QUOTE OF THE WEEK… “Spring is nature’s way of saying, ‘Let’s party!'” –Robin Williams, American actor
INFO THAT HITS US WHERE WE LIVE… It may be premature to begin partying in the housing market, but there are signs we’ll enjoy a nice spring selling season. Freddie Mac’s chief economist posted a blog on their websites offering a rosy outlook: “Housing is stronger today than at any point since the Great Recession began and hit bottom in 2009.” He cites three points. 1. Home sales are up 13% from their low and should be up “about 3% in 2014.” 2. Housing starts are up 50% since bottoming out, with “almost 20% growth” expected this year. 3. Home prices are up 16% since their trough and should continue to grow in 2014, “albeit at a more moderate 5% pace.”
Speaking of prices, a national online listing site reported asking home prices continue to rise as the spring selling season gets under way. The site put asking prices up a seasonally adjusted 2.9% from February to March 2014, delivering the third straight month of solid month-over-month gains. Year-over-year, asking prices are up 10% nationally, registering gains in 97 of the 100 largest metros. The Mortgage Bankers Association also reported purchase loan applications up a seasonally adjusted 3% for the week ending April 4. Spring housing market activity seems to be kicking into gear.
BUSINESS TIP OF THE WEEK… Want to jump-start your creativity? A recent study revealed that the most creative people focus on asking a lot of questions, staying positive, and seeking to learn from others.
>> Review of Last Week
MAYBE A CORRECTION… It was an unusually rough week on Wall Street, with all three major indexes finishing decidedly down. A few observers feared a backslide for the economy, pointing to some disappointing corporate earnings reports. But most analysts saw the downtrend in stock prices as probably the start of a correction. That’s the 10% or so drop in stock prices that regularly occurs following the kind of upward market surge we’ve lately experienced. In addition, the week’s economic data, while sparse, was fairly upbeat.
Wednesday’s release of FOMC Minutes from the Fed’s March 18–19 meeting admitted “that growth in economic activity slowed during the winter months” but put most of the blame on “adverse weather conditions.” They also said, “Inflation has been running below the Committee’s longer-run objective.” Since the Fed wants to see a little more inflation, Friday’s 0.5% bump in the Producer Price Index was seen as a good thing.Michigan Consumer Sentiment came in higher than expected and weekly initial unemployment claims dropped to 300,000, the lowest level since May 2007!
The week ended with the Dow down 2.4%, to 16027; the S&P 500 down 2.6%, to 1816; and the Nasdaq down 3.1%, to 4000.
With stocks under pressure, bonds posted decent gains. Treasuries logged their seventh consecutive weekly move up. The FNMA 4.0% bond we now watch finished the week up .14, at $104.20. For the week ended April 10, Freddie Mac’s Primary Mortgage Market Survey reported national average fixed mortgage rates down slightly“following the decline in 10-year Treasury yields.” Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.
DID YOU KNOW?… The Philadelphia Fed’s state leading indexes report for January 2014 forecasts that all 50 state coincident indexes will grow over the next six months.
>> This Week’s Forecast
RETAIL, HOME BUILDING, MANUFACTURING ALL UP, INFLATION OK... We’ll see a range of data this week that’s expected to paint an encouraging picture of the overall economy. Retail Sales should grow a bit more in March, as well as Housing Starts. All manufacturing indicators are forecast up: the regional NY Empire and Philadelphia Fed indexes and Capacity Utilization nationwide. The Consumer Price Index (CPI) measure of inflation should barely budge. Wednesday, the Fed’s Beige Book tells of economic conditions in Fed districts across the country and may indicate future central bank policy.
>> 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.