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
Office: 847-273-3265

We had our closing yesterday

We had our closing yesterday and everything went very smoothly thanks to Jim Passi and his team. It took us over a month to get prepared for this huge event: buying our first home. The one thing we are 100% sure about is that we chose the right lender’s team to work with. These guys are real professionals! They are so quick to respond to every question, explain every aspect you are asking them about.
The best and luckiest choice for the first time homebuyers and, we are sure, best team if you move for a tenth time!
Thank you so much for the great work you have done for our family!
Ivar and Natasha

Ivar and Natalia