New Homes Sales in November rose and December Consumer Sentiment rose

December 23, 2016

The Commerce Department reported that New Home Sales in November rose 5.2% from October to an annual rate of 529,000, the highest rate in four months. The 529,000 was above the 573,000 expected and up 16.5% from November 2015. Sales were unchanged in the Northeast and jumped 43.8% in the Midwest, highest since October 2007. Sales declined 3.1% in the South, but rose 7.7% in the West to their highest level since January 2008. The inventory of new homes stands at a 5.1 month supply, just below the 6.0% that is considered a healthy balance between supply and demand.

The final reading on December Consumer Sentiment rose to 98.2 as the euphoria from the presidential election continued to lift the spirits of consumers around the country. The 98.2 was a 14-year high. The survey revealed that an all-time record number of consumers (18%) spontaneously mentioned the expected favorable impact of Trump’s policies on the economy. In addition, consumers anticipated that a stronger economy would create more jobs, although expected wage gains were quite meager.

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Cash sales for homes rose, Economic growth up in Q3, Mortgage rates continue to rise this week

December 22, 2016

Cash sales for homes rose for the third straight month in September though below the 2015 levels, reports analytics firm CoreLogic. Cash sales made up 31.7% of total home sales in September, down 1.3% from last year, but up slightly from August’s 31.1%. By comparison, back in January of 2011, cash sales peaked at 46.6% of total sales, while before the Great Recession, cash sales made up 25% of total sales.

Economic growth ramped up in the third quarter of 2016 led by higher consumer spending and business investments. The final reading for third quarter Gross Domestic Product rose by 3.5%, above the 3.3% expected and well above the anemic readings of 1.4% in the second quarter and 0.8% in the first quarter. Within the report, consumer spending was up 3.0% from 2.8%. Business investments surged 1.4% from 0.1%.

Mortgage rates continued to rise this week as the post-election results lifted Stock prices, which pushed rates higher. Freddie Mac reported on Thursday that the 30-year fixed conventional mortgage rate increased to 4.30% from 4.16% with 0.5 in points. Points are fees paid to a lender equal to 1% of the loan amount. Mortgage rates are at the highest levels in more than two years.

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Existing Home Sales in November higher, Mortgage Rates hit highs, Home Price gains remain strong

December 21, 2016

The National Association of REALTORS® reported on Wednesday that Existing Home Sales in November edged higher by 0.7% from October to an annual rate of 5.61 million units, a 9-year high. Potential borrowers locked in before the presidential election on November 8 to lock in low rates feeling that rates may edge higher after the results. Year-over-year, sales were up 15.4%, but that number could be distorted given the fact that TRID rules went into effect November 2015 and many mortgage applications were pushed into December.

Mortgage rates hit highs not seen since the spring of 2014 this week as the post-presidential election results touched off a six-week rally in the Stock markets, which pushed Bond prices lower and yields higher. The Mortgage Bankers Association reported today that the 30-year fixed-rate conventional mortgage ($417,000 or less) rose to 4.41% in the latest week, the highest since May 2014. However, it is still worth noting that from a historic perspective, mortgage rates are still very low – for example, mortgage rates were 10.13% in 1990 and 5.67% in 1996.

Fannie Mae released its December 2016 Economic and Housing Outlook revealing that mortgage rates continue to trend higher following the U.S. presidential election and after the Federal Reserve hinted at multiple interest hikes in 2017. Fannie Mae went on to say that home price gains remain strong, which has pushed equity in homes higher and is providing support to consumers. In addition, Fannie said, “The recent surge in interest rates amid continued strong home price appreciation are likely to present affordability challenges to home buyers, especially for young adults who are looking to enter the housing market for the first time.”

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Housing Market Growth for 2017 forecast, Interest rate hikes possibility, Holiday factoids

December 20, 2016

CoreLogic reported its forecast of the housing market this week revealing that it sees both housing and economic growth in 2017. On the mortgage interest rate front, CoreLogic sees rates just over 4% in 2017, nearly 0.5% higher than in 2016. On home prices, CoreLogic predicts prices will continue to rise seeing a 5% increase, a slower pace than in 2016. Lastly, with rates on the rise, refinancing origination’s will decline from 2016, but will be offset by higher purchase-money volume.

A stronger dollar is weighing on Bond prices today as visions of interest rate hikes dance in the heads of U.S. currency investors. Last week the Fed said in its dot-plot forecast that the benchmark short-term Fed Funds Rate could rise three times in 2017. The U.S. dollar index is trading at a 14-year high. When the Federal Reserve increases the Federal Funds Rate, it normally reduces inflationary pressure and works to appreciate the dollar. Also weighing on Bonds is Fed Chair Yellen’s bullish remarks yesterday on the U.S. job market where she said, “You are entering the strongest job market in nearly a decade. The job prospects and career opportunities for new graduates at this time are very good.”

On the lighter side, here are some facts from the holidays from the Chicago Tribune: The traditional Christmas plant we call a poinsettia was known by the Aztecs as cuetlaxochitl. Its current name came from the first U.S. envoy to Mexico, Joel R. Poinsett, who noticed the plant being used for holiday celebrations and sent a few north to the United States in the 1820s. Hanukkah, based on the Jewish calendar, is a wandering holiday and starts at sunset on December 24 this year. Kwanzaa, which is observed December 26 through January 1, is a nonreligious holiday that celebrates African-American culture. And “Festivus for the rest of us,” was ushered in by Frank Costanza, George’s father in the hit comedy series “Seinfeld.”

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Dow Jones Industrial Average, Latest Star Wars Movie

December 19, 2016

The closely watched Dow Jones Industrial Average is closing in on the 20,000 level milestone as the year comes to an end. Since the results of the presidential election, the Dow is up 8.5% since November 8, as investors placed bets that the new administration could put forth deregulation and infrastructure spending that could boost the economy. In the same time, investors withdrew money from the Bond markets, which pushed mortgage rates up to two-year highs.

The latest installment of the “Star Wars” movies, “Rogue One: A Star Wars Story” opened at movie theaters across the country this past weekend and posted the second-best December opening weekend ever as people flocked to the big screens. It is estimated that the movie grossed $155 million, while earning $290.5 million globally. The movie by Disney, sent the shares of the giant media company to seven months highs.

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Home Builder Confidence surged in December, Mortgage Rates continue to rise this week, First Time Unemployment low

December 15, 2016

Home builder confidence surged in December after the election in early November. The National Association of Home Builders reported that its Housing Market Index hit 70 this month, above the 63 expected and up from 63 in November. It was the highest level since July 2005. “This notable rise in builder sentiment is largely attributable to a post-election bounce, as builders are hopeful that President-elect Trump will follow through on his pledge to cut burdensome regulations that are harming small businesses and housing affordability,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill.

Mortgage rates continued to rise this week after the Federal Reserve announced that inflation has pushed higher, the economy is improving and interest rates will continue to rise. The news caused Bond prices to fall and Bond yields to push higher. Freddie Mac reported on Thursday that the 30-year fixed conventional mortgage rate increased to 4.16% from 4.13% with 0.5 in points. Points are fees paid to a lender equal to 1% of the loan amount. Mortgage rates are at the highest levels in more than two years.

Americans filing for first time unemployment benefits continue to hover near multi-decade lows and as the sector has improved dramatically since the end of the Great Recession back in mid-2009. The Labor Department reported that Weekly Initial Jobless Claims fell by 4,000 to 254,000 in the week ended December 3. Claims have now remained below the 300,000 mark for 93 straight weeks, which is normally associated with a robust job market. First-time unemployment benefits hit a 43-year low in mid-November of 233,000.

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Consumers pulled back on spending, Mortgage applications declined in latest week

December 14, 2016

Consumers pulled back on spending to begin the 2016 holiday shopping season in a month that featured the presidential election and Black Friday. The Commerce department reported that Retail Sales rose 0.1% last month, down from the 0.6% recorded in October, which was revised lower from 0.8%. Sales were up 3.8% from November 2015, which is an improvement compared with the beginning of the 2015 holiday shopping season. The report showed that sales slowed in the first two weeks of the month, but picked up after the election.

Mortgage application volume continued to decline in the latest week given the fact that the holidays are in full swing and as mortgage rates edged higher. The Mortgage Bankers Association (MBA) reported that its market Composite Index, a measure of total mortgage application volume, fell 4% in the latest week. Within the report it showed that the refinance index declined 4%, while the purchase index decreased by 3%. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417K or less) rose to its highest level since October 2014, 4.28%, from 4.27%.

The Mortgage Bankers Association (MBA) also reported this week that mortgage applications for new homes fell 3% in November from October, but were up 12% since November 2015. The MBA said the solid year-over-year rise was due to a strengthening economy and an improved job market. The average loan size for new homes in November was $329,400, up 3% from a year ago. The MBA’s Builder Applications Survey tracks application volume from mortgage subsidiaries of home builders across the country.

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Small Business optimism, Foreclosures fell in October, Fannie Mae and Freddie Mac will suspend foreclosure evictions for holidays

December 13, 2016

Small businesses across the nation saw an increase in optimism following the presidential election, though profits continue to get squeezed due to sluggish revenue growth and rising operating costs, reports the National Federation of Independent Business (NFIB). The NFIB reported that its Small Business Optimism Index rose 3.7 points to 98.4, which is slightly above the long-term average. Within the report it showed that eight of the index’s 10 major components rose in November as small business owners appear to be more optimistic about the outlook for business conditions in the year ahead.

CoreLogic, a leading provider of consumer, financial and property information, reported on Tuesday that completed foreclosures in October fell 25% from October 2016. There were 30,000 completed foreclosures in October, down from the 40,000 in October 2015. On a month-over-month basis, completed foreclosures were down 3.6%. Completed foreclosures are an indication of the total number of homes actually lost to foreclosure.

Along those lines, government sponsored entities Fannie Mae and Freddie Mac announced on Monday that they will suspend foreclosure evictions for the holidays. The two mortgage giants will suspend evictions of foreclosed single-family properties from December 19, 2016 to January 2, 2017. “Our announcement today is to help provide families with a greater measure of certainty during the upcoming holiday season. We also want to be sure families experiencing financial hardship are aware of the options available to them,” said Chris Bowden, senior vice president of REO at Freddie Mac.

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Home equity increased in Q3, Oil prices higher today, Monetary Policy Statement to be released Wednesday

December 12, 2016

CoreLogic, a leading provider of consumer, financial and property information, reported on Monday that U.S. homes with negative equity decreased more than 10% in the third quarter of 2016. Homeowner equity increased by 3.1% or $227 billion in the third quarter from the second quarter of 2016. The rise in equity saw 384,000 borrowers come out of negative equity and increased the number of homes with positive equity to 93.7% in the third quarter. Higher home prices were the catalyst behind the decrease in negative equity, with paydown of principal coming in second.

Oil prices are gushing higher today after a group of non-OPEC countries agreed to additional cuts in production, a move to reduce the vast amount of oil flowing through global pipelines. West Texas Intermediate (WTI) oil was up $2.00 in early trading to $53.50 per barrel, the highest levels since July 2015. The rise in oil has pushed gas prices at the pumps higher. The national average price for a regular gallon of gasoline is at $2.20, up slightly from a month ago and from $2.01 a year ago.

The scheduled two-day Federal Open Market Committee meeting kicks off on Tuesday and will end Wednesday at 2:00 p.m. ET with the release of the monetary policy statement. It is expected that the short-term Fed Funds Rate will rise by 0.25%, the first rise since December 2015 bringing the rate to the 0.50% to 0.75% range. Fed members feel that a rate hike is necessary given the fact that the labor market continues to improve while inflation is edging higher. Once the statement is released, Fed Chair Janet Yellen will hold a press conference at 2:30 p.m. ET.

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Consumers reacted positively to Trump’s surprise presidential victory and Best days to holiday shop

December 09, 2016

Consumers reacted positively to the Donald Trump’s surprise presidential victory and expect the new administration’s fiscal policies to have a positive effect on the economy. The preliminary early December Consumer Sentiment Index rose to 98.0 versus the 94.3 expected and up from the 93.8 recorded in November. It was the highest reading since January 2015. Consumer Sentiment measures the overall health of the economy as determined by consumer opinion.

With the holiday shopping season upon us, a recent report by Foursquare says there are different days of the week that are better than others as far as slow days where a shopper can make the most of shopping time. Weekends, of course, are the busiest times and most crowded at the malls and parking lots. The data shows that the best days to shop during the holidays are Monday, Thursday, and Friday. Saturday is the busiest shopping day for any category of gifts that consumers are looking to purchase.

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