Market Update

Dated: 09/29/2015

Views: 151

Danyal Erickson
Mortgage Loan Originator
NMLS# 1299942
1517 N. Ankeny Blvd, Ste. A
Ankeny, IA 50023
Cell: (515) 491-6861
Office: (515) 965-1707
Fax: (844) 289-7133
derickson@stearns.com
danyalshomeloans.com
For the week of September 28, 2015 – Vol. 13, Issue 39

>> Market Update 

QUOTE OF THE WEEK... "It ain't over 'til it's over." --In memoriam, Lawrence Peter "Yogi" Berra (1925-2015), American baseball great

INFO THAT HITS US WHERE WE LIVE... Sadly, Yogi's time with us is now over, but beyond the baseball memories he leaves are his humorous, often wise, "Yogi-isms." The one quoted here is a pithy comment on why persistence makes sense. And persistence makes perfect sense if we're going to weather the twists and turns of today's housing market. August, for example, gave us Existing Home Sales twisting down 4.8%, while New Home Sales turned solidly up. But a closer look at the data shows existing home sales are still up 6.2% over a year ago and came in at a decent 5.31 million unit annual rate. Plus, the August dip follows three months in a row of sales gains. 
It was also nice to see that non-cash existing home sales, where the buyer takes out a mortgage, are up 7.6% versus a year ago. The main sales problem seems to be tight inventories, but with the median price of an existing home up 4.7% from a year ago, more sellers should be enticed onto the market. Meanwhile,New Home Sales were up 5.7% in August, hitting a 552,000 unit annual rate. In fact,  last monthAmericans bought new homes at the fastest pace in 7 years. Finally, the FHFA index of prices for homes financed with conforming mortgages was up 0.6% in July and is 5.8% ahead of a year ago. The upward trend in housing is clearly telling us, "It ain't over."
BUSINESS TIP OF THE WEEK... Schedule meeting time with yourself for the tasks you need to accomplish. Then silence your phone, close your email program, work away from your desk if you need to.This guarantees you distraction-free blocks of time.

>> Review of Last Week

ECONOMY BETTER, STOCKS WORSE... A weird week on Wall Street, as investors saw signs the economy is improving, yet sold off stocks heavily, sending all three market indexes south for the week. Equities have headed in that direction ever since the Fed left the key borrowing rate unchanged at its September 17 confab. Investors interpreted that as the central bank's concern for a still anemic economy.But last Thursday, just a week later, Fed Chair Janet Yellen said an interest rate hike is likely before year end, since "prospects for the U.S. economy generally appear solid." She even claimed signs of weak global growth, a worry the week before, won't have significant impact.
Some of the economic data indeed supported her confident new views. The GDP - Third Estimate showed the economy grew  in the second quarter at an upwardly revised 3.9% annual rate. The final September read of  the Michigan Consumer Sentiment Index also came in higher than expected, although down from August. Housing market news was up and down too, as mentioned above. Then a 2% dip in August Durable Goods Orders put another fly in the economic healing ointment. But hold on. Initial Unemployment Claims registered yet another week under the 300,000 threshold, while Continuing Unemployment Claims rested at a reasonable 2.242 million.
The week ended with the Dow down 0.4%, to 16315; the S&P 500 down 1.4%, to 19531; and the Nasdaq down 2.9%, to 4687.
Yellen's rate hike talk, along with the stronger GDP growth, sent bond prices down. The 30YR FNMA 4.0% bond we watch finished the week down .07, at $106.13. National average fixed mortgage rates moved lower in Freddie Mac's Primary Mortgage Market Survey for the week ending September 24. The reason? The Fed's decision NOT to hike rates at the prior week's meeting. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information. 
DID YOU KNOW?...A real estate data company reports that 1,947,028 single-family homes and condos sold through August, up 5.4% from a year ago, and the highest total for the first eight months of the year since 2007.

>> This Week’s Forecast

INFLATION TAME, PENDING HOME SALES OK, JOBS UP... Fed Chair Janet Yellen said to start raising rates, their inflation target is 2% as measured by PCE Prices.  For August, that measure is forecast at 0.1%, so rates should stay down a while longer. Pending Home Sales are predicted to show continued  slow growth in contracts signed on existing homes. As always, Friday's jobs report will get the most attention, with new Nonfarm Payrolls expected to come in around 200,000 in September, theUnemployment Rate holding at 5.1%.>> The Week’s Economic Indicator CalendarWeaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates. 
Economic Calendar for the Week of Sep 28 – Oct 2
Th
Oct 1
 Date Time (ET) Release For Consensus Prior Impact
M
Sep 28
08:30 Personal Income Aug 0.4% 0.4% Moderate
M
Sep 28
08:30 Personal Spending Aug 0.3% 0.3% HIGH
M
Sep 28
08:30 PCE Prices - Core Aug 0.1% 0.1% HIGH
M
Sep 28
10:00 Pending Home Sales Aug 0.5% 0.5% Moderate
Tu
Sep 29
10:00 Consumer Confidence Sep 96.0 101.5 Moderate
W
Sep 30
09:45 Chicago PMI Sep 52.7 54.4 HIGH
W
Sep 30
10:30 Crude Inventories 9/26 NA -1.925M Moderate
08:30 Initial Unemployment Claims 9/26 270K 267K Moderate
Th
Oct 1
08:30 Continuing Unemployment Claims 9/19 2.248M 2.242M Moderate
Th
Oct 1
10:00 ISM Index Sep 50.6 51.1 HIGH
F
Oct 2
08:30 Average Workweek Sep 34.6 34.6 HIGH
F
Oct 2
08:30 Hourly Earnings Sep 0.2% 0.3% HIGH
F
Oct 2
08:30 Nonfarm Payrolls Sep 205K 173K HIGH
F
Oct 2
08:30 Unemployment Rate Sep 5.1% 5.1% HIGH
                                                                                                           

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months... Despite the Fed Chair's recent comments, most economists do not expect the Fed to hike rates before its January meeting. Note: In the lower chart, an 11% probability of change is an 89% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

After FOMC meeting on: Consensus
Oct 28 0.00%-0.25%
Dec 16 0.00%-0.25%
Jan 27 0.00%-0.25%

Probability of change from current policy:
      51%
After FOMC meeting on: Consensus
Oct 28       11%
Dec 16       39%
Jan 27

This e-mail is an advertisement for Danyal Erickson. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice, or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in this message is the property of Stearns Lending, LLC and cannot be reproduced for any use without prior written consent. This message is intended for business professionals only and is not intended for distribution to consumers or other third parties. The material does not represent the opinion of Stearns Lending, LLC. This is not a commitment to lend. Program restrictions apply. Stearns Lending, LLC offers many loan products. Stearns Lending, LLC is a California Limited Liability Company headquartered at 4 Hutton Centre Drive, 10th Floor, Santa Ana, California 92707. (800) 350-LEND (5363) Company NMLS# 1854 (www.nmlsconsumeraccess.org). Stearns Lending, LLC is licensed, registered, or exempt from licensing to conduct business in the following states which require license disclosure on advertising materials: Arizona Mortgage Banker License #0905413; Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act RMLA# 4130495; Georgia Residential Mortgage Licensee #24066; Illinois Residential Mortgage Licensee #MB.6760686; Kansas Licensed Mortgage Company #MC.0025047; Massachusetts Mortgage Lender/Broker License #MC1854; Licensed by the Mississippi Department of Banking and Consumer Finance; Missouri Residential Mortgage Loan Broker License #12-2052; Licensed by the New Hampshire Banking Department; Licensed by the N.J. Department of Banking and Insurance; Rhode Island Licensed Lender; Registered under Texas SML Mortgage Banker Registration; Virginia State Corporation Commission Lender/Broker License #MC-2184; Washington Consumer Loan Company License #CL-1854. For State of Nevada residents Stearns Lending, LLC is a mortgage lender promoting the loan products or services contained in this article; the business phone number that Stearns Lending maintains on file with the State of Nevada Department of Business and Industry is (714) 513-7777. This information is accurate as of July 24, 2015. © 2015 Stearns Lending, LLC All Rights Reserved. 

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