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Inflation and rents are both on the rise in this week’s Markets in a Minute!

Inflation and rents are both on the rise in this week’s Markets in a Minute!
March 23, 2018 Fred Kreger

 

 

For the Week Ending March 23, 2018

 

Inflation Data:

We can forget the regular news that most traders use to make their daily decisions. With President Trump’s announcement of tariffs against China, and with the late Thursday afternoon announcement that China will retaliate with 3 Billion Dollars (yes that is a “B”) in tariffs of their own against the planned U.S. tariffs of 50 Billion (yes another “B”), no one knows how this will play out.

 

This is not an American – China issue. This trade war will impact the entire world and can have unknown consequences. Nothing like this has ever been done before. Even expert opinions on this matter, that have emerged immediately since the announcements, means nothing. It is all speculation on not only the outcome of these decisions between the two countries, but the global economic impact. Time will tell what the reality of these decisions will be if both countries stick to their announced plans.

 

The Federal Open Market Committee Announcement:

The Fed reiterated that they are sticking to their plan of a total of 3 interest rate hikes in 2018. The Fed did raise rates, as expected, by 25 basis points. One rate hike down, two more to go. Inflation continues to be described as moderate and the expectation that in the coming months it will likely increase. Needless to say, the threat of a trade war with China threatens to upend any plans the Fed has for economic policy.

 

The Fed sees the economy as stable, however they have changed their description in describing the economy from “solid” to “moderate”.

 

Existing Home Sales:

Existing home sales jumped 3.0 percent in the month of February. The annualized rate of 5.540 million was higher than expected. Compared to the same time last year, sales are up 1.1 percent. Prior to this report, sales were actually negative compared to last year.

The best part of the February sales data comes from the single-family home sector. Sales increased 4.2 percent while supply also increased 4.6 percent to 1.590 million. The increase in sales did not negatively impact home prices. The median home price rose 0.4 percent. Compared to the same time last year, prices are 5.9 percent higher.

 

Next week’s potential market moving reports are:

• Monday March 26th – Dallas Fed Manufacturing Survey
• Tuesday March 27th – S&P Corelogic Home Price Index, Consumer Confidence
• Wednesday March 28th – MBA Mortgage Applications, Pending Home Sales
• Thursday March 29th – First Time Jobless Claims, Consumer Sentiment

 

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.

 

 

As expected, the Fed raised policy rates at this week’s meeting. While they alluded to only two more hikes this year, rising inflation could necessitate more. 
The institution of tariffs, most recently against China, can contribute to rising inflation by limiting free markets. Inflation fuels rising interest and
mortgage rates.
After rising quickly early in the year, mortgage rates have stabilized. Nonetheless, further increases are expected through the rest of the year.

 

Existing home sales were up 3% in February, despite a chronic shortage of inventory. That’s 1.1% higher than February 2017, showing strong demand.
Tight inventory, especially for homes in the lower price ranges, is the new normal. Housing inventory was down 8.1% from a year ago this time.
Along with interest rates, rents have been rising. A recent survey concluded that the largest 250 U.S. cities saw rents grow year over year by an average
of 2.7%.

If you make something idiot proof, someone, somewhere will make a better idiot.

 

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
rate trends can differ from our own and are subject to change at any time.

Sincerely,

Fred Kreger
American Family Funding
Certified Mortgage Consultant
NLMS # 1850 / 214640 BRE# 01215943 / 01371184
(661) 505-4311
Fred.Kreger@affloans.com
28368 Constellation Road
Suite 398
Santa Clarita, CA
91355

www.fredkreger.com

 

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do not demonstrate all options or pricing structures. Rates, terms, programs and underwriting policies subject to change without notice. This is not an offer to extend credit or a commitment to lend. All loans subject to underwriting approval. Some products
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