Stocks and Bonds are on the decline so far this morning as the markets sell off. Gold and Oil are on the rise, making today’s plays seemingly based on fear–or hedging, whatever you want to to call it. With no negative news out today, it would seem that traders are just bracing for the election, which is now just one week away.
In economic news, CoreLogic reports that home prices rose 1.1% last month to round out the year-over-year increase to 6.3%. The ISM index shows that the manufacturing sector continues to grow. Last month’s positive reading was 51.5; the market was expecting a 51.7, and we saw a 51.9. The nice round number of 50.0 represents the baseline for growth for this survey.
The Fed meets today. Nobody is expecting a rate hike announcement at the conclusion of the convocation tomorrow, but every word in the verbiage of the prepared statement will be dissected and debated. The Fed Funds Futures is pricing in a 78% probability of a rate hike at the December meeting–December being the one year anniversary from the last hike, which was the first in nine ans a half years.
Looking at the technical picture for bonds, the 30 Year Fannie Mae coupon just broke to the underside of the 200 Day Moving Average for the first time in over a year. Things aren’t looking promising for the continuation of the low rates we have been enjoying since the start of summer. Anticipate higher interest rates ahead.
Consumer Confidence is up higher than anticipated, but lower than last month’s survey, indicating that economists are not quite as optimistic as retail shoppers. So either the experts know something that we don’t know, or “retail therapy” is doing its job keeping the customer satisfied.
The Case-Shiller 20 City Home Price Index shows that home values continue the steady march upward. The 5.2% year-over-year gain is just shy of last month’s 5.4% reading.
Tomorrow’s Monetary Policy statement read at the conclusion of the Fed meeting is what is really captivating the everybody’s attention right now. Nobody expects a rate increase tomorrow, but the tone of the message will certainly be scrutinized to ascertain the anticipated timing of when rates will come up. Where several countries are dealing with negative interest rates, I am not sure that we’ll see a hike anytime too soon by the Fed.
The Federal Housing Finance Agency shows that home prices rose 0.5% over the last monthly period, and 6.1% over the last 12 months. Someone needs to tell that to appraisers, who assigned a value lower than the REPC price on four of my loans last Friday. So much for the spirit of giving. Maybe it’s not a localized trend and that’s the reason why the number of Existing Home Sales dropped 10.5% last month. Or maybe home buyers and their representatives have already checked out for the rest of the year like the Federal Reserve, who will not be making any more asset purcheses until 2016.
UP: 49% of those participating in the Fannie Mae National Housing Survey feel that it’s a good time to sell a home. Forty-nine percent is a new high for the survey.
Another new high: the Job Opening and Labor Turnover Survey (JOLTS) shows that there were 5.4 million job openings in the U.S. at the end of April–the most since JOLTS began 15 years ago by the Bureau of Labor Statistics.
DOWN: Homes in foreclosure declined 20% since this time last year. Also down is the likelihood that Greece’s proposal of debt restructure will be approved by creditors. Even still, mortgage pricing is al the lowest since last October.
Home prices across the nation rose 5.5% November to November according to CoreLogic, who also forecasts a 4.6% appreciation rate in the year ahead. Including distressed sales, home prices in Utah are still 11.0% under their peak 2007 value (9.1% excluding distressed sales).
The DOW is down another 100 points this morning after yesterday’s 300 point slide. It would seem that this new year is bringing with it concern over just how robust our economy actually is. Low oil prices and a new congress are just not as inspiring as they used to be.
Mortgage Bond pricing is bumping up against resistance not seen since March of 2013. If we can get through this threshold, interest rates could drop another 1/2%…
Today is the mid-term election here in the United States of America. So go vote, wisely. Speaking of living the American dream, CoreLogic reports home prices, including distressed sales, rose by 5.6% year-over-year in September. That’s the slowest year-over-year appreciation rate since August 2012. Last month’s reading is 0.28% less than August and well below the 11.8% recorded half a year ago in February. Looking forward, CoreLogic expects a 5% rise from September 2014 to September 2015. Don’t panic, historically speaking, a five percent appreciation rate is a nice healthy average. Oil prices have dropped significantly over the last two days, leaving a barrel of sweet crude at only $77 a barrel. I think that I’ll fill up the car with gas on the way to the polls this afternoon. Thirty year FHA loans are at 3.25% while Conventional 30 years hangs at 4.0%. Fifteen year rates are still at 3.0% (APR will generally be higher, depending on the loan and down payment amounts, and amortization term–as closing costs and the presence of mortgage insurance affect each loan differently.)
After a summer of laisser aller scheduling, it’s nice to get settled back into a routine with the kids heading back to school today. My first lesson is that the carpool lane at the junior high is substantially more complex than that of the elementary school. You know who didn’t take the summer off is home builders; Housing Starts rose almost 16% in July alone to raise the annual units to just back over 1M. Building Permits are also higher than expected, at 1.052M. Inflation at the retail level was moderated with the Consumer Price Index registering a 0.1% modest gain, dropping the year-over-year increase to a nice round 2.0%. Thirty year FHA loans are at 3.5% and Conventional loans are at 4.125%. Fifteen year rates are way lower at 3.0% (APR will be higher, depending on the loan and down payment amounts, and amortization term–as closing costs and the presence of mortgage insurance affect each loan differently.)
Inflation numbers for last month are in at an increase of 0.3%, and a year-over-year level of 2.1%–matching exactly the prior month and in line with expectations. Energy and transportation costs continue to rise 0.2% faster than the other measured sectors. The consequential costs associated with driving all over the valley to show homes hasn’t deterred home sales however; Existing Home Sales are up 2.6% in June alone to 5.04M units moved.
It’s nice to be back at my desk after spending last week in the memorable-but-dusty middle of nowhere. And honestly I can’t wait to get up to the mosquito-infested Uintas next week.
Ten years ago, the homeownership rate in the US was 69.2%; today it has fallen to 64.8%. Where the American dream has historically owning your home, this is a sobering thought. On the bright side in the reports out today, more people are buying each other’s homes than last month: Existing Home Sales are up 4.9% from April to May. While it won’t help the Ownership Rate, is does help Realtor commissions 🙂 Also increasing commissions is a price increase of 0.9% from April to May.
It seems that everybody is looking through those rose-colored glasses we were talking about yesterday. The S&P closed at another all-time high of 1911, and MBS crept to a new 12 month high as well. Today Stocks are down marginally while Bonds opened up, driving yields (interest rates) down further. I tend to be conservative with other people’s money and recommend locking in these great rates as soon as you get a chance, hence yesterday’s caution. But what the heck, you only live once; today I say let it ride and let’s get those 30 year rates back in the 3’s!
We just crossed a pretty strong threshold, and banks are lowering interest rates because all they can see are blue skies from here. Thirty year FHA loans are still at 3.5% and Conventional loans are a bit higher at 4.0%. Fifteen year rates are down at 3.125% (APR will be higher, depending on the loan and down payment amounts, and amortization term–as closing costs and the presence of mortgage insurance affect each loan differently.)