|For the Week Ending April 6, 2018|
The Stock Market:
If you have been reading this newsletter for a while, you will recall my mentioning in past editions how it is amazing what we can get used to. Well…this week the stock market has had some of the largest swings from negative to positive territory in a single session ever recorded. A more than 700 point swing from being down over 500 points, to rallying up over 200 points, all in the same day. The amazing part is that unless you were actually trading yourself, you probably just looked at the headline and moved on. I will say it again,,,”it is amazing what we get used to”.
Construction spending has not been as robust as it was late last year. The most recent data for February showed only a minimal 0.1 percent increase. This small movement comes after the prior month showed no increase at all. The good news in the report is that single-family homes rose 0.9 percent for a second straight month. This now places year-on-year spending up by a very strong 9.5 percent. Multi-family homes is where the majority of weakness exists. However, even this month, spending increased in this sector by 1.2 percent making the annual increase 0.9 percent.
The drag on construction spending comes from the home improvement sector. This area declined by 1.5 percent. It is too early to determine, but some analysts believe that homeowners unwillingness to either tap an existing home equity line of credit, or even apply for one, may be playing a role. With interest rates rising, HELOC’s move immediately with Fed rate increases. Couple that with the fact that the interest is no longer tax deductible, this could very well have homeowners holding off on major improvements or renovations.
Once again, we are experiencing just how sensitive borrowers are to even the slightest movement in interest rates. For the week ending March 30th, the Mortgage Bankers Association of American reported that applications for refinances declined 5.0 percent. The share of refinances is now down to 38.5 percent of total mortgage volume. This is the lowest since September 2008.
Purchase applications were also down, but only by a modest 2.0 percent. This seems to be more caused by the lack of housing inventory nationally, than interest rate movements. As we head into what is considered the selling season, it still seems that homeowners are not budging.
Next week’s potential market moving reports are:
• Tuesday April 10th – Producer Price Index
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.
|Factory activity slowed in March, but growth in the manufacturing sector is still going strong. More companies showed signs of expanding than shrinking.|
|Tariffs on goods from China continued to dominate the headlines this week. Trade war concerns have helped keep mortgage rates from rising.|
|Jobless claims were up on the week, but jobless rolls fell to the lowest level since 1973. A tightening labor market could boost wage growth, leading to inflation.|
|Construction spending was up in February after being unchanged in January. Spending on private residential projects increased 0.7%, after falling in January.|
|Home buyers are blowing their budgets to snag their dream houses as prices rise. A third of buyers spent an average of $16k more than they planned.|
|Rising home prices may keep some out of the market. A recent Freddie Mac survey finds 67% of current renters view renting as more affordable than owning.|
Optimist: The glass is half full.
Pessimist: The glass is half empty.
Mother: Why didn’t you use a coaster?
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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