Market Update for the Week of January 28, 2019

MARKET UPDATE

After a couple of months of nice gains, Existing Home Sales dipped 6.4% in December, to an annual rate just under 5 million units. But inventories are finally reversing, rising year-over-year now five months in a row.

The National Association of Realtors chief economist pointed out, “rising inventory is a positive development for consumers and could lead to slower home price appreciation.”

In fact, the Federal Housing Finance Agency (FHFA) home price index (HPI) rose just 5.8% year-over-year in November, down from 6.7% a year ago. Purchase mortgage applications stayed close to a nine-year high.

REVIEW OF LAST WEEK

STOCKS CATCH THEIR BREATH… Traders took a break from the intense market run-up of the last four weeks, as the Dow and the Nasdaq saw small gains, the S&P 500 a small setback.

Wall Street worried about China trade talks, global economic growth and the partial U.S. government shutdown, which then got a surprise three-week reprieve. Plus, Q4 corporate earnings were unexpectedly strong and positive in their outlooks.

Initial Weekly Unemployment Claims fell to 199,000, the fewest since 1969! Finally, a prominent business journal reported the Fed may soon stop shrinking its balance sheet, good news for continued economic growth.

The week ended with the Dow UP 0.1%, to 24737; the S&P 500 down 0.2%, to 2665; and the Nasdaq UP 0.1%, to 7165.

The bond market heard enough positive data to trim initial price gains. The 30YR FNMA 4.0% bond ended unchanged, at $101.67. The national average 30-year fixed mortgage rate also stayed flat 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?

The most expensive property sold in the U.S. was a 24,000 SF Manhattan penthouse overlooking Central Park. Its $238 million price still trails the Hong Kong home that went for $361 million. Nice commissions.

THIS WEEK’S FORECAST

PENDING HOME SALES, JOBS, INFLATION, MOVE UP; RATES DON’T… The Pending Home Sales index of contracts signed on existing homes is expected up in December. Also up should be Nonfarm Payrolls, along with Core CPE Price inflation, although still near the Fed’s target. Not going up should be the Fed Funds Rate Wednesday.

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… Virtually no one expects a rate hike at this week’s Fed meeting. March and May increases are also unlikely. Note: In the lower chart, a 1% probability of change is a 99% probability the rate will stay the same.

Current Fed Funds Rate: 2.25%-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    1%
Mar  20    6%
May   1    12%
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

Andrea L. Testimonial

I want to thank you for making the process of establishing a loan so easy for us. As a real estate agent in Denver, I have the opportunity to work with a lot of lenders – I know the good ones from the bad ones. And YOU are definitely one of the “good ones”. For my own home purchase, you can imagine how selective I was in working with a lender on our mortgage. I am so glad that we worked with you and CityWide. It’s no secret that the process of procuring a mortgage is extremely stressful, but you made this process as smooth of a transaction that it could have been and given the fact that we lived in Denver, and Marcus was in the middle of a very hectic travel schedule, you met and EXCEEDED our expectations.

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Andrea L.