Monday, June 30, 2014

Housing Again Leading Economy


Housing Takes the Lead!!

With the Spring season of Home Sales happening, it may not be a historically unheard of statement:  Housing is the strongest economic engine in the past quarter.  

Yet it has been a few quarters since anyone trumpeted this statement for almost any quarter. I know, between my own observations and data from other sources, that I have been sharing the overall strength in the housing sector.

Yes, not every one has yet to see the double digit annual increase seen in Florida, California and Nevada(which is slowing by the way).  Still, increasing values have been the rule to the land for the past 12-24 months in most corners of the country.

In Jim Belote's MMG Weekly, the strength of the Housing sector is compared to the weakness in consumer spending in the 1st quarter. With home sales up and the GDP down, it easy to see why housing lead the economy.

As I always wonder: How come there is so much hand wringing over the sales?  With the winter weather we had January - March, retail sales, car sales and home sales were impacted. Every time
we have tough weather, be it snow in the NE or a hurricane in the Gulf, sales are tough in that region.  Buying just doesn't interest someone who see a foundation where a his or her home stood.

Loss sales can not ever be made up!!!  Been know for years. I know this is why the media outlets and such get "talking heads" complaining about the bad weather impact on sales.  But who can dictate the weather???   

We simply have to deal with the consequences!!!   

As so aptly stated below, with the improved weather(don't ask the Upper Midwest and Plains if weather improved), retail sales and car sales should rebound.

And yes, home sales should increase also!  The low mortgage rates seem to be hanging around and can only make buyer and seller motivated to move.  

No time like the present!!!   No one wants to be caught in the "would have/should have" dilemma.

Read, comment, reply!!!




Provided to you Exclusively by Jim Belote  
For the week of Jun 30, 2014 | Vol. 12, Issue 26
Jim Belote
Jim Belote
Branch Manager, MBA
Union Mortgage Group
Phone: (757) 395-LOAN
Fax: (757) 351-6471
E-Mail: jim@jimbelote.com
Union Mortgage Group
582 Lynnhaven Parkway, Suite 300
Virginia Beach, VA 23452
In This Issue...
Last Week in Review: Housing continues to be a bright spot, while first quarter Gross Domestic Product showed worrisome numbers for our economy.

Forecast for the Week: The markets are closed Friday for Independence Day, but not before the June Jobs Report and other key reports are released.

View: Conquer home office clutter with these tips for going paperless.
Last Week in Review
"Help! I need somebody." The Beatles. While the Fed has been working hard to help our economy shake off the recent recession, some key reports continue to disappoint.
After six years and over $4 trillion of stimulus geared toward promoting economic growth, the final reading for 2014 first quarter Gross Domestic Product (GDP) came in at an anemic -2.9 percent. This was worse than expected and the worst reading since the first quarter of 2009, the height of the recession. The report showed that consumer spending fell to 1 percent from 3 percent, which is a big concern as consumer spending is a main driver of our economy.

Harsh winter weather early in the year was a key factor in the contraction. GDP is considered the broadest measure of economic activity, so it will be especially important to see if the second quarter data (from months with better weather) shows signs of improvement when it is released at the end of July.

Housing continues to be a bright spot as New Home Sales for May surged by 18.6 percent to an annual rate of 504,000, well above expectations. Existing Home Sales for May were also up 4.9 percent from April, reaching their highest monthly rate since August 2011. Meanwhile, the Case-Shiller 20-city Home Price Index rose 10.8 percent in the year ended in April. However, from March to April, the 20-city Index gained just 0.2 percent. A spokesman for Case-Shiller said that overall prices are rising month-to-month, but at a slower rate.

What does this mean for home loan rates? The weak GDP report, tame inflation news and a decline in Stocks boosted Mortgage Bonds last week. Since home loan rates are tied to Mortgage Bonds, home loan rates reached some of their best levels this year.

The takeaway is that now remains a great time to consider a home purchase or refinance. Let me know if I can answer any questions at all for you or your clients.
Forecast for the Week
The holiday-shortened week isn't short on economic data, and culminates with Thursday's Jobs Report for June.
  • Manufacturing data kicks off the week on Monday with Chicago PMI, followed by the ISM Index on Tuesday.
  • Also on Monday, look for housing data with Pending Home Sales for May.
  • Thursday brings Weekly Initial Jobless ClaimsISM Services Index and the June Jobs Report, which includes Non-farm Payrolls and theUnemployment Rate.
All capital markets will be closed on Friday, July 4 in observance of Independence Day.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving—and when they are moving lower, home loan rates are getting worse.

To go one step further—a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Bonds and home loan rates are at some of their best levels this year. However, the June Jobs Report could be a market mover and I'll be watching all the news closely to see what happens.
Chart: Fannie Mae 3.5% Mortgage Bond (Friday Jun 27, 2014)
Japanese Candlestick Chart


The Mortgage Market Guide View...
Home Office Maximizer
Kicking the Paper Habit


Going paperless makes sense not only for conservation's sake, but also for reducing clutter and increasing convenience.

Brian Berson, CEO of FileThis, a web-based file service, says this time in history is similar to the transition we went through going from print photos to digital photos, but there are some key things to keep in mind.

To begin, don't try to handle the backlog of paper you already have. Start with the paper coming your way over the next year.

You can store documents on your computer, but that takes a lot of space and you can't access them from anywhere. You could try an external hard drive, but experts recommend sticking with a single service such as FileThisDoxo or Neat.

Get into a workflow with saving documents so you make the habit stick—grab the PDF manual for new office equipment or receipts for online purchases and forward them to your filing system or paperless service.

Schedule time to "scan and shred"—you'll need a scanner and shredder to handle the paper you've already got, and you'll need to take a day to go through it. But once you've got that pile organized, it will be easy to manage moving forward by handling items as they come in.

Capture to-do's, notes and ideas from here on out with web or smartphone based services like Evernote—whose motto is "Remember Everything"—and which make tracking ideas and resources a snap.

As always, feel free to pass these tips along to your team, clients and colleagues!




Economic Calendar for the Week of June 30 - July 04
Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Mon. June 30
09:45
Chicago PMI
Jun
64.7

65.5
HIGH
Mon. June 30
10:00
Pending Home Sales
May
NA

0.4%
Moderate
Tue. July 01
10:00
ISM Index
Jun
55.7

55.4
HIGH
Wed. July 02
08:15
ADP National Employment Report
Jun
NA

179K
HIGH
Thu. July 03
08:30
Average Work Week
Jun
NA

34.5
HIGH
Thu. July 03
08:30
Unemployment Rate
Jun
6.3%

6.3%
HIGH
Thu. July 03
08:30
Non-farm Payrolls
Jun
220K

217K
HIGH
Thu. July 03
10:00
ISM Services Index
Jun
56.5

56.3
Moderate
Thu. July 03
08:30
Jobless Claims (Initial)
6/28
NA

312K
Moderate
Thu. July 03
08:30
Hourly Earnings
Jun
NA

0.2%
HIGH

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.
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