QUOTE OF THE WEEK
“Never make predictions, especially about the future.”—Casey Stengel, American professional baseball player and manager
NATIONAL MARKET UPDATE
The median monthly payment of purchase mortgage applicants fell in June, showing affordability is improving. This has spurred buyers, as applications for purchase mortgages are now 18% higher than a year ago.
The National Association of Home Builders reports that existing single-family homes nationally are now more expensive than new ones. Tight resale inventory and more new home supply has reversed the historical norm.
Attom Data reports that the number of equity-rich homes rebounded in Q2 to almost half of all mortgaged homes. Equity-rich properties are those whose loan balances are 50% or less of their estimated market value.
REVIEW OF LAST WEEK
BUYING THE DIP… Following the prior week’s market decline, “buy the dip” optimism sent the three major indexes up strongly for the week, the tech-y Nasdaq ending at an all-time high, the S&P 500 just shy of one.
Traders had to look past the tariffs that kicked in last week, as well as a July ISM Non-Manufacturing read that showed slower growth for the services sector that represents roughly 71% of the U.S. economy.
Yet Productivity rose in Q2, keeping Unit Labor Costs down and inflation contained. Plus, 82% of S&P 500 companies reporting earnings have beaten estimates, pushing Q2 earnings growth forecasts sharply higher to 9.7%.
The week ended with the Dow UP 1.3%, to 44,176; the S&P 500 UP 2.4%, to 6,389; and the Nasdaq UP 3.9%, to 21,450.
Bond prices, overall, edged south, but the 30-Year UMBS 5.5% was UP 0.92, to 100.05. Freddie Mac’s Primary Mortgage Market Survey reported the national average 30-year fixed mortgage rate dropped for the third straight week, to a four-month low. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW… According to Realtor.com, last week the housing market maintained its summer trends—stable prices, increasing inventory, and listings spending a little more time on the market than last year.
THIS WEEK’S FORECAST
INFLATION, MORTGAGE APPLICATIONS, RETAIL SALES… Economists are forecasting inflation will continue to moderate, according to the July Consumer Price Index (CPI). We’ll keep an eye on the weekly MBA Mortgage Applications Index to see if buyer activity stays ahead of last year. July Retail Sales are expected to gain, as the consumer continues to contribute to the economy.
FEDERAL RESERVE WATCH
Forecasting Federal Reserve policy changes in coming months. The futures market sees a quarter percent rate cut at the next two meetings, then a hold to end the year. Note: In the lower chart, the 88.4% probability of change means there’s only an 11.6% probability the rate will stay the same. Current rate is 4.25%-4.50%.
| AFTER FOMC MEETING ON: | CONSENSUS |
| Sep 17 | 4.00%-4.25% |
| Oct 29 | 3.75%-4.00% |
| Dec 10 | 3.75%-4.00% |
Probability of change from current policy:
| AFTER FOMC MEETING ON: | CONSENSUS |
| Sep 17 | 88.4% |
| Oct 29 | 56.7% |
| Dec 10 | 45.3% |
BUSINESS TIP OF THE WEEK
Set the stage for tomorrow’s success the night before. Look at the next day’s items, prioritize them, then time-block the day’s schedule. Long-term success is built on locking in business-building actions and avoiding tempting distractions—every day!
