Market Update for the Week of July 8, 2019


The National Association of Home Builders reports their current sales conditions index rose from 69 to 72, buyer traffic increased from 47 to 49, and expectations for the next six months edged up to 72.

A major insurer’s housing market health index hit its highest in three years, seeing “another solid year as slower house price growth and lower mortgage rates help affordability, while job gains and faster income growth sustain demand.”

First American says that, factoring in consumer house-buying power, home prices are 40.7% below their 2006 peak, and 15% below January 2000. In fact, Capital Economics reports “a drop in mortgage payments as a share of income.”


TRADE BETTER, JOBS BEST… Stocks hit record highs Wednesday on hopeful trade news. Friday’s 224,000 new jobs in June bested that, but investors felt the unexpectedly strong report might cause the Fed to go easy on rate cuts.

Labor force participation moved up, thanks to more job opportunities and higher wages. In fact, wages have risen by a yearly rate above 3% for 11 months in a row after more than nine years of never reaching that level!

In spite of all the worries, May’s trade report showed a big gain in total volume. Exports grew $4.2 billion, imports $8.5 billion, with total trade now just shy of a record high, even before the trade deals that will ultimately be made.

The week ended with the Dow UP 1.2%, to 26922; the S&P 500 UP 1.7%, to 2990; and the Nasdaq also UP 1.9%, to 8162.

Soft global economic reports helped bonds, which then got slammed by June jobs. Still, the 30YR FNMA 4.0% bond ended UP .05, to $103.36. After trading in a narrow range the past month, the national average 30-year fixed mortgage rate stabilized 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.


In the U.S., active military members are less than 1% of the population and veterans only 7%, but military homebuyers account for over 20% of all annual home purchases.


INFLATION STAYS MILD ON BOTH FRONTS… Economists are forecasting the Consumer Price Index (CPI) flat for June, with the Core CPI (excluding volatile food and energy prices) up just a smidge. Wholesale price inflation should also be flat, by the Producer Price Index (PPI). Inflation remains below the Fed’s 2% target range, and a July rate cut could help get it there.

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.


Forecasting Federal Reserve policy changes in coming months… A rate cut is still seen as a certainty in July, followed by another in September, but no change in October. Note: In the lower chart, a 95% probability of change is only a 5% probability the rate will stay the same.

Current Fed Funds Rate: 2.25%-2.50%

Jul 31 2.00%-2.25%
Sep 18 1.75%-2.00%
Oct 30 1.75%-2.00%


Probability of change from current policy:

Jul 31    95%
Sep 18    71%
Oct 30    44%
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
NMLS# 158000

1284 West Northwest Hwy.
Palatine, IL 60067
Mobile: 847-899-1813

A testimonial comment for Jim

A testimonial comment for Jim Passi, Great with numbers-always remained in complete contact with me-even when I was undecided on buying a new home/condo. Jim checked in on me every week to see how things were going with my new home search. Jim I highly recommend as a loan officer. As of today I am very completely satisfied on my new home- so I like to give a shout out to those that our looking to buy a new home-as to say, Jim’s your guy.


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