Brought to you by Darel Ansley
Low inventory continues to be a problem in many areas, but a positive sign was seen in the U.S. Census Bureau's report that residential construction spending rose 0.6% for the month of July.
With today's low mortgage rates, purchase mortgage applications increased 4%, seasonally adjusted, from the week before, and refinance applications for the week were 152% higher than a year ago!
Supply constraints are pushing prices up, though at a slower pace. But buyers should act, as annual home price gains are still forecast up 5.4% by CoreLogic, up 4.3% by Fannie Mae, and up 3.8% by the Mortgage Bankers Association.
|NATIONAL MARKET UPDATE|
MARKETS UP, NEAR RECORD HIGHS... Stocks posted gains two weeks in a row, as all three market indexes neared record highs. The catalysts? China agreed to October trade talks in Washington, plus some strong economic data.
Strongest of all, non-manufacturing activity (the bulk of our economy) grew at an accelerated rate in August. Yes, manufacturing activity contracted, yet that happened nine times from 2012 to 2015 without stopping overall expansion.
Some pundits freaked that we got "only" 130,000 new jobs in August. But civilian employment (including small business startups) rose by 590,000, the labor force grew by 571,000, and wages gained 3.2% year-over-year. Impressive.
The week ended with the Dow UP 1.5%, to 26,797; the S&P 500 UP 1.8%, to 2,979; and the Nasdaq also UP 1.8%, to 8,103.
With stocks on the rise, bonds dipped a tick for the week. The 30YR FNMA 4.0% bond ended down .11, at $103.69. The national average 30-year fixed mortgage rate fell to another three-year low in Freddie Mac's Primary Mortgage Market Survey. Remember , mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW?... The NAR's chief economist says today's home building labor shortage is because the crisis took us from 2.2 million units a year to 600,000, and stayed there three years. Laborers who were no longer needed retired, left the country, or took more sustainable jobs.
|REVIEW OF LAST WEEK|
INFLATION STAYS MILD, RETAIL STAYS UP... Consumer price inflation in August measured by the Consumer Price Index (CPI) is forecast below the Fed's 2% target, while Core CPI, excluding food and energy prices, should come in just above it. Consumers aren't having a problem paying current prices, as August Retail Sales are predicted to keep heading up.
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... There's just under a 100% certainty of a September rate cut. It looks good for another one in October, but none in December. Note: In the lower chart, a 91% probability of change is only a 9% probability the rate will stay the same.
Current Fed Funds Rate: 2.00%-2.25%
|FEDERAL RESERVE WATCH|
|Everyone you're working with now is your best source of business for the future, so cultivate those relationships. Pay attention to the details, exceed expectations, and stay in touch going forward.|
|BUSINESS TIP OF THE WEEK|