| QUOTE OF THE WEEK |
| “If you spend too much time thinking about a thing, you’ll never get it done”—Bruce Lee, Hong Kong-American martial artist, actor, filmmaker, and philosopher |
| NATIONAL MARKET UPDATE |
| New Home Sales rose in December for the second month in a row, a 6.7% year-over-year gain, to their highest level since 2021. Plus, the median sale price is 7.2% below its October 2022 peak, thanks to more lower-priced homes. Pending Home Sales slipped in December, but the National Association of Realtors notes: “After four straight months of gains in contract signings, one step back…is not entirely surprising. Economic data never moves in a straight line.” Home prices booked moderate gains in November. The national Case-Shiller index is up 3.8% from a year ago, and the FHFA index of prices for homes purchased with conventional mortgages is up 4.2% versus a year ago. |
| REVIEW OF LAST WEEK |
| EVENTFUL… The week began with a focus on DeepSeek, a less resource-intensive Chinese AI platform, and ended with the announcement of imminent tariffs, with a Fed meet in between. Only the blue-chip Dow eked out a gain. The Fed didn’t cut rates, as expected, and Chair Powell said “we do not need to be in a hurry” to do so, as “inflation remains somewhat elevated.” Friday’s Core PCE read bore this out, with prices up 2.8% annually three months in a row. But business spending was up in December, two months in a row, consumer spending is the strongest since the start of 2023, and the low level of initial jobless claims is a good signal for growth prospects. The week ended with the Dow UP 0.3%, to 44,545; the S&P 500 down 1.0%, to 6,041; and the Nasdaq down 1.6%, to 19,627. Investor money moved over to bonds, sending them up overall, the 30-Year UMBS 5.5% UP 0.16, to $98.29. The national average 30-year fixed mortgage rate was down slightly 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 Mortgage Bankers Association reports that in December, purchase mortgage applications for new homes were up nearly 9% year-over-year, as “first-time homebuyers remained active in the new home segment.” |
| THIS WEEK’S FORECAST |
| CONSTRUCTION SPENDING, CONSUMER SENTIMENT, JOBS… December Construction Spending is forecast to increase again overall, and we’ll watch the residential segment. Economists expect February’s preliminary University of Michigan Consumer Sentiment index to head up a bit. Friday should give us a modest December gain in new Nonfarm Payrolls and Average Hourly Earnings, with the Unemployment Rate holding at 4.1%. |
| FEDERAL RESERVE WATCH |
| Forecasting Federal Reserve policy changes in coming months. The futures market has now pushed out its expectation for this year’s first Fed rate cut to June. Note: In the lower chart, the 15.5% probability of change is an 84.5% probability the rate will stay the same. Current rate is 4.25%-4.50%. AFTER FOMC MEETING ON: CONSENSUS Mar 19 4.25%-4.50% May 7 4.25%-4.50% Jun 18 4.00%-4.25% Probability of change from current policy: AFTER FOMC MEETING ON: CONSENSUS Mar 19 15.5% May 7 35.0% Jun 18 62.5% |
| BUSINESS TIP OF THE WEEK |
| It takes extra energy to ramp up sales, learn something new, or head in a new direction. But a kickstart doesn’t happen unless you give it the gas. Just remember, you won’t have to sustain that output level forever. Things will get back to normal after you power through the launch. |
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.
