and S&P Global reports.

Plus, First American’s data says that when you factor in consumer house buying power, home prices are still 37% below their peak in 2006 and 11% under January 2000 price levels.

The National Association of Home Builders reports declining material costs and a strong economy sent homebuilder confidence up to 68 in October. Their Senior Economist added, “positive demographics support future demand.”


ERASING PRIOR GAINS…The stock market closed Wednesday for the national day of mourning for President George H.W. Bush, but four days were enough to erase the prior week’s gains. Hey, we’re still within 10% of the S&P 500’s all-time high.

Euphoria about the President’s tariff truce with China evaporated over concerns there’s still no final agreement. Traders ignored the fact that China has already cut its tariffs from 9% to 7.5% on 1500 U.S. products.

Recession fears stemmed from bond yield moves, but we’ve had these before with no negative impact. Here traders ignored growing manufacturing and services sectors, healthy job gains and the fastest wage growth in nearly 10 years.

The week ended with the Dow down 4.5%, to 24389; the S&P 500 down 4.6%, to 2633; and the Nasdaq down 4.9%, to 6969

Diving stocks drove investors to bonds, sending prices higher. The 30YR FNMA 4.0% bond went UP .61, to $101.28. Plateauing for weeks, the national average 30-year fixed mortgage rate finally fell in Freddie Mac’s Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.


Attom Data Solutions found that December 26 is the day to get the best discount on a home, and December is the best month to buy a home if you’re looking for a deal.


INFLATION COOL, RETAIL WARM… Inflation is expected to stay near the Fed’s target range, as tracked by Core CPI, the consumer price index that excludes volatile food and energy prices. Retail Sales should keep growing in November, not as hot as the prior month, but still pretty warm.

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 consensus is weakening, though a majority still believes we’ll get a small rate hike this month. Wall Street now sees that rate holding through March. Note: In the lower chart, a 70% probability of change is a 30% probability the rate will stay the same.

Current Fed Funds Rate: 2.00%-2.25%

Dec 19 2.25%-2.50%
Jan  30 2.25%-2.50%
Mar  20 2.25%-2.50%


Probability of change from current policy:

Dec 19   70%
Jan  30   32%
Mar  20   44%
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.
Jim Passi - Citiwide Home Loans

Jim Passi
Regional Manager
NMLS# 158000

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

Just closed on a refinance

Just closed on a refinance last week and picking up a check tomorrow. Looking forward to the new hardwood floors. Jim and his team were excellent. Explained the process in detail and walked us through the whole way. I would highly recommend Jim and his team. Keep up the great work.

Steven S.