What a difference a week makes. Where the economic news last week was primarily negative, this week we have seen a reversal of fortune. From positive reports on housing to the improving employment picture, things are looking up ever so slightly. We are still far from out of the woods however this week's positive reports and market movement brings a welcome sigh of relief.
The stock market rebounded nicely from last week's drop. As of this report the stock market is in positive territory and is expected to finish the week approximately 300 points higher than where it started. The main contributor to the stock market increase is the broad based positive economic news.
The S&P Case Shiller Housing Value Index showed an increase in values of 1.0%. This increase follows the previous month's rise of 1.3%. The housing market still has many challenges to overcome from increasing mortgage delinquencies, to increasing foreclosures. However, home values are stabilized despite the lackluster demand for housing.
The Pending Home Sales Index also rebounded this month with an increase of 5.2%. The increase in pending homes sales occurred in virtually every major region of the U.S. After months of post stimulus declining home sales, this increase was welcome news to the housing markets.
Additionally, mortgage applications for home purchases rose for the 3rd consecutive week. The increase of 1.8% is hoped to be part of a continuing trend. Record low interest rates are believed to be the main reason for the increase in housing purchases. 80% of all mortgage applications today are estimated to be for refinances which still indicates that although housing demand is increasing, we are far off from having a healthy purchase real estate market.
In Other News:
• First Time Jobless Claims declined from the previous week. This is the 3rd consecutive week of declines however the claim numbers are still very high.
• National Unemployment rose .1% up to 9.6%. Much of the increase is attributed to government layoffs primarily related to census workers. The private sector increased hiring slightly which hopefully indicates that private entities are starting to be a little more comfortable with the economy and hiring.
• Consumer Confidence also came in higher than expected. Overall consumers are feeling a little bit more at ease with the economy however the job market continues to remain the #1 concern.
• The Manufacturing Index ticked up in the prior month which was related to the increases in manufacturing orders earlier in the year.
As you can see, this week was filled with primarily positive news which had broad based positive impact on the markets. The only downer is that mortgage Interest rates increased about .25% - .375%. Good economic news is often bad for the demand of purchasing government securities which when demand drops, rates ultimately rise. Mortgage rates are still very low and are expected to remain low for some time.
Next week there is limited economic news however the demand for the 10YR Note Auction will certainly have an impact on the direction of mortgage rates.
• Wednesday September 8th - MBA Mortgage Applications and 10 YR Note Auction
• Thursday September 9th - Weekly Jobless Claims
Your Mortgage Consultant,
JJ Mack
916-517-1800
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