|For the Week Ending January 5, 2018|
The Stock Market and the Economy:
Heading into the new year, “all systems go”. The stock market continues to rise and faith in the economy continues to grow. Employment does not seem to be a concern as job growth continues to rise and unemployment remains at historical lows. The Fed minutes released this week show that the board members want to continue to increase interest rates. However, there plan is for doing it slowly and making sure they remain in tune with any changes in the economy that would
Additionally, the most recent forecast for global economic growth is strong. Europe, which has struggled for many years, and more so since the Brexit vote, is coming back strong. Car makers are optimistic about European sales, and home builders are feeling great as well. The Japanese economy is also doing quite well.
U.S. Motor Vehicle Sales:
One of the strength indicators of the U.S. economy is often motor vehicle sales. For the month of December, sales remained strong at an annualized rate of 17.9 million versus November’s 17.5 million. Other than October and November sales, which were off the charts because of hurricane-replacement demand, December’s pace is one of the best over the last 2 years.
U.S. Construction Spending and Manufacturing:
Spending increased broadly in November, with a reported jump of 0.8 percent. Construction spending on residential properties rose 1.0 percent. Single-family inventory increased by a very welcome 1.9 percent. This rise in available properties should translate into further increases in new home sales in the coming months. Homeowners also seem to be putting more money into their properties. Home improvement rose by a strong 0.7 percent for the month.
The best part of this report is that single-family construction is up 8.9 percent from the same time last year. Home improvements are up by a whopping 9.8 percent. All of this positive data adds on to the recent string of strong and improving housing reports.
The ISM Manufacturing Index jumped with a 14 year high for new orders. The index rose by 1.5 points up to 59.7 which points to great strength in the sector. Inventories are dwindling because of demand.
Next week’s potential market moving reports are:
• Monday January 8th – Consumer Credit
As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can.
Please enjoy this quick update on what happened this week in the housing and financial markets.
|Tax reform passed for 2018 is expected to spur more economic growth. A stronger economy could pressure mortgage rates higher through 2018.|
|The minutes from the Fed’s last meeting showed concerns over sluggish inflation. The lack of inflation has helped to keep mortgage rates low in the past.|
|The labor market continues to show strength. The private sector added 250,000 jobs in December, the biggest increase since March.|
|Home prices continue to soar. CoreLogic reports for November 2017 show that home prices were up year-over-year by 7%, the 4th consecutive month of growth.|
|The Federal Housing Finance Agency is considering the VantageScore model instead of FICO for mortgage lending. This could result in more qualified buyers.|
|The final tax reform plan changed the mortgage deduction on new loans from a cap of $1 million to $750,000, with an additional $100,000 for home equity loans.|
My New Year’s resolution is to help all my friends gain ten pounds so I look skinnier.
Rate movements and volatility are based on published, aggregate national averages and measured from the previous to the most recent midweek daily reporting period. These
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