Rather than write this report every week, I think I am just going to send out a one page picture of an arrow pointing either up, down or sideways. That by itself will give you a clear indication as to the direction of the economy. Please expect to see an arrow pointing sideways for the near future. A flat economy has been the name of the game for pretty much the entire year thus far.
The economic reports this week once again indicate we are going nowhere fast. The stock market continues to have its good days and bad days moving on any drop of news so investors can take a gamble to lock in profits for a day. It seems more like the stock market is all day traders than anyone believing in long term investments.
In regard to housing, let's start off with the "not so good", and then give you the optimistic side of housing. (Yes there is an optimistic side).
The Housing Market Index which dropped to the lowest point since April is an opinion of housing conditions released by the National Association of Home Builders. Although the index dropped sharply, you must remember it is only an opinion and not based upon any statistical data.
The Housing Starts report was a mixed message. New construction for homes dropped sharply however there was a very healthy increase for new building permits reported. Could this be a sign that builders see the 4th quarter being more productive? (I hope so)
Mortgage applications for refinances and purchases jumped as expected. Record low mortgage rates have been driving the last group of holdouts to finally submit applications to lower their rates. Purchase applications also rose 3.4% showing that the there are signs of life in the purchase market. We all know record low rates are the driving force behind the increase in applications. Given the last couple of months of declining purchases, any positive report should be embraced and personally I am excited about any increase no matter how large or small. Mortgage rates are expected to remain very low for the coming months.
Existing Home Sales also fell for the month however not as much as anticipated. The drop of 5.1% was not a market mover and the increase of inventory from 8.3 months to 8.9 was not a big surprise. The big positive side to the report is that median home prices rose 5.2% which some people are saying may indicate we have hit the bottom as far as home values. (I personally think it is crazy to make that prediction based upon one report however, any positive news in values can cause fence sitters to jump back in to the market.)
Jobless claims dropped more than expected. As stated last week, the jobless claims are not playing a major role in the movement of the markets. Until we begin to see a declining trend, you can expect the coming weeks and month to be up and down once again reinforcing my desire to just place an arrow pointing sideways on this report.
Economic reports due out next week are:
• Monday July 26th - New Home Sales
• Tuesday July 27th - Case-Shiller House Price Index & Consumer Confidence
• Wednesday July 28th - MBA Purchase Applications & Durable Goods Orders
• Thursday July 29th - Weekly Jobless Claims, GDP and Consumer Sentiment
Your Mortgage Professional,
JJ Mack
916-517-1800
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