Santa Fe Las Campanas Homes & Land Market For Week of June 19, 2017

Market Update
QUOTATION OF THE WEEK… “When I’m out on the football field, I have so much confidence in what I’m doing.” –Tom Brady, American football quarterback

INFO THAT HITS US WHERE WE LIVE … If that’s the secret to becoming the only quarterback ever to win five Super Bowls, confidence is a pretty powerful thing. So it’s nice to see that these days, home builders appear to have it in spades. The National Association of Home Builders (NAHB) reports builder confidence came in at 67 in June. Any number over 50 indicates most builders see conditions as good. The reading wasn’t quite as high as May’s, yet the NAHB chairman reassured us, “Builder confidence levels have remained consistently sound this year, reflecting the ongoing gradual recovery of the housing market.”

Friday, one might have wondered why all that builder confidence didn’t translate into better looking housing reports. Housing Starts were down 5.5% in May, at a lower than expected 1.092 million annual rate, while Building Permits also missed forecasts, dipping to a 1.168 million annual rate. Builder confidence could have been bolstered by the fact that single-family starts are still up 8.5% the past year. Plus, housing completions are up 14.6% the last year, while homes under construction have been trending down since February. This shows builders are busy finishing projects before starting new ones, driven to meet the heightened demand.

>> Review of Last Week
THE FED HIKES RATE, DOW BREAKS RECORD… Investors had plenty to chew on last week, with the Fed hiking the Funds Rate amidst a slew of economic reports. The three major stock indexes sent mixed messages, as the blue chip Dow wound up with its 21st record close of the year, the broadly based S&P 500 finished the week flat, and the tech-heavy Nasdaq ended down. As expected, our central bank announced it would raise the target range for its Fed Funds Rate by 0.25%, to 1.00%-1.25%. This was the second hike of the year and Wall Street now thinks that will be it, despite the Fed’s earlier call for three hikes in 2017.

In the week’s economic data, weekly Initial Jobless Claims fell by 8,000, dropping for the second week in a row, to just 237,000. Economists say this is evidence of growing strength in the job market, a good sign for real estate. Other reports came in below expectations, including headline housing numbers, inflation, the Philly Fed index of manufacturing in that region, and Retail Sales, off 0.3% for May. But the Retail drop was due to lower gas prices, a good thing, and experts tell us economic reports can be quite volatile month to month. The fact is, economic data averages for 2017 so far are still higher than last year’s averages.

The week ended with the Dow UP 1.0%, to 21384; the S&P 500 UP 0.1%, to 2433; and the Nasdaq down 0.9%, to 6152.

Over in bonds, Treasuries rallied on Friday from the economic reports that missed their forecasts. Other bonds also did well, but the 30YR FNMA 4.0% bond we watch finished the week down .16, at $105.42. National average 30-year fixed mortgage rates moved up just a tad in Freddie Mac’s Primary Mortgage Market Survey for the week ending June 15. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?… The NAR reports: 34% of all homebuyers are Millennials (36 and younger); 28% are Generation Xers (37-51), who tend to buy the largest, most expensive homes; 17% are single women, who buy at twice the rate of single men; and nearly half of all first-time homebuyers are Hispanic.  >> This Week’s Forecast
EXISTING HOME SALES DIP, NEW HOME SALES SKIP… Taking a breather from last week’s heavy dose of economic data and Fed news, we’ll only have a few things now to watch. Wednesday, Existing Home Sales for May are expected to be off a bit, though still above a 5.5 million unit annual pace. Friday, we’ll see New Home Sales, forecast to skip up nicely to just a tick below 600,000 units a year.
>> 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

>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months… Now that the Fed hiked the rate for the second time this year, investors feel no moves will be made until next March. Note: In the lower chart, a 0% probability of change is a 100% certainty the rate will stay the same.

Current Fed Funds Rate: 1.0%-1.25%