QUOTE OF THE WEEK… “Winter is not a season, it’s an occupation.” –Sinclair Lewis, American writer
INFO THAT HITS US WHERE WE LIVE… It certainly has been a job getting through this winter in real estate. The latest evidence of this came with February New Home Sales, down 3.3% for the month, to a 440,000 annual rate. Observers once again felt that weekend snows in the Northeast, Mid-Atlantic states, and the Midwest motivated the downturn. Other analysts pointed out that February is always slow for home sales no matter what the weather is doing. Plus, contracts for these sales were signed at the start of the year, when buying a home isn’t a big post-holiday priority.There were an estimated 189,000 new homes for sale at the end of February, a 5.2-month supply.
Pending Home Sales were also down in February, 0.8%. This National Association of Realtors (NAR) measure of contracts signed on existing homes, indicates those sales should be off slightly a few months out. But the NAR’s chief economist was upbeat:”Contract signings for the past three months have been little changed, implying the market appears to be stabilizing. Moreover, buyer traffic information…shows a modest turnaround, and some weather delayed transactions should close in the spring.” Finally, the S&P/Case-Shiller 20-City Composite index dipped 0.1% in January, yet remained 13.2% ahead for the year. Adjusting for seasonal factors, priceswere actually up 0.7% for the month.
BUSINESS TIP OF THE WEEK… Learn from what others have done, but then carve out your own path, dealing with whatever comes along. If something doesn’t work, try something else. Above all, never give up.
>> Review of Last Week
TIMOROUS TRADING… Caution was the watchword on Wall Street, as traders took profits on some of their higher flying stocks, leaving the Dow barely ahead for the week, the S&P 500 off a bit, while the tech-heavy Nasdaq suffered its biggest weekly drop since October 2012. Investors were clearly keeping an eye on the geopolitical uncertainty coming out of the Ukraine crisis. They were also concerned that the stock market’s recent record breaking performances may have been running ahead of the economic realities. As usual, it was a mixed set of data that described those realities.
A private survey put consumer confidence in March at its lowest level in four months. The dips in New Home Sales and Pending Home Sales raised concerns for some about housing. On the positive side, Weekly Initial Unemployment claims dropped to 311,000, the lowest level in four months. The four-week average for Continuing Unemployment Claims is at its lowest level in three months. Q4 GDP was revised upward to a 2.6% annual economic growth rate. And consumer Personal Spending, accounting for about two-thirds of the U.S. economy, went up the most in 3 months.
The week ended with the Dow up 0.1%, to 16323; the S&P 500 down 0.5%, to 1858; and the Nasdaq down 2.8%, to 4156.
The safe haven of the bond market was a welcome destination for investors. The FNMA 3.5% bond we watch finished the week up .04, to $100.19. National average fixed mortgage rates went up a tad during the week ending March 27 in Freddie Mac’s Primary Mortgage Market Survey. This followed an uptick on the 10-year Treasury note. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.
DID YOU KNOW?… Since Freddie Mac began tracking mortgage rates in 1971, the all-time high was hit in October 1981, at 18.63%. That’s more than 4 times recent average 30-year fixed mortgage rates.
>> This Week’s Forecast
MANUFACTURING GROWS, SERVICES GAIN, JOBS GO FORWARD… This week gives us some fundamental reads on the economy in March. The manufacturing sector should continue to show growth, both nationally, measured by the ISM Index, and in the Midwest, recorded by the Chicago PMI. The ISM Services index is expected to reveal that sector expanding at a slightly higher rate. Friday’s Employment Report is forecast to feature just under 200,000 new Nonfarm Payrolls, an encouraging sign for sure.
>> 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.