Market Update for the Week of May 6, 2019

MARKET UPDATE

After dipping 15 months in a row, Pending Home Sales rebounded 3.8% in March, up in the West, Midwest, and South, down a tick in the Northeast. “Lower mortgage rates and more inventory won out,” as one economist explained.

Plus, home price gains slowed in the latest Case-Shiller Home Price Index. First American says, “declining mortgage rates, ongoing household income growth and moderating unadjusted home prices have boosted affordability.”

Their Real House Price Index reports that when consumer home buying power is factored in, home prices are 39% below their 2006 peak, and 14% below where they were in January 2000.

REVIEW OF LAST WEEK

THE FED BEHAVES, JOBS GO WILD… The Fed played nice and left rates alone, but April jobs staged a wild blowout–263,000 new Nonfarm Payrolls sent the Unemployment Rate down to 3.6%, a 50-year low.

More than half the country hadn’t been born when unemployment was last at that level. Investors’ renewed confidence in U.S. economic growth sparked risk-on sentiment that sent stocks up, though the Dow ended off a bit.

PCE (Personal Consumption Expenditures), the Fed’s favorite inflation measure, stayed well below their 2% target, while Q1 Productivity surprised to the upside, another worthy indicator of economic health.

The week ended with the Dow down 0.1%, to 26505; the S&P 500 UP 0.2%, to 2946; and the Nasdaq UP 0.2%, to 8164.

A fairly volatile week kept bond prices in check. The 30YR FNMA 4.0% bond ended down .03, to $102.66. After inching up a few weeks, the national average 30-year fixed mortgage rate 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.

DID YOU KNOW?

Capital Economics reports “the rise in [personal] earnings growth to a 10-year high looks to have given landlords some latitude to increase rents,” up 3.7% from last year, to a 12-month high.

THIS WEEK’S FORECAST

INFLATION STAYS CALM… The Fed keeps an eye on inflation, and so do we. Happily, it’s forecast to stay under control. The Core Consumer Price Index (Core CPI) should remain within the central bank’s target range. The same goes for wholesale price inflation, measured by the Producer Price Index (PPI).

NOTE: Weaker 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… The market still sees no rate changes through the summer, though sentiment grows for a rate cut toward the fall. Note: In the lower chart, a 13% probability of change is an 87% probability the rate will stay the same.

Current Fed Funds Rate: 2.25%-2.50%

AFTER FOMC MEETING ON: CONSENSUS
Jun 19 2.25%-2.50%
Jul 31 2.25%-2.50%
Sep 18 2.25%-2.50%

 

Probability of change from current policy:

AFTER FOMC MEETING ON: CONSENSUS
Jun 19    13%
Jul 31    22%
Sep 18    38%
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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

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My husband and I closed last week on our first home with Jim Passi and Citywide Home Loans. I received Jim’s name from a friend and I am happy to say that Jim did not disappoint. As a first-time home buyer, what we knew could fill a thimble but Jim could not have done anything to make the process easier for us. He was quick to respond to all of my questions, and there were many! He explained everything along the way, sometimes several times throughout the process. It was important to Jim that we understand everything. Jim made himself available to us as much as humanly possible and there was never a time when we were waiting more than a reasonable amount of time for an answer to any question we had. He also helped us secure an appraiser and an attorney. It was quite apparent that Jim works hard and cares very much about the satisfaction of his clients. Jim and his team helped us understand everything they needed from us to make the home purchase as smooth as possible. Jim even patiently listened while I had a bit of a meltdown midway through the loan process. He continued to reassure me along the way that everything would be ok and lo and behold, it was. My husband and I are very happy with the outstanding customer service we received from Jim and his team at Citywide Home Loans. We will gladly pass his name along in the future to friends or colleagues who are interested in buying a home. Thank you, Jim and Citywide Home Loans! It was a pleasure working with you!
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