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National Association of Home Builders (NAHB) reported this morning that its Housing Market Index rose to 44 in May

May 15, 2013

The Bond markets got a boost this morning after tame inflation data and weaker than expected manufacturing data hit the wires. Throw in continuing debt woes in Europe and France falling back into a recession and you have a recipe for rising yields. Stocks, as measured by the closely watched S&P 500, closed at yet another record level yesterday of 1,650 due to the ongoing stimulus programs enacted by the U.S. Federal Reserve and a recovering economy.

The Bureau of Labor Statistics reported this morning that prices at the wholesale level as measured by the Producer Price Index fell by 0.7% in April due in a large part to falling energy prices. This was below the -0.5% expected and adds to the notion that as long as inflation remains tame, the Federal Reserve will continue with its easy money policies and continue to stimulate the economy.

Over in the housing markets, the National Association of Home Builders (NAHB) reported this morning that its Housing Market Index rose to 44 in May, up from the 41 reading in April and was the first increase in 2013. The improvements were seen in current sales conditions, sales expectations and traffic of prospective buyers. The NAHB noted that builders are seeing an increased sense of urgency among potential buyers as a result of thinning inventories of homes for sale, continuing affordable mortgage rates and strengthening local economies. However, readings below 50 generally indicate that builders are pessimistic about sales trends – there hasn’t been a 50 reading since April of 2006.

Manufacturing data continues to weaken and remains a sore spot for the U.S. economy. The New York Federal Reserve reported this morning that the New York State Manufacturing Index fell by 1.43 in May, down from the 3.1 reading in April and lower than the 3.5 that was expected. The general business gauge and the employment component also declined. Any readings below zero indicate that respondents see conditions getting worse than better.

Freddie Mac announces immediate rollout of its streamlined modification program

May 14, 2013

Small businesses across the nation expressed some optimism in April, but are still cautious about weak sales due to concerns regarding the economy and the possible outcome of the new health care laws that are set to be implemented on January 1, 2014. The National Federation of Independent Business’s Small Business Optimism Index rose by 2.6 points in April to 92.1, the highest level since October, but below the 94.5 registered a year ago. The jobs component of the index ticked up a bit, but owners expect that business conditions will be weaker six months from now than they are today.

Freddie Mac announced today that its streamlined modification program that had been originally scheduled to begin on July 1, 2013, will start immediately to to expedite financial relief for potentially thousands of distressed families across the nation. There are some stipulations for the program – servicers are required to send modification offers to borrowers who are at least 90 days, but no more than 720 days, delinquent on mortgages that are at least 12 months old and meet other eligibility criteria. Borrowers will not be required to submit documentation and the modification will become permanent after the borrower demonstrates their ability to pay on-time payments during the three month trial period.

There were no high impact economic reports released today, but the rest of the week investors will see readings on consumer and wholesale inflation, housing numbers, manufacturing and consumer sentiment.

The ongoing debate of the Quantitative Easing (QE) program currently underway by the U.S. Federal reserve continues today. Charles Plosser of the Philadelphia Fed Bank said last night that due to the recent recovery in the economy, the Fed should now start to taper their purchases of the Bond buying program and the program should end by December 31, 2013. The Fed is currently purchasing $85 billion a month in Mortgage and Treasury securities in an effort to stimulate the economy and to promote job growth.

Home Loan Rates Hover Near Record Low Levels

May 10, 2013

There are no economic reports released today and the capital markets are all traing lower headed into the weekend. Stocks, Bond and Oil prices are falling as investors survey the U.S. economy and rethink their portfolios headed into the middle of 2013. The closely watched S&P 500 is up 14% so far this year and investors may feel the need to take some profits off the table.

And due to the Fed’s Bond purchase program, home loan rates continue to hover near record low levels. In the lastest survey, Freddie Mac said that the 30-year fixed conventional mortgage rate rose to 3.42% this week from 3.35% in the previous week. But to obtain that low rate, a borrower would have to pay 0.7 in fees and points.

The U.S. Postal Service continues to have troubles after posting a $1.9 billion loss in the second quarter, which ended on March 31. The USPS continues to suffer through declining mail volume and after a Congressional mandate stating that it must pay $5.5 billion into a health fund for its future retirees. The Post Office recently tried to shut down their Saturday delivery of mail, but it was voted down by Congress. The Post Office is losing $25 million a day with no end in sight for the losses until Congress overhauls its entire system.

Job Labor Market and Mortgages

May 09, 2013

The job market continues to hear good news as Americans filing for first time unemployment benefits fell to the lowest level since January of 2008. The Department of Labor reported that Weekly Initial Jobless Claims fell by 4,000 in the latest week to 323,000 and below the 336,000 that was expected. The labor markets have been steadily improving, especially with people filing for unemployment checks.

In the week ending January 5, 2013, the number of claims was 557K. To go one step further, at the height of the recession back in the week ended January 10, 2009, weekly initial jobless claims soared to 956K and that was the highest level since the +1 million recorded back in January of 1982.

Over in the housing sector, the number of homeowners that fell behind on their mortgage payments rose the the first quarter of 2013, as reported by the Mortgage Bankers Association. Delinquencies rose by 7.25% from 7.09% in the 4th quarter of 2012, but are lower than the 7.40% recorded in the same period last year. Delinquency rates are measured by mortgages that are at least one payment behind and have not yet entered the foreclosure process.