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| “Those who expect to reap the blessings of freedom, must undergo the fatigue of supporting it.”—Thomas Paine, English-born American Founding Father |
| The National Association of Realtors (NAR) reported Existing Home Sales rose in May, and for the second half of the year, home sales could “increase due to strong income growth, healthy inventory, and a record-high number of jobs.” Their Pending Home Sales index of signed contracts on existing homes gained almost 2% in May, which they feel is evidence that buyers are showing up, as “hourly wages are increasing faster than home prices,” May New Home Sales didn’t fare as well, declining more than 13%. But median new home sales prices are down 7.3% from their 2022 peak, and the supply of completed single-family homes is up 280% from their 2022 bottom. |
| SUMMER RALLY… A ceasefire between Israel and Iran, positive economic data, impressive corporate earnings, and another Fed Governor hinting at a July rate cut rallied stocks, with the S&P 500 and Nasdaq hitting record highs. As usual, all was not perfect. New Home Sales slumped, as reported above, the third estimate for Q1 GDP was revised downward, and consumer spending declined in May, while PCE inflation ticked up a tad. Nevertheless, Durable Goods Orders surged, University of Michigan Consumer Sentiment improved overall, and initial jobless claims remain at low levels not associated with a recession, or even a significant economic slowdown. The week ended with the Dow UP 3.8%, to 43,819; the S&P 500 UP 3.4%, to 6,173; and the Nasdaq UP 4.2%, to 20,273. Bonds also moved higher, the 30-Year UMBS 5.5% heading UP 0.26, to 99.30. Freddie Mac’s weekly survey found the national average 30-year fixed mortgage rate decreased for another week. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information. DID YOU KNOW… Thanks to the overall increase in housing inventory, home price growth slowed in April, to annual rates of 2.7% in the Case-Shiller Index and 3.0% in the FHFA Index of homes financed with conforming mortgages. |
| CONSTRUCTION SPENDING, MORTGAGE APPLICATIONS, JOBS… Overall Construction Spending should decrease slightly for May, but we’ll focus on the residential component. We’ll also check to see if MBA Mortgage Applications continue to increase. Economists forecast modest gains in Nonfarm Payrolls and Average Hourly Earnings for June, while the Unemployment Rate stays low. Thursday, July 3, the stock markets will close at 1 p.m., the bond markets at 2. All U.S. financial markets will be closed Friday, July 4, for Independence Day. |
| Forecasting Federal Reserve policy changes in coming months. The futures market sees no rate cut in July, but then a quarter percent drop at the next two Fed confabs. Note: In the lower chart, the 19.1% probability of change is an 80.9% probability the rate will stay the same. Current rate is 4.25%-4.50%. AFTER FOMC MEETING ON: CONSENSUS Jul 30 4.25%-4.50% Sep 17 4.00%-4.25% Oct 29 3.75%-4.00% Probability of change from current policy: AFTER FOMC MEETING ON: CONSENSUS Jul 30 19.1% Sep 17 93.1% Oct 29 70.8% |
| Stay organized, commit to following a structured calendar, and avoid procrastination. Time management is the foundation for success in any business. |
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