The stock market seems to be continuing its slow but steady climb as confidence in the markets continues to grow. IRA's, 401K's, Mutual Funds, and shareholders are all seeing an increase in their account balances which is certainly a catalyst for improving consumer confidence.
As promised, housing data was the main focus this week. Starting from the beginning of the week all the way through to yesterday, we received reports on The Housing Market Index, Housing Starts, Mortgage Applications, Existing Home Sales.
The Housing Market Index, which measures home builder opinion's on the current and future state of new construction, showed that construction overall is showing no current improvement. Additionally, the majority of builders believe that demand for new construction will not improve any time soon.
Housing Starts declined in December which comes as little surprise to anyone involved in real estate. The question that is being pondered is: is the decline due to the weather, or just overall softness in the housing market? Many experts have stated that this time of year it is very difficult to gauge housing and that not much weight should be placed on new construction reports at this time.
Building Permits showed a sharp increase last month which was an unexpected surprise. Anyone reading this article might say, that does not make sense, if builders don't feel the market is getting better and new construction is not doing well, why would building permits increase? The answer is that although builders may not be breaking ground, they still need to prepare for an upswing in the market by having their plans and permits in place.
The Mortgage Bankers Association reported that applications for home purchases declined another 1.9% last week following the prior week's 3.7% drop. On the flip side, refinance applications increased 7.7% as mortgage rates have dropped slightly.
The biggest housing report of the week is Existing Home Sales which jumped an unexpected 12.3%. (Now here is where I need to clarify this report as the experts have got it wrong.) Please understand that I am very happy about the increase in home sales and I don't want to throw cold water on the parade.
Existing Home Sales measures closed transactions according the National Association of Realtors. Experts are attributing the increase in home sales to the fact that interest rates increased and that motivated many more buyers to jump into the market. "Not true says I":
Existing Home Sales have increased because the process of closing home loans is taking longer. In the late fall there was an increase in Pending Home Sales. We are now seeing them exit the system in bulk due to the delays that were caused by the initial increase in purchase transactions. (Please excuse what I am about to write) Simply put, the housing system has been "constipated". Sooner or later what gets shoved in, will come out) Think about what happens the days following Thanksgiving. (I truly apologize to anyone I may have offended)
Reports due out next week are:
• Tuesday January 25th - S&P Case-Shiller Home Price Index
• Wednesday January 26th - MBA Mortgage Applications, New Home Sales & FOMC Announcement
• Thursday January 27th - First Time Jobless Claims, Durable Goods Orders and Pending Home Sales
• Friday January 28th - GDP and Consumer Sentiment
Your Mortgage Consultant,
JJ Mack
916-517-1800
Friday, January 21, 2011
Friday, January 14, 2011
Mortgage Market Update - 1/14/2010
The first real week of economic data for 2011 came as little surprise to most analysts and the markets.
The major economic reports released this week showed once again that we are going back and forth between optimism and pessimism. The reports that recap activity in 2010 plus the latest December readings are showing that industrial production continues to be the strong point of the economy while unemployment continues to be a major drag on the recovery.
The stock market has been moving up gradually in small increments. Investors are demonstrating belief in business and the future growth of corporate profits despite many negative forces on the economy such as unemployment and housing.
Is inflation a concern? It appears that on the wholesale level inflation may be starting to heat up. It is not a problem as of yet, however we have seen over the last couple of months a trend of higher wholesale prices. The rise in wholesale prices may eventually create a problem for the Fed. The challenge that lays ahead for the government is to control the rise of inflation without hurting job growth. This is no easy task as any move the Fed makes to quell wholesale inflation can have a negative impact on employment.
On the other hand, the Consumer Price Index showed that outside of volatile food and energy costs, inflation on the retail level is the lowest on record. Energy and food have been rising which is why many people feel that inflation may be worse than it really is. However, energy and food prices are always a wildcard in the inflation report. Simply put, retail companies have not been able to raise prices for goods and services outside of consumer necessities as the public has shown that they continue to be very frugal in their shopping.
Retail Sales showed a healthy jump for 2010. Overall sales rose 6.7% from the prior year which is the 2nd largest jump ever recorded.
Consumer Sentiment once again is showing that unemployment continues to be the major concern regarding the future growth of the economy. First time jobless claims increased significantly over the last 2 weeks, and once again the numbers are significantly north of 400,000 filings per week.
Housing purchases dropped 3.7% in the first week of 2010. Is this because of the time of the year, or a reflection of concern about the economy? My personal feeling is it is a little bit of both. Foreclosures for 2010 hit 1 million and the speculation is that in 2011 we will see the same or more. (Don't shoot the messenger please)
Next week housing is the main focus of the market reports. With 3 significant reports due to be released, this may very well set the tone for the movement of stocks and bonds. Recently mortgage rates have dropped slightly which can be directly related to some of the weaker economic reports that have been released.
Reports due out for the first week of 2011 are:
• Monday January 17th - Martin Luther King Holiday - Markets are Closed
• Tuesday January 18th - Housing Market Index
• Wednesday January 19th - MBA Mortgage Applications and Housing Starts
• Thursday January 20th - First Time Jobless Claims & Existing Home Sales
• Friday January 14th - No Economic Reports
Your Mortgage Consultant,
JJ Mack
916-517-1800 x300
The major economic reports released this week showed once again that we are going back and forth between optimism and pessimism. The reports that recap activity in 2010 plus the latest December readings are showing that industrial production continues to be the strong point of the economy while unemployment continues to be a major drag on the recovery.
The stock market has been moving up gradually in small increments. Investors are demonstrating belief in business and the future growth of corporate profits despite many negative forces on the economy such as unemployment and housing.
Is inflation a concern? It appears that on the wholesale level inflation may be starting to heat up. It is not a problem as of yet, however we have seen over the last couple of months a trend of higher wholesale prices. The rise in wholesale prices may eventually create a problem for the Fed. The challenge that lays ahead for the government is to control the rise of inflation without hurting job growth. This is no easy task as any move the Fed makes to quell wholesale inflation can have a negative impact on employment.
On the other hand, the Consumer Price Index showed that outside of volatile food and energy costs, inflation on the retail level is the lowest on record. Energy and food have been rising which is why many people feel that inflation may be worse than it really is. However, energy and food prices are always a wildcard in the inflation report. Simply put, retail companies have not been able to raise prices for goods and services outside of consumer necessities as the public has shown that they continue to be very frugal in their shopping.
Retail Sales showed a healthy jump for 2010. Overall sales rose 6.7% from the prior year which is the 2nd largest jump ever recorded.
Consumer Sentiment once again is showing that unemployment continues to be the major concern regarding the future growth of the economy. First time jobless claims increased significantly over the last 2 weeks, and once again the numbers are significantly north of 400,000 filings per week.
Housing purchases dropped 3.7% in the first week of 2010. Is this because of the time of the year, or a reflection of concern about the economy? My personal feeling is it is a little bit of both. Foreclosures for 2010 hit 1 million and the speculation is that in 2011 we will see the same or more. (Don't shoot the messenger please)
Next week housing is the main focus of the market reports. With 3 significant reports due to be released, this may very well set the tone for the movement of stocks and bonds. Recently mortgage rates have dropped slightly which can be directly related to some of the weaker economic reports that have been released.
Reports due out for the first week of 2011 are:
• Monday January 17th - Martin Luther King Holiday - Markets are Closed
• Tuesday January 18th - Housing Market Index
• Wednesday January 19th - MBA Mortgage Applications and Housing Starts
• Thursday January 20th - First Time Jobless Claims & Existing Home Sales
• Friday January 14th - No Economic Reports
Your Mortgage Consultant,
JJ Mack
916-517-1800 x300
Friday, January 7, 2011
Mortgage Market Update - 1/7/2010
Happy New Year - I think???
I remember at the end of 2009 how everyone could not wait until 2010 got going. Everyone knew it was going to be a better year. What I found interesting is that the majority of people I spoke with are not sure if 2011 is going to be better than 2010, so there just seems to be a little less fanfare this year.
Expectations at least from a corporate side do seem to be far better than last year. As you have seen me write many times, corporate profits are up, overall sales as well as manufacturing are also increasing at a steady pace.
We know that housing continues to remain a drag on the economy and that is not expected to change in the near future. Typically people say that in order for the economy to improve, housing must lead the way. It has become clear that this time around, it will work in the opposite direction. Corporate profits and the reduction of unemployment will lead to the recovery in housing.
The bright side of housing is that the free fall of home values has ended so we are dealing with at least some semblance of stability. There are some doomsday advocates that are suggesting home values may continue to drop in 2011 however I am of the belief that the worst is definitely over.
The FOMC minutes released this week clearly indicated that the members are actually more optimistic about the recovery than they indicated in their statement a couple of weeks ago.
The Mortgage Bankers Association released their mortgage application report for the last 2 weeks on Wednesday as well. The last 2 weeks of the year purchase applications were up 3.1% and down .8% respectively. Refinance applications have been showing their sensitivity to the movements in rates. Refinance applications were up 3.9% and then down in the final week 7.2%. If you chart the movement of rates over the last month, you will easily see just how rate sensitive refinance borrowers are.
First time jobless claims rose back over 400,000 however the markets did not seem to pay this much mind as everyone was waiting for the national unemployment numbers that were released today. And here they are...
According to the government nonfarm payrolls increased by 103,000 which continues the trend of hiring that we have seen for the last few months. This latest report drops the national unemployment rate from 9.8% to 9.4%. The report is a positive sign for unemployment and hopefully the better than expected report will do some good from a psychological aspect. If people believe the employment picture is getting better, they will act as if it is, which will build momentum towards recovery. (By the way the ADP Employment Report released this week called for an increase in private payrolls of 297,000. Hmm - they were not even in the ballpark)
I am starting a new award category: Idiot Expert / Analysts of the Year. Our first candidate of 2011 is Celia Chen, a housing market analyst for Moody's Analytics. According to CnnMoney.com, Celia predicted that housing in Las Vegas won't recover until 2032, Phoenix 2034, and Naples, FL 2038. Then Celia goes on to state something along the lines that these predictions must be taken with a grain of salt as the economy can impact these predictions. Duh?- What was the point of the prediction then? Congratulations Celia on being the first to make our list!
Reports due out for the first week of 2011 are:
• Wednesday January 12th - 10 YR Note Auction & MBA Mortgage Applications
• Thursday January 13th - First Time Jobless Claims & Producer Price Index
• Friday January 14th - Consumer Price Index, Retail Sales, Industrial Production, Consumer Sentiment
Your Mortgage Consultant,
JJ Mack
916-517-1800 x300
I remember at the end of 2009 how everyone could not wait until 2010 got going. Everyone knew it was going to be a better year. What I found interesting is that the majority of people I spoke with are not sure if 2011 is going to be better than 2010, so there just seems to be a little less fanfare this year.
Expectations at least from a corporate side do seem to be far better than last year. As you have seen me write many times, corporate profits are up, overall sales as well as manufacturing are also increasing at a steady pace.
We know that housing continues to remain a drag on the economy and that is not expected to change in the near future. Typically people say that in order for the economy to improve, housing must lead the way. It has become clear that this time around, it will work in the opposite direction. Corporate profits and the reduction of unemployment will lead to the recovery in housing.
The bright side of housing is that the free fall of home values has ended so we are dealing with at least some semblance of stability. There are some doomsday advocates that are suggesting home values may continue to drop in 2011 however I am of the belief that the worst is definitely over.
The FOMC minutes released this week clearly indicated that the members are actually more optimistic about the recovery than they indicated in their statement a couple of weeks ago.
The Mortgage Bankers Association released their mortgage application report for the last 2 weeks on Wednesday as well. The last 2 weeks of the year purchase applications were up 3.1% and down .8% respectively. Refinance applications have been showing their sensitivity to the movements in rates. Refinance applications were up 3.9% and then down in the final week 7.2%. If you chart the movement of rates over the last month, you will easily see just how rate sensitive refinance borrowers are.
First time jobless claims rose back over 400,000 however the markets did not seem to pay this much mind as everyone was waiting for the national unemployment numbers that were released today. And here they are...
According to the government nonfarm payrolls increased by 103,000 which continues the trend of hiring that we have seen for the last few months. This latest report drops the national unemployment rate from 9.8% to 9.4%. The report is a positive sign for unemployment and hopefully the better than expected report will do some good from a psychological aspect. If people believe the employment picture is getting better, they will act as if it is, which will build momentum towards recovery. (By the way the ADP Employment Report released this week called for an increase in private payrolls of 297,000. Hmm - they were not even in the ballpark)
I am starting a new award category: Idiot Expert / Analysts of the Year. Our first candidate of 2011 is Celia Chen, a housing market analyst for Moody's Analytics. According to CnnMoney.com, Celia predicted that housing in Las Vegas won't recover until 2032, Phoenix 2034, and Naples, FL 2038. Then Celia goes on to state something along the lines that these predictions must be taken with a grain of salt as the economy can impact these predictions. Duh?- What was the point of the prediction then? Congratulations Celia on being the first to make our list!
Reports due out for the first week of 2011 are:
• Wednesday January 12th - 10 YR Note Auction & MBA Mortgage Applications
• Thursday January 13th - First Time Jobless Claims & Producer Price Index
• Friday January 14th - Consumer Price Index, Retail Sales, Industrial Production, Consumer Sentiment
Your Mortgage Consultant,
JJ Mack
916-517-1800 x300
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