Weekly Housing and Market Update

QUOTE OF THE WEEK… “What is harder than rock, or softer than water? Yet soft water hollows out hard rock. Persevere.” –Ovid, Roman poet  

INFO THAT HITS US WHERE WE LIVE… The Latin bard offers good advice in the wake of last Thursday’s Pending Home Sales, down 1.6% for August. Observers said rising interest rates were partially to blame for the dip in this measure of contracts signed but not yet closed on existing homes. But national average mortgage rates have dropped the last two weeks with the Fed’s announcement it would continue buying mortgage bonds, which should boost bond prices and keep rates low. Also helping us persevere is the fact Pending Home Sales are still up 5.8% for the year. 

Further encouragement came from single-family New Home Sales, up 7.9% in August and 12.6% year-over-year. They’re now at a 421,000 annual rate, not where they need to be, but rebounding strongly. There were also signs of continued success for home prices. The S&P/Case-Shiller 20-city home price index was up 0.62% in July, its 18th consecutive monthly gain, with all 20 metros ahead. Its 12.39% annual gain was its biggest since early 2006. The FHFA price index of homes financed with conforming loans was up 1% in July, also gaining 18 months in a row, and up 8.8% annually.

BUSINESS TIP OF THE WEEK… Understand your customers. When you know their wants and needs top to bottom, you can focus on giving them exactly what they want in a way no one else can.

>> Review of Last Week

WATCHING THE BUDGET…  All week, the budget battle in Washington loomed large over Wall Street. The lack of progress, with the deadline for an agreement just days away, kept investors cautious, sending the Dow and the S&P 500 indexes down for the first time in four weeks, although the tech-heavy Nasdaq showed a miniscule gain. The Senate did pass a bill to avoid government shutdown, but as of Friday, it still needed House approval. The U.S. will also hit its borrowing limit on October 17 unless the debt ceiling is raised. With all this going on, economic data held little sway.

That data, as usual, was mixed. Durable Goods Orders were up 0.1% for August, following their drop in July. New Home Sales were up in August but Pending Home Sales were off. The Commerce Department left Q2 GDP, Third Estimate, unchanged, at an underwhelming 2.5% annual growth rate. The Fed’s favorite inflation measure, the Core PCE Price index, was up 0.2% in August and well within the Fed’s target range, up just 1.2% for the year. But Michigan Consumer Sentiment for September fell to its lowest final reading in five months.  

The week ended with the Dow down 1.2%, to 15258; the S&P 500 down 1.1%, to 1692; but the Nasdaq was up 0.2%, to 3782.

The ongoing Washington budget wrangling drove many investors to the safe haven of bonds and prices continued to rise. The FNMA 3.5% bond we watch ended the week up 1.03, to $101.24. National average mortgage rates fell again in Freddie Mac’s Primary Mortgage Market Survey for the week ending September 26. Their chief economist commented, “These low rates should somewhat offset the house price gains… and keep housing affordability elevated.” Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.

DID YOU KNOW?…  A recent survey by a consumer financial services company reported that the majority of Americans, 55%, are confident that home prices will increase over the next 12 months.

>> This Week’s Forecast

MANUFACTURING, JOBS GROPE FORWARD… The continuing story of an economy that’s growing but oh so slowly should continue to be told this week. We’ll see two key reads on manufacturing in September, the national ISM Index and the Chicago PMI for the Midwest. Both are forecast just over 50, indicating expansion. The ISM Servicesindex is also expected to come in with a growth number, although slightly below August’s.

The first Friday of the month will feature, as always, the prior month’s Employment Report. September Nonfarm Payrolls are predicted to be up a little, although well under 200,000 per month. This should not budge the Unemployment Rate, still above the Fed’s 6.5% target.

>> 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.

Source; Rebecca Hansen; Guild Mortgage
Contact Jeff Hansen

About Jeff Hansen, Realtor in Colorado

Search for homes here; www.jeffhansen.remax.com for FREE. Licensed Real Estate broker with RE/MAX Professionals at 10135 W. San Juan Way, Littleton, Colorado 80127. I have been a Realtor Since 1992 and provide Free Real Estate Advice Realtor in Littleton, Colorado and the Metro Denver Area, A Real Estate investment company focusing on the buyers and sellers of homes, also including fix and flips and rental properties, Listings and all sales of realty. (303)794-4530 Disclaimer I will not receive any compensation or take on any liability because of any conversation on this or any related web page w/o any written brokerage agreement. And there will be no relationship actual or implied because of any conversation on this or similar pages. No written agreement, therefore. AND Differ from state to state, so check your state's rules.
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