Market Update for the Week of July 1, 2019

MARKET UPDATE

The Pending Home Sales index of contracts signed on existing homes rose 1.1% in May. This suggests closed Existing Home Sales, which rebounded nicely in May, should continue their upward move in June.

But New Home Sales took a 7.8% dip in May, to a 626,000 annual rate, 3.7% down from a year ago. However, total new home sales from January to May this year are UP 3.7% over the same period in 2018.

Last week, the President signed a bill lifting the cap on no-down-payment VA loans for service members and veterans, and created a White House Council charged with “eliminating regulatory barriers to affordable housing.”

REVIEW OF LAST WEEK

SO-SO WEEK, SUPER SIX MONTHS… Stocks dipped a tick for the week, but the S&P 500 posted its best first half in 22 years, up 17% since January. Investor enthusiasm cooled ahead of President Trump and President Xi’s G-20 meet.

Other downers included May’s New Home Sales and a drop in Durable Goods Orders, although all this made investors more certain about a July rate cut from the Fed, especially when Core PCE inflation also fell.

Yet the economy rolls on, with personal incomes and consumer spending up in May, and the University of  Michigan consumer sentiment index just south of 100. Plus, final Q1 GDP confirmed the economy grew a strong 3.1%.

The week ended with the Dow down 0.4%, to 26600; the S&P 500 down 0.3%, to 2942; and the Nasdaq also down 0.3%, to 8006.

Safe haven investing drove up bond prices.The 30YR FNMA 4.0% bond ended UP .09, to $103.31. Freddie Mac’s Primary Mortgage Market Survey saw the national average 30-year fixed mortgage fall to its lowest level in two and a half years. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?

Harvard’s Housing Studies Center says “regulatory constraints on development” are one of “the most significant factors” hurting affordable housing. And after a 12-year decline, homeownership rose in 2017 and 2018 to 64.4%, mostly among millennials.

THIS WEEK’S FORECAST

MANUFACTURING, SERVICES SECTORS, JOBS ALL GROW… You have to wonder what data those recessionistas are reading. ISM Manufacturing and ISM Services are expected to remain in growth territory, above 50, for June. And the forecast is for 160,000 new Nonfarm Payrolls in June, a 3.6% Unemployment Rate, and another nice climb for Average Hourly Earnings.

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… Wall Street still feels it’s a sure thing we’ll get a rate cut in July, followed by another in September. There’s a 33% chance of an October rate cut, but that’s balanced by a 17% possibility of a hike, so the rate probably won’t change. Note: In the lower chart, a 100% probability of change is a 0% probability the rate will stay the same.

Current Fed Funds Rate: 2.25%-2.50%

AFTER FOMC MEETING ON: CONSENSUS
Jul 31 2.00%-2.25%
Sep 18 1.75%-2.00%
Oct 30 1.75%-2.00%

 

Probability of change from current policy:

AFTER FOMC MEETING ON: CONSENSUS
Jul 31   100%
Sep 18    75%
Oct 30    50%
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

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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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