November 14, 2017
The October Producer Price Index (PPI) rose 0.4% versus the 0.1% expected, fueled by higher costs for services. Core PPI also rose 0.4%, above the 0.2% expected. Year over year, PPI rose 2.8%, the biggest increase since February 2012, while Core PPI increased 2.4%. The PPI is a family of indexes that measures the average change in selling prices received by domestic producers of goods and services over time.
The NFIB’s Small Business Optimism Index rose to 103.8 in October from 103 the previous month as more owners expect higher sales and think now is a good time to expand. Thirty-five percent of all owners reported job openings they could not fill in the current period, up 5 points, the highest reading since November 2001. “Owners became much more positive about the economic environment last month, which suggests a longer-run view,” said NFIB Chief Economist Bill Dunkelberg. “In the nearer term, they are more optimistic about real sales growth and improved business conditions through the end of the year.”
The Mortgage Bankers Association reports that its Builder Application Survey soared 23% in October after plunging 20% in September due in part to hurricanes Harvey and Irma. It was the strongest month in 2017. From a year ago, the index is up 16.1%. By product type, conventional loans made up 71.8% of loan applications while the average loan size for new homes hit a high of $339,534.
Antique store owner
November 07, 2017
CoreLogic reports that home prices nationwide, including distressed sales, surged by 7% in September 2017 compared to September 2016. Month over month, sales were up 0.9% in September from August. Limited inventories coupled with low home loan rates continue to be the catalysts driving higher home prices. In addition, a strengthening economy and healthy consumer balance sheets were also contributing factors to the rise in prices. Looking ahead, prices are expected to rise 4.7% from September 2017 to September 2018.
Black Knight reports that housing affordability improved in September as the average homeowner needed 21.4% of their median income to purchase a home. That is below July’s post-recession peak of 21.7% and well below the 26.2% needed in the years before the housing boom from 2000 to 2003. Black Knight went on to say that “affordability across most of the country still remains favorable to long-term benchmarks.”
The National Association of REALTORS® (NAR) reports that due to an improving economy, job growth and rising consumer confidence, that now is a good time to purchase a home. The NAR reports that there will be 5.47 million Existing Home Sales in 2017, the fastest pace since 6.47 million in 2006. Looking out to 2018, the NAR predicts that sales will grow by 3.7% to 5.67 million. The NAR said the greatest hurdle for home sales in 2018 is the limited supply of homes for sale on the market.
October 30, 2017
The Fed’s favorite inflation gauge, the year-over-year Core PCE, remained at 1.3% in October, well below the 2% target that the Fed has been looking for. On a monthly basis, the Core PCE was unchanged at 0.1%. The Fed has said that it will most likely raise rates at the December FOMC meeting, despite the low inflation levels. Within the report it also showed that Personal Spending recorded its largest increase in more than eight years last month, rising 1.0% versus the 0.8% expected. That is good news heading into to the holiday shopping season. Personal Incomes were up 0.4%, just above the 0.3% expected.
The two-day Federal Open Market Committee meeting kicks off on Tuesday and ends Wednesday with the 2:00 p.m. ET release of the Fed’s monetary policy statement. A rate hike to the short-term Fed Funds Rate is not expected at this meeting. The Fed members will most likely repeat that economic activity has been rising moderately so far this year while job gains have remained solid in recent months. The decline in job growth in September will most likely be mentioned as well but the Fed has already said that the weak numbers were due to hurricanes Harvey and Irma.
Residential real estate company Redfin reported recently that the average price of a newly-built home rose in the third quarter of 2017. The average price rose to $374,000, up 3.3% year-over-year compared to existing home prices. The report went on to say that one in eight homes for sale in September were new construction, compared to one in 13 five years ago. “After almost a decade of underproduction, we are finally seeing a slow, steady increase in single-family housing starts, up 9% from a year ago,” said Redfin Chief Economist Nela Richardson.
Builder in new home
October 27, 2017
The Bureau of Economic Analysis reports that Gross Domestic Product (GDP) grew by a solid 3% in the third quarter based on the first of three readings. Gains were led by private inventory investments, exports and federal government spending. Within GDP, consumer spending increased 2.4% following the 3.3% rise in Q2. GDP is the monetary value of all finished goods and services produced within a country’s borders in a specific time period. It is considered the broadest measure of economic activity.
Consumer Sentiment came in at 100.7 for the final reading in October, just below the 101.0 expected and remains at lofty levels. The report revealed that personal finances were judged near all-time record favorable levels due to gains in household incomes as well as decade highs in home and stock values. Chief economist, Richard Curtin said, “Lingering doubts about the near-term strength of the national economy were dispelled as more than half of all respondents expected good times during the year ahead and anticipated the expansion to continue uninterrupted over the next five years.”
The Federal Housing Finance Agency reported this week that home prices rose 0.7% from July to August with a 6.6% jump year over year. The FHFA monthly Home Price Index is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. The index doesn’t include high-end homes purchased with jumbo loans or cash sales.
The front facade of a modern contemporary A frame style home.
October 18, 2017
Hurricanes Harvey and Irma put a dent in new home construction in Florida and southern Texas. The Commerce Department reported that total September Housing Starts fell 4.7% from August to an annual rate of 1.127 million units versus the 1.160 million expected. It was the lowest level since September 2016; however, from September 2016 to September 2017, starts were up 6.1%.
Single family Housing Starts fell 4.6% percent from August, although they were up 5.9% from September 2016. Multi-dwelling starts with five or more units, saw a drop of 6.2% from August and a 7.9% rise over September 2016. Overall, the South saw a 9.3% decline in September, while gains were seen in the Northeast, Midwest and West. Building Permits, a sign of future construction, fell 4.5% from August to an annual rate of 1.215 million units, just below the 1.225 million expected.
Mortgage rates were essentially unchanged in the latest week as reported by the Mortgage bankers Associaiton (MBA). The 30-year fixed-rate mortgage with conforming loan balances ($424,100 or less) decreased to 4.14% from 4.16%, with points remaining unchanged at 0.44. The MBA’s Market Composite Index, a measure of total mortgage loan application volume, rose 3.6% in the latest week. The refinance index rose 3%, while the purchase index was up 4%.
Mortgage Calculator Showing Purchase Of Home Loan
October 17, 2017
Homebuilder sentiment pushed higher in October as builders rebounded from the initial shock of the hurricanes. The NAHB Housing Market Index rose 4 points in October to 68, above the 64 expected and up from 64 in September. The report showed that the component gauging current sales conditions rose 5 points to 75 and the index measuring sales expectations in the next six months increased 5 points to 78. Meanwhile, the component measuring buyer traffic ticked up a single point to 48. “It is encouraging to see builder confidence return to the high 60s levels we saw in the spring and summer,” said NAHB Chief Economist Robert Dietz.
U.S. Stocks closed at record high levels yesterday. The Dow closed at 22,956.96; S&P 500 at 2,557.64; while the tech-heavy NASDAQ closed at 6,624.00. The new mantra for Stocks, “buy high and sell higher.” Equities can’t continue this blistering pace, there has to be some sort of correction. The S&P is currently trading near unchanged this morning while the Dow hit 23,000 for the first time ever.
The United Kingdom (U.K.) Consumer Price Index hit 3% in September, the highest since March 2012. This is important to watch as low inflation around the globe has been a major tailwind for higher Bond prices and lower yields for a long time. The rise in U.K. inflation comes after Fed Chair Yellen said on Sunday that she expects inflation to bounce back soon. At the moment, the Core Personal Consumption Expenditure, the Fed’s favorite inflation gauge, is running at 1.3% year over year, way below the 2% the Fed is looking for. So, persistently low inflation here in the U.S. remains a “mystery” and is a major reason why long-term Bond yields are so low.
House Symbols Displaying Houses Or Homes For Sale
May 27, 2014
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