Some recently released data indicates that real estate is starting to make a recovery!
For the week of March 26, 2012 – Vol. 10, Issue 13
>> Market UpdateQUOTE OF THE WEEK..."I invented my life by taking for granted that everything I did not like would have an opposite, which I would like." --Coco Chanel
INFO THAT HITS US WHERE WE LIVE... The renowned French fashion designer certainly would have appreciated that while February's Housing Starts were down 1.1% for the month, Building Permits bumped UP 5.1%, to their highest level since 2008. The housing recovery is full of opposites. In spite of that monthly dip, starts are UP almost 35% from a year ago. And before their February slip, single-family starts went up four months in a row to an 18-month high.
Continuing the theme of opposites, February Existing Home Sales fell 0.9% but are UP 8.8% over a year ago. And while the median price rose, a good thing, the supply also rose, not a good thing, but is still only 6.4 months. Friday, New Home Sales were off 1.6% for February, at a 313,000 annual rate, but the months' supply is only 5.8, inventories are at record lows and the median price of new homes sold is UP 6.2% from a year ago, all good things.
BUSINESS TIP OF THE WEEK... Watch out for stress. When you feel it, just stop, relax and enjoy the world around you. Then focus that positive energy on new business and profits.
>> Review of Last WeekHOT, THEN NOT... Investors pushed stocks to the S&P 500's highest level since mid-2008, then took their profits, concerned that global economic conditions are still worrisome. As a result, the Dow and the S&P 500 suffered their worst weeks of the year, although the techie Nasdaq edged upward. The global negative vibe came from manufacturing indexes in China and Europe showing activity contracting in those regions. Not a great sign for our economically interconnected world.
Over here, the slight dips in housing numbers were a bit disappointing, although, as noted above, there was positive data as well, indicating real estate appears to be starting a recovery. Supporting that recovery is an improving jobs situation, as weekly initial jobless claims edged down to a multi-year low of 348,000. That number still needs to get way lower, but at least it's no longer growing.
For the week, theDow ended down 1.2%, at 13081; the S&P 500 closed down 0.5%,to 1397; and the Nasdaq went UP 2.2%, to 3068.
Bond prices were hammered early in the week, then benefited from the stock sell-off and the less inspiring economic data. The FNMA 3.5% bond we watch wound up the week off just .01, at $102.12. National average mortgage rates headed up for the second week in a row in Freddie Mac's weekly survey. But mortgage rates still remain well below their levels of a year ago.
DID YOU KNOW?... According to the National Association of Realtors (NAR), there's been a reversal of the trend toward more single buyers: 64% of buyers are now married couples, the highest proportion since 2001.
>> This Week’s ForecastPENDING HOME SALES, Q4 GDP AND, OH YES, INFLATION... The only thing left after last week's avalanche of data on February housing was Pending Home Sales. This measure of signed contracts indicates actual sales a few months out and a mild trend upward is expected today. Thursday, the Q4 GDP 3rd Estimate is forecast to remain in moderate growth range.
Core PCE Prices, excluding volatile food and energy, should remain within the Fed's guidelines, although prices overall keep edging up. This, unfortunately, can also push up mortgage rates.
>> The Week’s Economic Indicator CalendarWeaker 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.
Economic Calendar for the Week of Mar 26 – Mar 30
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months... The Fed has stated it wants to keep the Funds Rate low for quite some time, which is what economists expect. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.
Current Fed Funds Rate: 0%–0.25%
Probability of change from current policy:
- Ed Dorame / Guarantee Home Mortgage555 Dayton St. #A-1Phone: 2065102118
Edmonds, WA 98020