|For the Week Ending March 2, 2018|
The Stock Market:
What a difference a week makes. From the stock market loving President Trump’s tax reform, to now hating on the new Fed Chairman’s lack of a clear message on interest rate plans for 2018. We all know from past history, that no matter what the Fed says, they can always change their plan as needed based upon economic conditions. However, the Fed usually outlines a definitive plan. New Fed Chairman Powell has been waffling in his communication and no real plan for rates is clearly stated. This uncertainty is leaving investors concerned.
In addition, the latest announcement on Thursday by President Trump regarding plans to add tariffs on Steel and Aluminum imports has the markets rattled as well. A move like this can have a significant impact on not only automobile prices, but almost any product that uses either metal or aluminum in construction or delivery. Tariffs could lead to a global trade war forcing prices on almost any import you can think of to increase. Hopefully, this is nothing more than words and posturing in hope of bringing China more into step with fair trade, which has been a Trump focus since prior to his election.
New Home Sales:
The latest report on new homes sales was not anywhere close to expectations. Analyst’s were expecting sales to remain stable at a pace of 640K per year. January data shows a significant drop in the pace of sales down to 593K annually. There is however a good part of the latest report that can be extracted when you get past the headline. Supply of new homes jumped from 5.5 months up to 6.1 months, which should create some easing in rapidly rising new home prices. With interest rates going up, the potential slow-down of price increases will allow home affordability to remain in check. A market where both home prices and interest rates go up simultaneously has the potential to quickly push buyers out of the market and create significant home price declines in both the new and existing home markets.
The S&P Corelogic Case-Shiller House Price Index for December rose a strong 0.6 percent. The western states led the way with Seattle topping the list with a year-on-year increase of 12.7 percent. Las Vegas was a close second with 11.1 percent. Monthly increases were led by Seattle and Denver with a gain of 1.2 percent. San Francisco and Las Vegas followed right behind with a 1.1 percent monthly gain.. Nationally, home prices remain higher by 6.3 percent from a year ago, and still trending higher.
Next week’s potential market moving reports are:
• Monday March 5th – ISM Non-Mfg 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.
|New Fed Chair Jerome Powell appeared for his first time in front of Congress this week. He moved markets with his upbeat economic views, pressuring rates.|
|Consumer prices increased in January, and inflation posted its largest gain in 12 months. Inflation pressures rates higher, including mortgage rates.|
|The labor market continues to show strength as well. Filings for unemployment benefits fell last week to the lowest level in almost five decades.|
|Home prices accelerated in December, according to a recent Case-Shiller report. Prices were up 6.4% year-over-year with continued strong buyer demand.|
|Pending home sales were down 4.7% in January. However, the drop is likely due to tight inventory and bad weather rather than increased mortgage rates.|
|Buyer traffic was strong in January, but listings fell to an all-time low, down 9.5% year-over-year. This can continue to fuel price gains.|
Middle age is when work is a lot less fun, and fun is a lot more work.
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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