Housing Starts shot up 12.3% in August, to a 1.364 million annual rate, a new post-recession high. And Building Permits gained 12.0% over a year ago, to a 1.419 million yearly rate, another post-recession record. No wonder builder confidence hit an 11-month high! Meanwhile, Existing Home Sales have now risen two months in a row, up 1.3% in August, to a 5.490 million annual rate , 2.6% above a year ago.
Housing activity is clearly gaining momentum with a nice rise in purchase demand. The Mortgage Bankers Association reports purchase mortgage applications up 15% from a year ago. Credit the strong labor market and low-interest rates.
|NATIONAL MARKET UPDATE|
BACK AND FORTH... Investor sentiment fluctuated and the three big stock indexes ended slightly lower after three weeks of gains. The first downer was the attack on Saudi refineries that created the worst oil supply disruption in history.
But the Saudis began restoring production quickly and the conflict didn't escalate. More g ood news came when the U.S. granted China tariff exemptions, but then Chinese representatives aborted a friendly visit to farms in Montana. Har-umpf!
We had the Fed's expected rate cut to "sustain the expansion," which has been doing fine all by itself, with 3.7% unemployment, the strongest wage growth in over a decade, and consumer spending up an average of 3% since 2018.
The week ended with the Dow down 1.0%, to 26,935; the S&P 500 down 0.5%, to 2,992; and the Nasdaq down 0.7%, to 8,118.
All the back-and-forths sent bond prices up as investors sought a safe haven. The 30YR FNMA 4.0% bond ended UP .22, to $103.64 The national average 30-year fixed mortgage rate in Freddie Mac's Primary Mortgage Market Survey saw its biggest uptick since October but is almost a percent below a year ago. Remember , mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW?... Thanks to the drop in mortgage rates, Fannie Mae's latest forecast projects refinance at a three-year high. Even with last week's rate move, refinance applications were 148% higher than a year ago.
|REVIEW OF LAST WEEK|
NEW AND PENDING HOME SALES, CONSUMER INCOME AND SPENDING, GDP, ALL UP... The "looming" recession forecasters keep having this problem: the economic data won't cooperate, as we should continue to see this week. August New and Pending Home Sales are expected to show the housing recovery intact. Personal Income and Spending are predicted to reveal consumers making more money and spending it, sending the third estimate for Q2 GDP to solid 2.0% growth.
NOTE: Weaker economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.
|THIS WEEK'S FORECAST|
Forecasting Federal Reserve policy changes in coming months... The Fed Futures market expects the rate to hold in October, drop come December, then hold in January. Note: In the lower chart, a 45% probability of change is a 55% probability the rate will stay the same.
Current Fed Funds Rate: 1.75%-2.00%
|FEDERAL RESERVE WATCH|
|BUSINESS TIP OF THE WEEK|
Senior Real Estate Loan Officer
901 North Mission Street
Wenatchee, WA 98801
Office: (509) 664-5324
Mobile: (509) 860-3301
Fax: (509) 664-5315