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Home prices soaring and jobs report Friday in this week’s Markets in a Minute!

Home prices soaring and jobs report Friday in this week’s Markets in a Minute!
February 2, 2018 Fred Kreger



For the Week Ending February 2, 2018

The Markets and the Economy:

This morning, the main headline is the Employment Situation Summary where a reading of +190,000 compared to last month’s +148,000, came in at +200k. Hourly Earnings were +.9%, +2.9% year over year, and the Unemployment Rate came in at 4.1%.


As expected, on Wednesday the Federal Open Market Committee announced that they are leaving interest rates where they are for now. In what is a rare occurrence, all 9 members voted to leave rates where they are.
It has been a very long time since all the board members could be in agreement on monetary policy. The stock market had muted reaction to the Fed announcement.

The big question on investors minds these days is… “Is the bull run for stocks coming to an end?”


After week after week of new stock market records, the first half of the week saw the market tank by over 500 points in two days. The two main drivers for this change of fortune was some concern about future economic
growth, and the bigger factor of JP Morgan Chase, Amazon, and Berkshire Hathaway getting into the healthcare business to reduce medical costs. This had almost every stock related to healthcare in some fashion take a nose dive.


Pending Home Sales and Overall Housing:

The tight supply of homes available for sale continues to restrict significant growth of pending home sales. December showed an expected increase of 0.5 percent, which although not a significant movement, does point to sales improvement in the coming months.


The South is the strongest region for property resales. Pending sales in this area increased 2.6 percent in December, and is higher from the same time last year by 4.0 percent. Sales in the West increased 1.5 percent, however unlike the South, sales compared to last year are down by 3.1 percent.


Until more sellers place their homes on the market, significant growth in this sector is unlikely. There continues to be very high demand for housing, however, with the recent increase in mortgage rates, home affordability has declined slightly. If interest rates continue to rise, it is likely we will see a decline in the number of buyers out searching for home for a brief period of time. Once people accept the new reality of slightly higher mortgage rates (which are still very low by historical standards) the buyers that took a pause on purchasing, will likely return.


The most recent Core-Logic housing data shows that prices continue to rise. The latest data is for November 2017. Home prices rose 0.7 percent from the prior month, and were higher by 6.4 percent from the same time last year. The next step is to see how higher rates might impact values.


Next week’s potential market moving reports are:

• Monday February 5th – ISM Non-Manufacturing Index
• Tuesday February 6th – JOLTS Report
• Wednesday February 7th – MBA Applications, EIA Petroleum Status Report
• Thursday February 8th – First Time Jobless Claims


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.



The Fed didn’t raise policy rates at this week’s FOMC meeting, though their announcement pointed to a likely increase when they meet in March.
Consumer spending increased in December, a reflection of the strong labor market. However, the 2.4% national savings rate was the lowest since 2005.
The Fed believes that inflation could reach their 2% target this year. Supported by a growing economy, inflation pushes rates (including mortgage rates) higher.


National home prices continued their run higher in November, rising 6.2% annually. Home prices are rising more than three times faster than the rate of inflation.
Despite tight inventory, pending home sales were up 0.5% in December over November. The supply of homes for sale is at its lowest level since 1999.
Construction spending increased more than expected in December. Private residential projects rose to their highest level since March 2007.

What did the left eye say to the right eye?
Between you and me, something smells.


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.


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



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