QUOTE OF THE WEEK… “Don’t talk unless you can improve the silence.” –Jorge Luis Borges, Argentine writer
INFO THAT HITS US WHERE WE LIVE… It certainly is a nice improvement over silence to report that Building Permits for new homes were up 5.2% in September, 6.2% in October, and are now up 13% in the past year. The multifamily sector is hot right now, accounting for most of the monthly increases and for 60% of the annual gains. But single-family permits were also up from September to October and are now at a seasonally adjusted rate of 620,000 units, an 8.8% gain versus a year ago.The Census Bureau said September and October Housing Starts would be released with November numbers on December 18.
Home prices also continued to strengthen. The S&P/Case-Shiller home price index went up 1% in September, to a 13.3% gain for the year, increasing in all 20 metros measured. The FHFA index of prices for homes financed by conforming mortgages edged up 0.3% in September and is up 8.5% over last year. Speaking of conforming mortgages, the acting director of the FHFA announced last week that the $417,000 conforming loan limit will not be lowered, good news for the housing market. A glitch: Pending Home Sales dipped 0.6% in October, but some expect existing home sales to start back up in December.
BUSINESS TIP OF THE WEEK… Videos are a great way to engage with customers and get your message out. These days, producing them can be as simple as using your smartphone.
>> Review of Last Week
HAPPY THANKSGIVING!… The national holiday was celebrated traditionally on Wall Street, with markets closed on Thursday, then open for a shortened trading day on Black Friday. Things ended happily, with all market indexes up for the week and for the month now concluded. Investors could feel upbeat about the Chicago PMI showing higher than expected manufacturing growth in the Midwest. Likewise, the Leading Economic Indicators index for October beat forecasts, while the Final Michigan Consumer Sentiment reading spiked to an unexpected 75 for November.
Of course there were the usual misses, slowing down the economic recovery. Monthly Pending Home Sales, Consumer Confidence, and Durable Goods Orders reports were all off. But Building Permits increased two months in a row, and home prices showed gains in both the Case-Shiller and FHFA indexes. Most encouraging of all, Initial Unemployment Claims for the week dropped by 10,000 to 316,000. Even better, Continuing Claims declined 91,000, to 2.78 million, a new low for the recovery.
The week ended with the Dow up 0.1%, to 16086; the S&P 500 up 0.1%, to 1806; and the Nasdaq up 1.7%, to 4060.
With an up week for stocks, lower investor interest in bonds left prices flat to down. The FNMA 3.5% bond we watch ended the week down .81, to $100.25. Freddie Mac’s Primary Mortgage Market Survey reported national average fixed mortgage ratesincreased slightly for the week ending November 27. The seasonally adjusted Purchase Loan Index was up 6% for the week ending November 15. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.
DID YOU KNOW?… Robert Shiller, founder of the S&P/Case-Shiller Home Price Indexes, noted on CNBC that, “Affordability is still good compared to any time over the last 50 years.”
>> This Week’s Forecast
MANUFACTURING SLIPS, NEW HOMES WAVER, PRICES HOLD, GDP GAINS, JOBS CRAWL… November’s ISM Index is expected to report manufacturing down a tad, but still in growth territory, above 50. New Home Sales are forecast up for September, then down in October. Core CPE Prices should stay within the Fed’s guidelines.
The 2nd Estimate of GDP growth for Q3 is predicted up some, but not enough to help jobs. Proof of this should come Friday with the November Employment Report delivering under 200,000 new Nonfarm Payrolls, although the Unemployment Ratemay tick down.
>> 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.