Info That Hits Us Where We Live
The first good news was that Existing Home Sales rose 1.1% in March to a 5.60 million annual rate. Yeah, they were down a tick from March 2017, but that month had the second highest sales pace last year.
Then, March New Home Sales also surprised to the upside, gaining 4.0%, to a 694,000 annual rate. Sales are 8.8% ahead of a year ago, posting the second highest sales pace since 2007.
Freddie Mac’s chief economist noted, “Despite the increase in borrowing costs, demand… remains solid. The Mortgage Bankers Association reported… activity was up 11% from a year ago.”
Business Tip of the Week
When talking to someone, you’ll never be at a loss for words if you use the FORD approach: Family, Occupation, Recreation, Dreams.
Review of Last Week
LITTLE CHANGE… Investors keep balancing optimism about corporate earnings and economic growth against worries over rising interest rates and whether growth will continue. By Friday, worriers barely prevailed, the S&P 500 ending flat, the Dow and Nasdaq down slightly.
We’re right in the middle of first quarter earnings season and 80% of the S&P 500 companies reporting bested forecasts (though that didn’t necessarily boost share prices).
Q1 GDP slipped to 2.3% (Advance read), but that beat estimates, and real GDP is still up 2.9% from a year ago. Jobless claims fell to their lowest level since 1969, while Michigan Consumer Sentiment came in higher than expected once again.
The week ended with the Dow down 0.6%, to 24311; the S&P 500 flat, at 2670; and the Nasdaq down 0.4%, to 7120.
Bonds edged up as investors feared weak growth in France and the UK might be contagious. The 30YR FNMA 4.0% bond ended UP .12, at $101.81. Still low by historical standards, the national average 30-year fixed mortgage rate continued up in Freddie Mac’s latest 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 Census Bureau reports homeownership held steady in Q1 2018, but rental households fell for the fourth straight quarter, “a strong sign households are making the switch from renting to buying,” according to one prominent economist.
This Week’s Forecast
PENDING HOME SALES, MANUFACTURING, JOBS GROW; INFLATION AND THE FED STAY QUIET… March Pending Home Sales are predicted up, while two factory reads, the Chicago PMI and ISM Index, are forecast in solid growth territory. Most important to housing, jobs are expected up, with new Nonfarm Payrolls back near 200,000, and Hourly Earnings rising. Core PCE Prices inflation should be quiet, and quieter still will be the Fed’s FOMC Rate Decision: no hike.
The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.
Economic Calendar for the Week of Apr 30 – May 4
| Date | Time (ET) | Release | For | Consensus | Prior | Impact |
| M Apr 30 |
08:30 | Personal Income | Mar | 0.4% | 0.4% | Moderate |
| M Apr 30 |
08:30 | Personal Spending | Mar | 0.4% | 0.2% | HIGH |
| M Apr 30 |
08:30 | Core PCE Prices | Mar | 0.2% | 0.2% | HIGH |
| M Apr 30 |
09:45 | Chicago PMI | Apr | 58.0 | 57.4 | HIGH |
| M Apr 30 |
10:00 | Pending Home Sales | Mar | 1.5% | 3.1% | Moderate |
| Tu May 01 |
10:00 | ISM Index | Apr | 58.5 | 59.3 | HIGH |
| W May 02 |
10:30 | Crude Inventories | 04/28 | NA | +2.2M | Moderate |
| W May 02 |
14:00 | FOMC Rate Decision | May | 1.50%-1.75% | 1.50%-1.75% | HIGH |
| Th May 03 |
08:30 | Initial Unemployment Claims | 04/28 | 220K | 209K | Moderate |
| Th May 03 |
08:30 | Continuing Unemployment Claims | 04/21 | NA | 1.837M | Moderate |
| Th May 03 |
08:30 | Productivity – Preliminary | Q1 | 0.8% | 0.0% | Moderate |
| Th May 03 |
08:30 | Unit Labor Costs – Preliminary | Q1 | 3.0% | 2.5% | Moderate |
| Th May 03 |
08:30 | Trade Balance | Mar | -$49.8B | -$57.6B | Moderate |
| Th May 03 |
10:00 | ISM Services | Apr | 58.3 | 58.8 | HIGH |
| F May 04 |
08:30 | Average Workweek | Apr | 34.5 | 34.5 | HIGH |
| F May 04 |
08:30 | Hourly Earnings | Apr | 0.2% | 0.3% | HIGH |
| F May 04 |
08:30 | Nonfarm Payrolls | Apr | 190K | 103K | HIGH |
| F May 04 |
08:30 | Unemployment Rate | Apr | 4.0% | 4.1% | HIGH |
Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months… Wall Street figures this week’s Fed meet will be a non-event, but it’s a cinch we’ll get a quarter percent bump in June. Note: In the lower chart, a 7% probability of change is a 93% certainty the rate will stay the same.
Current Fed Funds Rate: 1.50%-1.75%
| After FOMC meeting on: | Consensus |
| May 2 | 1.50%-1.75% |
| Jun 13 | 1.75%-2.00% |
| Aug 1 | 1.75%-2.00% |
Probability of change from current policy:
| After FOMC meeting on: | Consensus |
| May 2 | 7% |
| Jun 13 | 100% |
| Aug 1 | 11% |
Statistics source: www.markettrends.com
Material in this article from: Inside Lending Market Snapshot
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