QUOTE OF THE WEEK… “The great thing in the world is not so much where we stand, as in what direction we are moving.”–Oliver Wendell Holmes, Sr., American physician, poet, professor, and author
INFO THAT HITS US WHERE WE LIVE… We may not be standing in the middle of a fully recovered housing market, but we’re clearly moving in that direction. Existing Home Sales were UP 2.1% in October, staying right near their highest level in over two years. Sales are up 10.9% from a year ago. The median price is now $178,600, up 11.1% over a year ago. And the supply of existing homes dropped from 5.6 to 5.4 months. The inventory of existing homes is down to 2.14 million, the lowest level since December 2002.
Anyone who still thinks the housing market isn’t in recovery had only to look atOctober Housing Starts, which grew 3.6% to an annual rate of 894,000 units.Multi-family starts were up 11.9% and are up 57.1% versus a year ago. Single-family starts dropped 0.2% for the month, but are up 35.3% over a year ago. Building permits dropped slightly in October, but are up 26.6% for single family and up 36.3% for multi-family units versus last year. Not surprisingly, the NAHB Homebuilders confidence index rose to its highest level in six years.
BUSINESS TIP OF THE WEEK… A simple sales pitch can be powerful. Think about the advantages you offer. Then focus on your target market’s needs and explain how you meet them.
>> Review of Last Week
DOORBUSTERS HIT WALL STREET… On Black Friday, stocks were selling as hot as doorbusters, which on Wall Street means prices go UP. The Dow and the S&P 500 posted their best weekly gains since June 8, while the tech-heavy Nasdaq busted up an impressive 4%. It was a holiday-shortened week, with just three and a half days of trading. Investors were feeling good on Friday about data out of Germany and China, two recent sources of economic worry, while on the home front, Black Friday retail action raised everyone’s holiday spirit.
Investors’ spirits were also raised by their growing sense that a deficit reduction agreement will be reached to avoid the fiscal cliff of automatic tax hikes and spending cuts slated to kick in January 1. Falling off this cliff could send the economy back into recession according to economists, the Congressional Budget Office, and Fed Chairman Ben Bernanke who said so Tuesday in front of the Economic Club of New York. Meanwhile, Michigan Consumer Sentiment rose less than expected for November but still hit a five-year high and Leading Economic Indicators edged up slightly for October.
For the week, the Dow ended up 3.4%, to 13010; the S&P 500 was up 3.6%, to 1409; and the Nasdaq was up 4.0%, to 2967.
Even though economic data was mixed, traders were happy to head into risk assets, which sent stocks up and put bond prices under pressure. The FNMA 3.5% bond we watch ended the week down .08, at $106.09. Freddie Mac’s weekly Primary Mortgage Market Survey showed national average fixed mortgage rates finding new record lows for the second week in a row. Not surprisingly, the Mortgage Bankers Association reported purchase loan applications UP 3% from the weekbefore.
DID YOU KNOW?… Housing Starts, reported last week, are the number of residential building construction projects begun during a specific time period, typically a month.
>> This Week’s Forecast
HOME SALES, GDP, INFLATION, MIDWEST MANUFACTURING… The coming week reveals data on October New Home Sales, forecast virtually flat, plus October Pending Home Sales, a measure of signed contracts on existing homes, expected up a bit, good news for those sales a few months out. The second estimate of Q3 GDPeconomic growth is predicted to come in a tad better than first thought, at 2.8%.