MARKET UPDATE
For the third month in a row, New Home Sales gained, up 4.5% in March, to a 692,000 annual rate, just under their 2017 post-recession high. Sales were up in the Midwest, West, and South, off in the Northeast.
There’s been an upward trend in new home sales since October, as affordability increased. Rates dropped while median prices fell year over year for the last five months, and are now down 9.7% from a year ago.
After February’s biggest monthly gain on record, Existing Home Sales slipped 4.9% in March, returning to a more typical pace. Q1 sales were still 1.2% over Q4 2018, their first quarterly gain in more than a year.
REVIEW OF LAST WEEK
SETTING RECORDS AGAIN… The broadly based S&P 500 and the tech-y Nasdaq hit new record highs (though the Dow slipped a tick), as investors sparked to new evidence the economy is still growing very nicely, thank you.
More than 40% of the S&P 500 have reported Q1 earnings, and we’re on track for overall gains. Analysts quibbled over the size of those gains, but, hey, some of these people had forecast profit declines.
The real shocker? The first read on Q1 GDP showed the economy grew at a 3.2% annual rate! Sure, this number may be revised down, but, remember, Q1 typically delivers the lowest GDP number of the year.
The week ended with the Dow down 0.1%, to 26543; the S&P 500 UP 1.2%, to 2940; and the Nasdaq UP 1.9%, to 8146.
Muted inflationary pressures pushed bonds north for the week. The 30YR FNMA 4.0% bond ended UP .22, to $102.69. The national average 30-year fixed mortgage rate inched up again, but remained well below its year-ago level 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 job market keeps strengthening and wages are increasing at the fastest rate since the Great Recession which should support housing demand going forward.
THIS WEEK’S FORECAST
PENDING HOME SALES, MANUFACTURING, JOBS GAIN, NOT RATES… We should see more evidence of a healthy economy, with Pending Home Sales gains, continued expansion in ISM Manufacturing, and increases in Nonfarm Payrolls and Hourly Earnings. But rate increases are NOT expected Wednesday from the Fed.
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… Virtually no one sees a rate hike this Wednesday, nor at the next two Fed confabs, though the probability of a rate cut grows. Note: In the lower chart, a 3% probability of change is a 97% probability the rate will stay the same.
Current Fed Funds Rate: 2.25%-2.50%
| AFTER FOMC MEETING ON: | CONSENSUS |
| May 1 | 2.25%-2.50% |
| Jun 19 | 2.25%-2.50% |
| Jul 31 | 2.25%-2.50% |
Probability of change from current policy:
| AFTER FOMC MEETING ON: | CONSENSUS |
| May 1 | 3% |
| Jun 19 | 19% |
| Jul 31 | 31% |
