This week did not come with any real surprises in regard to the economic data that was reported. On the housing front, the two major reports released were for existing home sales and new home sales.
Existing home sales slipped in the month of February by .6% from the prior month as reported by the National Association of Realtors. Despite the drop, existing home sales are 7% higher than February of 2009.
New home sales unexpectedly fell more than expected. The report for February is the lowest number on record and represents a drop of 13% from the same period in 2009. However, there are factors in the report that are indicative that housing is not as bad as it appears.
Due to the major snow storms in the Northeast and Midwest, many buyers held off making purchasing decisions while waiting for the weather to improve. This is a major contributing factor to the decline reported. However, in the western region of the U.S. there was a 20.8% jump in new home sales which is a strong report compared to what we have seen lately.
Mortgage rates began their slow but steady increase as expected. The media as well as the Warrior Weekender have been reporting for quite some time that as the government phases out their treasury re-purchase program, bond yields will rise unless other investors step in to keep demand high. Unfortunately at this week's bond auctions we witnessed lower demand from investors for bond purchases, especially lack of interest from foreign investors. The result was an increase in bond yields of about 25 basis points.
In other economic news, first time jobless claims dropped slightly showing that unemployment is still a concern however at least for now, the job market is showing signs of stabilization. Although the employment situation is not yet showing signs of improvement, deterioration of the job sector has appeared to have ended.
The U.S. economy expanded at a 5.6 percent annual rate in the fourth quarter of 2009, and corporate profits climbed, setting the stage for gains in employment that may broaden and preserve the expansion.
The rise in gross domestic product, while smaller than the government's previous estimate issued last month, marked the best performance in six years. Company earnings increased 8 percent, capping the biggest year-over-year gain in a quarter century.
It is to be expected that in the coming months we will see positive and negative news however more than likely the trend will be a slow but steady movement toward economic growth.
Economic data to be released next week:
• Tuesday March 30th - Case-Shiller Home Price Index
• Wednesday March 31st - ADP Employment Report
• Thursday April 1st - Weekly Jobless Claims
• Thursday April 1st - Construction Spending
• Friday April 2nd - Employment Situation
Have A Great Weekend!
Your Mortgage Professional,
JJ Mack
916-517-1800 x300
916-390-2463
Friday, March 26, 2010
Friday, March 19, 2010
Weekend Update - March 19, 2010
The market volatility expected by many this week fortunately never appeared. With a week of so much economic news, it was expected to be a roller coaster of week of ups and downs. However, to our surprise, the markets were stable and the stock market continued is slow and gradual climb.
The real estate reports continue to indicate that housing is a drag on the economy and thus far no real indication of a strong recovery is in the making. The bright spot in the reports is that there are signs of stability and that is the first step in a housing recovery.
The Housing Market Index dropped 2 points which reaffirms that the housing market continues to remain weak. The Housing Starts report also came in worse than expected in that the report showed a decline of 5.9% after January showed a 6.6% increase.
When you break down the numbers in the report, overall activity is not as bleak as the reports indicate. The majority of the decline in housing starts is confined to the multifamily sector versus single family dwellings. The multifamily starts dropped 30.3% whereas single family declined only .6%. Additionally, many are attributing the declines to the extreme weather experienced in the North East and Mid Atlantic States during the month.
Other key economic reports making headlines for the week:
• Industrial Production had a small gain of .1%. The results were lower than expected especially after a strong report in January however weather is believed to be a factor in the results.
• The Producer Price Index and the Consumer Price Index both continue to show that inflation is not an issue at the present time. The PPI dropped .6% which was more than expected. The greater than expected decrease is being attributed to the lowering of energy costs during the month. The CPI continues to show that prices on the retail level are not increasing.
• First time jobless claims for the week dropped slightly however the drop is not considered significant. Continuing jobless claims continues to be a significant concern in the job market in that the quest to reenter the workforce by many of the unemployed continues to be a major challenge.
The bright side on the economic front is that the FOMC reported that overall growth of the economy seems to be continuing. The speed of the recovery is expected to remain slow, but steady. The FOMC did not change monetary policy and have voted to keep interest rates the same. The FOMC also indicated that they expect to keep interest rates low for some time into the future.
Economic data to be released next week:
• Tuesday March 23rd - Existing Home Sales
• Wednesday March 24th - New Home Sales
• Thursday March 25th - Weekly Jobless Claims
• Friday March 26th - GDP and Consumer Sentiment
Have A Great Weekend!
JJ Mack
Mortgage Consultant
916-517-1800 x300
The real estate reports continue to indicate that housing is a drag on the economy and thus far no real indication of a strong recovery is in the making. The bright spot in the reports is that there are signs of stability and that is the first step in a housing recovery.
The Housing Market Index dropped 2 points which reaffirms that the housing market continues to remain weak. The Housing Starts report also came in worse than expected in that the report showed a decline of 5.9% after January showed a 6.6% increase.
When you break down the numbers in the report, overall activity is not as bleak as the reports indicate. The majority of the decline in housing starts is confined to the multifamily sector versus single family dwellings. The multifamily starts dropped 30.3% whereas single family declined only .6%. Additionally, many are attributing the declines to the extreme weather experienced in the North East and Mid Atlantic States during the month.
Other key economic reports making headlines for the week:
• Industrial Production had a small gain of .1%. The results were lower than expected especially after a strong report in January however weather is believed to be a factor in the results.
• The Producer Price Index and the Consumer Price Index both continue to show that inflation is not an issue at the present time. The PPI dropped .6% which was more than expected. The greater than expected decrease is being attributed to the lowering of energy costs during the month. The CPI continues to show that prices on the retail level are not increasing.
• First time jobless claims for the week dropped slightly however the drop is not considered significant. Continuing jobless claims continues to be a significant concern in the job market in that the quest to reenter the workforce by many of the unemployed continues to be a major challenge.
The bright side on the economic front is that the FOMC reported that overall growth of the economy seems to be continuing. The speed of the recovery is expected to remain slow, but steady. The FOMC did not change monetary policy and have voted to keep interest rates the same. The FOMC also indicated that they expect to keep interest rates low for some time into the future.
Economic data to be released next week:
• Tuesday March 23rd - Existing Home Sales
• Wednesday March 24th - New Home Sales
• Thursday March 25th - Weekly Jobless Claims
• Friday March 26th - GDP and Consumer Sentiment
Have A Great Weekend!
JJ Mack
Mortgage Consultant
916-517-1800 x300
Friday, March 12, 2010
Weekend Update - March 12, 2010
As expected, this week was void of any major economic data that could cause wide swings in the markets. For the entire week the stock and bond markets have been trading within a narrow range bringing a little emotional reprieve from the wild market movements we have been experiencing over the last few weeks.
It appears for now that the economy is recovering as expected at a slow but steady pace. Economic optimism has been the primary contributor to the slight increase in overall stock indices this week.
The government held a 10YR Treasury auction on Wednesday in which demand was higher than expected. Normally in this situation the bond yield would have declined resulting in a reduction in mortgage rates. However, given the lack of any other significant economic data, treasury yields remained virtually unchanged all week with the exception of Friday.
Friday it was reported that retail sales increased by .3% which exceeded analyst expectations. The higher than expected rise is retail is reinforcing the fact that consumers are our coming out and making purchases despite the challenging employment market.
In other housing news, as the country makes a larger push to become "green" and more and more homeowners and homebuyers want energy saving technology placed in homes, there appears to be a valuation issue rising up.
At the present time, many of the "green housing" initiatives are being completed by new home builders and that is where the challenge exists.. What is happening as of late is that appraisers are struggling to give increased valuation credit to the green properties due to a lack of data available. The foreclosure plague continues nationwide and it has become increasingly difficult for an appraiser to support a higher value on a property regardless of how much "green" technology may be incorporated.
As of late, we have seen that unemployment has been stable in that the pace of workers losing their jobs has slowed dramatically. As this news continues and is certainly welcome, the challenge that many of the current unemployed face remains high in that this week it was reported that continuing unemployment claims rose unexpectedly.
JJ Mack
Your Mortgage Consultant
916-517-1800 x300
It appears for now that the economy is recovering as expected at a slow but steady pace. Economic optimism has been the primary contributor to the slight increase in overall stock indices this week.
The government held a 10YR Treasury auction on Wednesday in which demand was higher than expected. Normally in this situation the bond yield would have declined resulting in a reduction in mortgage rates. However, given the lack of any other significant economic data, treasury yields remained virtually unchanged all week with the exception of Friday.
Friday it was reported that retail sales increased by .3% which exceeded analyst expectations. The higher than expected rise is retail is reinforcing the fact that consumers are our coming out and making purchases despite the challenging employment market.
In other housing news, as the country makes a larger push to become "green" and more and more homeowners and homebuyers want energy saving technology placed in homes, there appears to be a valuation issue rising up.
At the present time, many of the "green housing" initiatives are being completed by new home builders and that is where the challenge exists.. What is happening as of late is that appraisers are struggling to give increased valuation credit to the green properties due to a lack of data available. The foreclosure plague continues nationwide and it has become increasingly difficult for an appraiser to support a higher value on a property regardless of how much "green" technology may be incorporated.
As of late, we have seen that unemployment has been stable in that the pace of workers losing their jobs has slowed dramatically. As this news continues and is certainly welcome, the challenge that many of the current unemployed face remains high in that this week it was reported that continuing unemployment claims rose unexpectedly.
JJ Mack
Your Mortgage Consultant
916-517-1800 x300
Friday, March 5, 2010
3/5/2010 - Weekend Update
The housing data released this week was not as good as we would have liked to see. The National Association of Realtors reported that pending homes sales dropped 8% from the prior month. This decline continues to demonstrate the weakness that exists in the housing sector.
It is important to note however that pending home sales are still up from a year ago and many believe that the drop is related to the harsh weather that has plagued the northeast this winter. In addition, many experts feel that the impending expiration of the tax credit will put a spark into the fence sitters and move more people to action in home buying.
The media as of late has actually been assisting the housing market to become more active versus their normal M.O. of being a market killer. Fortunately the news and media have been reminding potential home buyers about the tax credit expiration and they have been urging buyers to take action.
More positive news for the economy is that national unemployment remained the same at 9.7%. This report was better than expected as the markets were anticipating an increase to 9.8% given all of the weather related issues that have occurred. The economy is still shedding jobs on a monthly basis however the pace in which jobs are being lost is the slowest it has been in almost 2 years.
Interest rates on mortgages had been stable all week until the news report Friday morning regarding national unemployment. The better than expected report set off a rally in the stock market which has resulted in upward pressure on the 10YR Bond Yield. The yield, which was at 3.61 for virtually the entire week, rose to 3.68 by the end of the trading day resulting in a slight increase in mortgage rates.
In other positive economic news, the manufacturing activity index rose for the 7th straight month. Although the rise in the index was not as much as we have seen in previous months, the fact that it has continued to rise indicates a slow but steady recovery for the sector.
Mortgage rates continue to remain low, and housing prices have shown that they are not going up any time soon. Foreclosures still remain a big concern for the housing market and will continue to weigh on house values for quite some time. Since foreclosures make up a high percentage of home sales taking place across the country, it is very likely that the home affordability index will continue to remain at one of its highest points in the last 10 years.
Next week stands to be a quieter news week as there appears to be only a few economic reports due out. The majority of the reports, on face value, should not have a major impact on the markets.
Have a Great Weekend!!
JJ Mack
Your Mortgage Professional
916-517-1800 x 300
It is important to note however that pending home sales are still up from a year ago and many believe that the drop is related to the harsh weather that has plagued the northeast this winter. In addition, many experts feel that the impending expiration of the tax credit will put a spark into the fence sitters and move more people to action in home buying.
The media as of late has actually been assisting the housing market to become more active versus their normal M.O. of being a market killer. Fortunately the news and media have been reminding potential home buyers about the tax credit expiration and they have been urging buyers to take action.
More positive news for the economy is that national unemployment remained the same at 9.7%. This report was better than expected as the markets were anticipating an increase to 9.8% given all of the weather related issues that have occurred. The economy is still shedding jobs on a monthly basis however the pace in which jobs are being lost is the slowest it has been in almost 2 years.
Interest rates on mortgages had been stable all week until the news report Friday morning regarding national unemployment. The better than expected report set off a rally in the stock market which has resulted in upward pressure on the 10YR Bond Yield. The yield, which was at 3.61 for virtually the entire week, rose to 3.68 by the end of the trading day resulting in a slight increase in mortgage rates.
In other positive economic news, the manufacturing activity index rose for the 7th straight month. Although the rise in the index was not as much as we have seen in previous months, the fact that it has continued to rise indicates a slow but steady recovery for the sector.
Mortgage rates continue to remain low, and housing prices have shown that they are not going up any time soon. Foreclosures still remain a big concern for the housing market and will continue to weigh on house values for quite some time. Since foreclosures make up a high percentage of home sales taking place across the country, it is very likely that the home affordability index will continue to remain at one of its highest points in the last 10 years.
Next week stands to be a quieter news week as there appears to be only a few economic reports due out. The majority of the reports, on face value, should not have a major impact on the markets.
Have a Great Weekend!!
JJ Mack
Your Mortgage Professional
916-517-1800 x 300
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