Market Update for the Week of December 24, 2018


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!


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.


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.”


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.


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%

Jan  30 2.25%-2.50%
Mar  20 2.25%-2.50%
May   1 2.25%-2.50%


Probability of change from current policy:

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.
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Jim Passi
Regional Manager
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1300 East Woodfield Road, Suite 302
Schaumburg, IL 60173
Mobile: 847-899-1813

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Jim Passi and his team are a shining example of truly taking care of your customer means. The level of personal attention we received through the whole process was amazing. We were in the exploration phase of looking for a home and figuring out costs when we were contacted by Jim, through a personal friend. Unfortunately, I lost my job due to COVID downsizing and we had to put our dream of owning a house on hold. Where a normal person would move on to the next customer, Jim went above and beyond and would check in every couple of weeks to every month to see how we were doing and if there was anything he could do for me and my family. I eventually found a job several months later and the first person I reached out to was Jim. Sure I could have moved on to another mortgage person or company, but the level of customer service that Jim displayed when we couldn’t even get a mortgage due to lack of income made me and my family feel like we were part of the Jim Passi family. Throughout the process of finding our dream home, Jim was in constant contact with us, listening to all of the houses we were searching for and even providing some advice about things to look out for. When we found our home Jim was still there letting us know where we were at in the loan process and what the next steps were so we were always a step ahead of the process. Jim’s team follow his example, by letting us know what was needed and responded quickly. I would definitely recommend the Jim Passi Team to anyone looking to buy a home.
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