Santa Fe Las Campanas Housing Report

TWO UP, ONE DOWN… Just like the April housing reports, last week’s stock market indexes failed to bat a thousand. Two ended ahead and one dropped back. The two winners were the broadly-based S&P 500 and the tech-y Nasdaq, while the blue-chip Dow lost. None of the moves were large, so some called the week flat, although investor responses to things economic went up and down. FOMC Minutes from the Fed’s April meeting revealed many members felt a rate hike in June was “unlikely,” an up for Wall Street. But Fed chair Janet Yellen told a Rhode Island business group the weak economic data was “transitory” and the central bank is ready to raise rates this year, a down to investors.

Since the Fed wants a higher level of inflation, it was also disturbing for Wall Streeters to see Core CPI prices come in higher than expected on Friday. The labor market seems to be gaining strength too. With this week’s Initial Unemployment Claims at 274,000, the four week average went to 266,000, its lowest level since April 2000. This came while Continuing Unemployment Claims sank to their lowest level since November 2000. But hold on. The Philadelphia Fed Index of manufacturing in that region missed estimates, coming in well below the prior month’s reading. The economy continues to move ahead haltingly, so no one really knows what the Fed will do, including the Fed.

The week ended with the Dow down 0.2%, to 18232; the S&P 500 UP 0.2%, to 2126; and the Nasdaq UP 0.8%, to 5089.

Friday’s higher than forecast Core CPI inflation reading hurt bond prices a bit. The 30YR FNMA 4.0% bond we watch finished the week down .09, at $106.15. For the week ending May 21, national average fixed mortgage rates moved slightly lower, after three weeks of gains in Freddie Mac’s Primary Mortgage Market Survey. Rates remain near historical lows. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.

DID YOU KNOW?… The existing homes inventory was up 10% in April, but is down 0.9% from a year ago. So prices continued to increase and houses sold faster last month (39 days) than at any time since July 2013.

By Troy Lepisto, First Mortgage Co, phone 505-670-6399