Daily News 5/19/2015

May 19, 2015

Tuesday – May 19

The warmer temperatures in April helped home builders break new ground on housing units, with levels not seen in nearly eight years. The Commerce Department reported that Housing Starts surged by 20% in April from March to an annual rate of 1.14 million, which was also the biggest percentage gain in more than 24 years. The recent increase in the job markets, a strengthening in the economy, coupled with an uptick in home equity has led consumers to shed concerns and consider purchasing a new home.

The world’s largest retailer, Wal-Mart, reported that higher wages and a stronger dollar pushed corporate earnings short of expectations in its latest quarterly report. Wal-Mart reported net income of $3.34 billion and earnings of $1.03, just below the $1.05 expected and well below the $1.11 from the year ago period. The company has been under pressure to raise worker pay and benefits and has announced that it will raise the minimum wage to $9 per hour this year and $10 in 2016. This change has and will impact the bottom line, but with $3.34 billion in net income in the latest quarter, no one is shedding a tear for the retailer.

At a recent conference on the outlook of the housing economy at the Mortgage Bankers Association’s (MBA) National Secondary Market Conference, attendees from Fannie Mae, Freddie Mac and the MBA predicted that the U.S. Federal Reserve will begin to raise the Fed Funds Rate some time this year. The rise will most likely take place in September, after weak economic data in the first quarter of this year pushed the time frame further out from the original target of June. The one caveat from the prediction … the refinance share of mortgage applications will likely fall.