Market Update for the Week of December 24, 2018

MARKET UPDATE

Housing Starts hit a better-than-expected 1.256 million annual rate, up 3.2% for November, though down 3.6% from a year ago. Of course, that’s when starts were way up following Hurricanes Harvey and Irma.

But comparing the first 11 months this year against the same period in 2017 shows starts up 4.7% overall. And the future looks good: Building Permits blasted up 5.0%, the biggest one month gain in more than a year.

Existing Home Sales also surprised, up two months in a row, though down from a year ago thanks to tight supply. Yet inventories are up four months in a row and demand is strong: 43% of homes sold in less than a month!

REVIEW OF LAST WEEK

HOLIDAY SALES… Stocks sold at discount prices as the major market indexes logged their worst weekly losses of the year. Traders worried over tariff “wars,” a partial government shutdown, and whether the Fed would hike too fast.

The Fed did raise rates 0.25% last week, as expected, but reduced the probable number of next year’s hikes to two. They noted, “economic activity has been rising at a strong rate” with inflation “near 2 percent” (under control).

Meanwhile, the economy rocks on. Final Q3 GDP came in at a 3.4% annual rate, the second straight Q of growth above 3%. Personal income is up 4.2% yearly, spending up 4.7%, and Michigan Consumer Sentiment a solid 98.3.

The week ended with the Dow down 6.9%, to 22445; the S&P 500 down 7.1%, to 2417; and the Nasdaq down 8.4%, to 6333.

Bonds gained as stock sales prompted flight-to-safety trades all week. The 30YR FNMA 4.0% bond went UP.42, to $101.45. Following its big drop the week before, the national average 30-year fixed mortgage rate dipped a tick 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.

DID YOU KNOW?

Freddie Mac‘s chief economist noted that “homebuyers are very sensitive to mortgage rate changes–and given the further drop in rates we’ve seen this month, we expect to see a modest rebound in home sales.”

THIS WEEK’S FORECAST

NEW AND PENDING HOME SALES MOVE UP… This week’s housing data should report November gains. New Home Sales are forecast up, and Pending Home Sales are expected to show signed contracts on existing homes also up for the month.

Today, Christmas Eve, stock markets will close early, at 1 p.m., bond markets at 2, and all financial markets will be closed tomorrow, Christmas Day. Happy Holidays to all!

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… After last week’s modest rate hike, the Fed Funds Futures market expects no further increases through May. Note: In the lower chart, a 2% probability of change is a 98% probability the rate will stay the same.

Current Fed Funds Rate: 2.25%-2.50%

AFTER FOMC MEETING ON: CONSENSUS
Jan  30 2.25%-2.50%
Mar  20 2.25%-2.50%
May   1 2.25%-2.50%

 

Probability of change from current policy:

AFTER FOMC MEETING ON: CONSENSUS
Jan  30    2%
Mar  20   17%
May   1   23%
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

1300 East Woodfield Road, Suite 302
Schaumburg, IL 60173
Mobile: 847-899-1813
Email: jpassi@citywidehomeloans.com

This testimony is from my

This testimony is from my experience being a first-time home buyer going through the process of purchasing a home with Jim Passi from City Wide home loans. Let me just start off by saying how reliable, courteous, genuine, informational and hardworking Jim Passi is. Jim is not like a lot of other loan officers. My house I purchased for under 160 grand, not a huge real estate deal. From experience with other loan officers they don’t want to deal with a smaller purchase or work on a loan that might be difficult. With our credit score being low and work history not at expectations I was almost positive I would have to wait a year or maybe two years before being approved and close on a house. I definitely had doubts that I would be a home owner, Jim worked hard and stayed in contact with us updating us almost every day of the process, even during evening hours and weekends during the stressful underwriting process. Communication is key and I give Jim a 5-star rating with that. I consider myself an average blue-collar hard-working guy that has experienced hardships during life. Jim was never turned away by the hardships, he was understanding of them and I feel like it made him work even harder to make this process a success.

I just successfully closed on a house with my fiancé. Jim did what I thought was impossible. Again, with our credit score being under 600 and spotty work history it was a difficult process that became a success with a lot of hard work. Jim also got me the best interest rate that was available. He was constantly checking the market and keeping me informed on what was available. He wanted me to take my time and make sure what rate was in our best interest. Jim has a cretin genuine care for his clients and speaking with him so much during this process I know he truly cares and wants to help people. Even after we closed Jim called and congratulated us with excitement. Jim made a dream come true for us that I was sure we would have to wait for. I’m just going to say if he made my dream come true with all the problems I had he can make a lot of others come true for any one in a similar situation. Jim Passi is highly recommended.

Tim A.