July 31, 2017
Stocks are at all-time highs again as investors embrace strong quarterly corporate earnings. Of the 289 S&P 500 companies that have reported up until Friday, 73% have exceeded expectations. This is slightly above the 71% average over the past four quarters, according to Thomson Reuters. The Dow Jones Industrial Average hit a record high of 21,916.67 in today’s trading session.
The National Association of REALTORS® reported on Monday that Pending Home Sales in June rose 1.5% from May, after three straight months of declines. June was the first month that Pending Home Sales rose annually since March, rising by 0.5%. Lawrence Yun, NAR chief economist, says the rebound in June in most of the country is a welcoming sign. Mr. Yun said, “Market conditions in many areas continue to be fast paced, with few properties to choose from, which is forcing buyers to act almost immediately on an available home that fits their criteria.”
The Census Bureau reported last week that homeownership rates remained near 50-year lows in the second quarter, though they did edge higher from a year ago. The homeownership rate increased by 0.1% to 63.7% in the second quarter from the first and is up 0.8% from the second quarter in 2016. The shortage of homes for sale on the market could continue to keep homeownership rates low.
Businessman ride a stock market graph. Conceptual business illustration
July 28, 2017
The first reading on 2017 Q2 Gross Domestic Product (GDP) rose 2.6% from 1.2% in Q1 bolstered by a 2.8% increase in consumer spending and a 0.7% rise in government spending. The first quarter was revised lower to 1.2% from 1.4%. In addition, investment in new housing declined 6.8%. GDP is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period.
The inflation-reading Employment Cost Index rose 0.5% in Q2, from 0.6% in Q1, and measures workers’ wages and benefits. From a year earlier, total compensation rose 2.4%, while wages were up 2.3% from a year ago. The lack of wage growth continues to be a tailwind for low interest rates. If wages don’t grow, inflation typically remains stagnant, which has been the case for quite some time.
AATOM Data Solutions reported this week profits for home sellers hit their highest point in a decade, due to a continued rise in home prices. In the second quarter of 2017, homeowners who sold their homes saw an average gain of $51,000, the highest since the second quarter of 2007 when owners saw gains of $57,000. The $51,000 was an increase of 26, the highest return average since the third quarter of 2007’s 27%.
Sale of real property
July 27, 2017
Mortgage rates edged lower this week, declining for the second straight week. The lower rates came after the Fed left its benchmark interest rate on hold. The news on rate sparked a rally in both the Stock and Bond markets, while yields pushed lower. Freddie Mac reported that the 30-year fixed rate mortgage fell to 3.92% from 3.96% with 0.5 in points and fees. Last year this time the rate was 3.42%.
The Fed left the Fed Funds Rate on hold yesterday and said that it will begin unwinding its balance sheet “relatively soon” provided the economy evolves broadly as anticipated. Low inflation levels could throw some doubt in Fed assumptions that the unwinding of its balance sheet will begin in September with a December rate hike.The Core PCE, the Fed’s favorite gauge of inflation is not just under 2%, but it has been steadily declining. It was 1.8% in January and fell to 1.4% in June. Low inflation will keep the Fed on hold with rates and could push back any thoughts of unwinding its balance sheet.
Stocks are higher once again as the Dow, NASDAQ and S&P trade at record highs. After the bell, Amazon will report earnings; this comes after blowout earnings from social media giant Facebook after the close yesterday. Today is the busiest day of the season for earnings. Of the companies in the S&P 500 that have reported their numbers, 78% have beat on earnings.
Raising Stocks Chart Shows Monetary Growth And Increase
July 26, 2017
The Commerce Department reported on Tuesday that New Home Sales in June rose a modest 0.8% from May to an annual rate of 610,000 units, which was in line with estimates. From June 2016 to June 2017, sales rose 9.1%. The median sales price of new houses sold in June 2017 was $310,800. At June’s sales pace, there is a 5.4 months’ supply of homes for sales on the market, up 1.1% from May, though still below the 6 percent that is seen as normal.
The Federal Open Market Committee meeting will end this afternoon with the 2:00 p.m. ET release of its monetary policy statement. There is a near zero percent chance of a hike to the Fed Funds Rate. The statement could give some clues as to the future path of interest rates and when the unwinding of the Fed’s massive balance sheet will begin.
The closely watched S&P 500 closed at yet another record high in Tuesday’s trading session fueled by higher oil prices, positive economic data and solid quarterly earnings reports. The S&P 500 Stock Index closed at 2,477.13 yesterday, up nearly 11% for the year. In contrast, at the height of the Great Recession, the S&P closed at a low of 666 in early March 2009.
July 24, 2017
The National Association of REALTORS® (NAR) reported on Monday the Existing Home Sales in June fell 1.8% from May to an annual rate of 5.52 million units, below the 5.58 million expected. Sales are up 0.7% year over year, the second lowest of 2017. Within the numbers it showed that first-time buyers made up 32% of total sales in June, slightly lower than 33% both in May and a year ago.
The NAR said that the decline in sales is due in part to the ongoing theme … a low supply of homes for sale on the market.The NAR went on to say that total housing inventory is at a 4.3-month supply at the current sales pace and has fallen year-over-year for 25 consecutive months. Normal inventory levels are around 6%. The median existing-home price for all housing types in June was $263,800, up 6.5% from June 2016 ($247,600).
The Federal Open Market Committee meeting kicks off this week beginning on Tuesday and ends Wednesday at 2:00 p.m. ET with the release of the monetary policy statement. There is currently a near zero percent chance of a hike to the short-term Fed Funds Rate. Investors will be looking for clues as to when the Fed will begin to taper its massive $4.5 trillion balance, which consists of Mortgage Backed and Treasury securities.
July 21, 2017
Ellie Mae reported its June Origination Insight Report this week revealing that the percentage of purchase home loans relative to refinances remained steady at 68% of all closed loans. The percentage of refinances remained at 32% for the second straight month. The report went on to say that the average time to close all loans increased one day to 43 days in June. The time to close a refinance held at 41 days, while the time to close a purchase increased to 43 days.
Motor club AAA reports that that gas prices could rise by $0.10 this summer and could top this year’s highest national price of $2.42. Currently, the national average price for a regular gallon of gas is at $2.28. AAA said the anticipated volatility is due to refiners continuing to run record levels of crude oil, which is creating high levels of gasoline and diesel. In addition, the summer season’s strong demand is expected to stay on pace and may even set a new record high between now and Labor Day.
The major Stock indexes are lower to end the week but remain near all-time high levels fueled in part by technology stocks. The closely watched S&P 500 closed at 2,473.45 on Thursday, an all-time high closing record. Back in March 2009, the S&P hit a low of 666 before at the height of the Great Recession. Shares of Amazon hit a record high of $1,034 this week as the on line retailer looks to take over the retailing sector and many other sectors in between.
A man pumping high priced gas into his car with a disgusted look on his face.
July 20, 2017
Business activity declined in July from June in the Philadelphia region and fell to its lowest level of 2017. The Philadelphia Fed Manufacturing Index fell to 19.5 in July, down from the 27.6 registered in June and below the 22 expected. Any reading above zero indicated improving conditions. Within the report it showed that firms remained generally optimistic about future growth, while more than one-third of the manufacturers expect to add to their payrolls over the next six months.
Mortgage rates edged lower this week after rising two consecutive weeks in a row. The lower rates came after political gridlock in Washington D.C., which pushed investors into the safe haven of the Bond markets. Freddie Mac reported that the 30-year fixed rate mortgage fell to 3.96% from 4.03% with 0.6 in points and fees. Last year this time the rate was 3.42%.
Real estate listing company Zillow reported on Thursday that median home prices rose to all-time highs in June, due in part to a severe shortage of low-priced starter homes for sale. The median price in June was a bit north of $200,000, up 7% from last year. Housing inventories have fallen 11% in June year over year with big declines coming from San Francisco (26%) and Minneapolis-St. Paul down 30%.
House Icon Shows House Or Building Price Going Up
July 19, 2017
The Commerce Department reported on Wednesday that Housing Starts in June surged 8.3% to an annual rate of 1.215 million units, the highest since February and after three straight monthly declines. Single-family starts, which represents the largest share of the residential housing market, rose 6.3%, while the multi-family dwelling sector soared by 13.3%. Housing Starts were up 2.1% from June 2016. Higher lumber prices and shortages of workers and land space could be potential hurdles to jump in the near future for new home building.
The Mortgage Bankers Association (MBA) released its weekly mortgage report showing that mortgage application volumes rose in its latest survey. The MBA’s Market Composite Index, a measure of total mortgage loan application volume, rose 6.3% in the latest week. The refinance index jumped 13%, while the purchase index was up 1%. In addition, the 30-year fixed conforming mortgage rate was unchanged at 4.22%. Jumbo 30-year rates climbed to 4.19% from 4.18%, while the FHA rate fell to 4.10% from 4.12%. Those rates usually carry at least a 0.30 point added on top.
Cost cutting continues at one of the nation’s largest banks in the form of branch closures as on line banking ramps up. Wells Fargo recently reported that it will close 450 branches across the nation. The bank said it will close 200 branches in 2017 and 250 in 2018 and has vowed to cut annual costs by $2 billion by the end of 2019. In this digital age, on line and mobile banking has moved to the forefront and will most likely grow even larger in the years to come.
Home Sweet Home Showing Welcome Friendly Invitation
July 18, 2017
Fannie Mae continues to project that the pace of growth in total home sales will slow to 3.3% this year. Fannie believes that rapid home price gains amid scarce supply will remain a hurdle for potential home buyers, despite improvements in credit access. In addition, Fannie forecasts economic expansion will slow in the second half of 2017.
Home builder confidence slipped in July on concerns of rising costs for materials, particularly higher lumber prices. The NAHB Housing Market Index fell two points to 64, the lowest level in eight months and below the 66 expected. All three of the surveys components declined, which include current sales, sales expectations and buyer traffic. However, the index is still well into positive territory where any number over 50 indicates more builders view conditions as good rather than poor.
Corporate earnings season is well underway with the spotlight today on Goldman Sachs and Bank of America. Investment banking giant Goldman Sachs reported that both revenues and earnings beat expectations, but trading revenues in fixed income products are down 40% from the same period last year. Bank of America reported that it too beat on revenues and earnings while trading revenues saw a 14% slide in its fixed income division.
Old lumber and two by fours stacked in a wood pile. Shallow depth of field.
July 17, 2017
A recent report reveals that an increasing number of U.S. companies are finding it difficult to hire new workers, and some have even raised wages. The National Association of Business Economists (NABE) reports that “slightly over one-third of panelists reports that their firms have experienced some difficulty in hiring,” NABE survey chair Emily Kolinski said in a statement. The share of firms reporting increased wages rose 8% from April to 47%.
Economic data continues to stream in on the weak side with today’s lower-than-expected regional manufacturing numbers. The Empire State Manufacturing fell to 9.8 in July, below the 13.0 expected and down from 19.8 in June. The closely watched new orders and shipment indexes both declined. In addition, the labor market component saw just a small increase in employment and no change in hours worked. Indexes assessing the six-month outlook remained favorable, though firms were somewhat less optimistic about future conditions than in June.
It is a big week for earnings, which could dictate the direction of Stock and Bond prices as well as mortgage rates. Wall Street will see numbers from Bank of America, Morgan Stanley, Goldman Sachs, Microsoft, IBM J&J and Netflix. Analysts estimate that second-quarter earnings for the S&P 500 companies rose 8.1% from a year earlier. First-quarter earnings posted their best numbers since 2011, according to Thomson Reuters data.