QUOTATION OF THE WEEK… “Spring is nature’s way of saying, ‘Let’s party!'” –Robin Williams, American stand-up comedian and actor
INFO THAT HITS US WHERE WE LIVE … Spring may have officially begun March 20, but the spring home buying party got started more than a month before that. This was evidenced when Pending Home Sales shot up 5.5% in February to its highest level in almost a year and its second highest level in more than a decade. The index of contracts signed on existing homes is 2.6% ahead of last year and anticipates nice gains for those sales in coming months. The National Association of Realtors (NAR) chief economist feels “the stock market’s continued rise and steady hiring in most markets is spurring significant interest in buying.”
The SVP at a property data provider noted, “stronger wage growth is…outpacing home price growth in more than half of the markets for the first time since Q1 2012.” The national Case-Shiller home price index was up 0.6% in January. Their managing director commented that the Fed’s last hike “by a quarter percentage point is expected to add less than a quarter percentage point to mortgage rates.” He added: “Given the market’s current strength and the economy, the small increase in interest rates isn’t expected to dampen home buying.” The latest NAR forecast pegs existing home sales at 5.57 million for 2017, up 2.3% over last yea
>> Review of Last Week
NOW THAT’S MORE LIKE IT!… Following the prior week’s fall from grace, stocks rebounded nicely, with the major market indexes up after five days of trading. It was also the end of the first quarter, and the three-month performances were impressive. The blue chip Dow advanced for the sixth quarter in a row, its longest streak of such gains in more than ten years. The broadly based S&P 500 also increased for the sixth straight quarter, while the tech-y Nasdaq posted the highest quarterly gain, up nearly 10% the last three months. Investors remain upbeat about the economic outlook and upcoming Q1 corporate earnings.
Upbeat is an understatement for describing how many people now feel. The Conference Board’s Consumer Confidence Index rocketed to a 16-year high in March. Their director of economic indicators noted consumers “expressed much greater optimism regarding the short-term outlook for business, jobs and personal income.” This follows other reports of renewed optimism. Fannie Mae found lenders are now more confident than ever in the economy, while consumers’ faith in the housing market is stronger than ever. February Personal Spending did fall short of forecasts, but Personal Income and PCE Price inflation were fine.
The week ended with the Dow UP 0.3%, to 20663; the S&P 500 UP 0.8%, to 2363; and the Nasdaq UP 1.4%, to 5912.
Bond prices gained and yields dropped with the miss in Personal Spending and talk from Fed members about trimming their $4.5 trillion balance sheet. The 30YR FNMA 4.0% bond we watch finished the week UP .31, at $104.94. National average 30-year fixed mortgage rates dropped in Freddie Mac’s Primary Mortgage Market Survey for the week ending March 30, the second straight “significant” decline. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW?… Hispanics accounted for 75% of the net growth in homeownership in 2016, and about half of first-time homebuyers. Their homeownership rate increased for the second straight year, while the overall homeownership rate sank to a 51-year low.
>> This Week’s Forecast
MANUFACTURING GROWS, FED MUSINGS, GOOD JOBS… The national measure of manufacturing activity should stay solidly in growth territory, as the ISM Index remains well north of 50. Fed watchers will study FOMC Minutes from the last meeting when all but one of the central bankers voted for the rate hike. The March jobs report is expected to make another good showing, with a smidge fewer than 200,000 new Nonfarm Payrolls and the important Hourly Earnings reading a welcome 0.3%.
>> The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.