Market Update for the Week of July 29, 2019

MARKET UPDATE

June had a healthy rebound in New Home Sales, up a strong 7.0%, to a 646,000 annual rate. Inventories rose and supply should also increase, as the pace of new construction picks up to meet the higher pace of sales.

Existing Home Sales retreated 1.7% in June to a 5.270 million annual rate, but the underlying trend remains positive. Q2 sales as a whole were up 1.4% versus Q1’s gain, the second straight quarterly gain after four consecutive declines.

Freddie Mac’s chief economist noted that, with low mortgage rates, “purchase application demand has responded, rising steadily over the last two months to the highest year-over-year change since the fall of 2017.”

REVIEW OF LAST WEEK

NEW HOPES, NEW HIGHS… Contradicting slowdown (and recession!) talk from some economic pundits, upbeat corporate earnings reports and encouraging Q2 GDP growth sent the S&P 500 and the Nasdaq to record highs.

Yes, the Dow gained only 0.1%, but it was stymied by one major stock’s slide thanks to purely company-specific issues. With more than 40% of the S&P 500 reporting Q2 earnings, the majority came in better than expected.

Plus, Q2 GDP growth, at 2.1%, was way stronger than feared, with consumer spending, the biggest part of our economy, up 4.3%! Yet the Fed should still cut rates this week, responding to low inflation and slowing global growth.

The week ended with the Dow UP 0.1%, to 27192; the S&P 500 UP 1.7%, to 3026; and the Nasdaq UP 2.3%, to 8330.

Higher GDP trimmed interest in safe haven bonds. Still, the 30YR FNMA 4.0% bond went UP .03, to $103.50. The national average 30-year fixed mortgage rate, hovering near three-year lows, 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?

John Burns Real Estate Consulting reports: “The  plunge in mortgage rates has created home ownership possibilities for 2.7 million more households as well as move-up possibilities for current homeowners with enough equity.”

THIS WEEK’S FORECAST

PENDING HOME SALES UP, INFLATION MILD, MANUFACTURING AND JOBS GROW, THE FED CUTS… The Pending Home Sales index of contracts signed on existing homes is forecast up for another month. The Fed’s favorite inflation gauge, Core PCE Prices, should be mild. So everyone expects a cut in the Fed Funds Rate despite positive July Manufacturing and June Employment reports.

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… Everyone sees at least a quarter percent rate cut from the Fed this week. There’s a good chance of another quarter percent dip in September, but none in October, the 37% probability of a cut offset by an 18% chance of a hike. 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    67%
Oct 30    55%

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

I was referred to Jim

I was referred to Jim by Gary Hall my realtor. I was told that he was the best guy to go to and I would be in good hands. That couldn’t of been more true.
From the very first time I spoke with Jim, it was very apparent he was there to help me. From calls after hours, on the weekends, Jim was keeping me in the loop the whole time. He was so understanding of the stress people are under when applying for a home loan. He gave me my options and explained the pros and cons to each one. He clearly was not just out to make a quick buck. He made it seem like I was just talking to a good friend. Jim is a person that truly cares about the people behind the application he is looking at.
I couldn’t have asked for a better person to help me. I hope I will never need a home loan again as I believe I found my forever home. But if I do I will go right back to Jim no questions asked.

Kelly