QUOTE OF THE WEEK… “Only be afraid of standing still.” –Chinese proverb
INFO THAT HITS US WHERE WE LIVE… Standing still is something we need not fear in the real estate market. One data and technology firm reported home prices increased 0.8% in February, up 12.2% from a year ago, which represents 24 months in a row of year over year price gains nationally. Not counting distressed sales, prices were up 10.7% versus a year ago. Their chief economist commented: “Although prices should remain strong in the near term due to a short supply of homes on the market, price increases should moderate over the next year as home equity releases pent-up supply.”
Another home data firm opined: “Over the year, we see Phase Three of the recovery unfolding, which we define as moderation across all price tiers.” The Commerce Department reported that in spite of harsher than normal weather, construction spending in January and February was up almost 9% from the same time last year.The National Association of Realtors revealed vacation home sales surged 29.7% last year, to 13% of all transactions. And the Mortgage Bankers Association’s survey of mortgage applications put the purchase index up 1% for the week ending March 28.
BUSINESS TIP OF THE WEEK… Online networking is important, but a recent study reported 95% of professionals believe face-to-face meetings are also essential to long-term relationships. Keep up your in-person networking .
>> Review of Last Week
GOOD JOBS… Friday arrived with a good March Employment Report, though not a great one. The stock markets at first rallied, but the early gains evaporated, as all three major indexes finished down for the day. The Dow and the S&P 500 eked out small increases for the week, but the tech-y Nasdaq suffered a loss. Some analysts felt the recent stock rally is tired and in need of a pullback. In other words, this is simply a market correction and doesn’t reflect any negative investor attitudes about the economy. That good but not great jobs report was simply consistent with the slow recovery we’ve seen for the last year.
Those Labor Department statistics showed an early spring rebound in hiring, with 192,000 new payrolls in March. Hiring was also stronger than originally thought inJanuary and February, so revisions to those months gave us a total of 229,000 newjobs. Unemployment stayed at 6.7% thanks to 503,000 more in the labor force. Average weekly earnings were unchanged for the month, but 2.1% higher than a year ago, a good sign. ISM Manufacturing and Services indexes both showed a bit better growth in March. One negative: the February Trade Deficit ballooned to $42.3 billion.
The week ended with the Dow up 0.5%, to 16413; the S&P 500 up 0.4%, to 1865; but the Nasdaq down 0.7%, to 4128.
The bond market was mixed, with prices heading in both directions. But when all was said and done, the FNMA 4.0% bond we now watch finished the week up .75, at $104.06. In Freddie Mac’s Primary Mortgage Market Survey, national average fixed mortgage rates were relatively unchanged for the week ending April 3. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.
DID YOU KNOW?… A national online real estate site’s chief economist offered: “…home prices still look 5% undervalued. Even though prices have jumped in the last 2 years, they’re still in rebound mode.”
>> This Week’s Forecast
FED MARCH MEETING MINUTES, WHOLESALE PRICES UNDER CONTROL… It’s a quiet week for economic reports, save Wednesday’s release of the FOMC Minutes from the Fed’s last meeting. It’s always interesting, if not necessarily revealing, to see what the central bankers have to say about our economic prospects. Beyond that, it’s good to keep an eye on the wholesale Producer Price Index (PPI). Any rise there may mean consumer prices will soon follow. Fortunately, March PPI is forecast flat.
>> 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.