Austin Mortgage Blog

>> Texas Mortgage Market Update 

QUOTE OF THE WEEK… “The greatest weapon against stress is our ability to choose one thought over another.” –William James, American psychologist and philosopher

INFO THAT HITS US WHERE WE LIVE… Here are two thoughts that should relieve some stress for those of us working in the housing market. Fannie Mae’s May 2013 National Housing Survey reported that the share of American’s who think now is a good time to sell and the share of those who think now is a good time to buy spiked sharply from April to May. 40% of respondents think it’s a good time to sell, up from 30% the month before, the largest gain in the survey’s 3-year history. And 76% of respondents think it’s a good time to buy!

They also reported that respondents expect home prices to go up 3.9% in the next 12 months, another record high for the 3-year survey. Later in the week, Fannie Mae’s Mid-Year Outlook predicted housing starts should be up 25% and home sales up 7% for the year. Their economists also feel that any mortgage rate increases are unlikely to trip up the recovery, since affordability remains near historical highs. An online listing site estimated rates could rise to 10.5% on a 30-year fixed-rate mortgage with 20% down payment before it’s more affordable to rent than to buy.

BUSINESS TIP OF THE WEEK… Attack your most challenging tasks early in the day when you’re most fresh. Save any busy work you have for the afternoon when your energy may slump a little.

>> Review of Last Week

STOCKS FALL ON FED FEARS… Last week investors got nervous that the Fed may begin tapering its bond buying program at this week’s meeting, from the current $85 billion a month rate. The program has helped keep stock prices up and interest rates down, so traders see any tapering as a negative and their fears sent all three stock indexes south for the third week out of the last four. The Fed’s bond buying will end when the economy or inflation picks up, so better than anticipated May Retail Sales and hotter than expected PPI producer prices kept many people skittish in the markets.

But wait. There was also evidence the economy is a long way from recovery. The manufacturing sector reported that Industrial Production was flat in May and factory Capacity Utilization dropped for the month. Then the University of Michigan Consumer Sentiment Index dipped more than expected in the preliminary June report. Lastly, continuing unemployment claims went up by 2,000. But on a better note, initial weekly jobless claims fell by 12,000, to 334,000.

The week ended with the Dow down 1.2%, to 15070; the S&P 500 down 1.0%, to 1627; and the Nasdaq down 1.3%, to 3424.

There was enough weakness in stocks and the economic data to send investors back into bonds, pushing up prices after six weeks of declines. The FNMA 3.5% bond we watch ended the week up .10, at $103.16. National average mortgage rates edged up again, but are still at historically attractive levels. As evidence of that, demand for purchase loans was up 5% for the week, and up 6% from a year ago, according to the Mortgage Bankers Association.

DID YOU KNOW?… Analysts feel mortgage rates could rise if the Fed stops its bond buying program. But last week, FOMC member James Bullard said, “…surprisingly low inflation readings may mean the Committee can maintain its aggressive program over a longer time frame.”

>> This Week’s Forecast

NO INFLATION, NO RATE CHANGE, MORE HOME BUILDING, MORE HOME SALES… The closely watched Consumer Price Index (CPI) is expected to show no huge move up for May. The FOMC Rate Decision on Wednesday should leave the Fed Funds Rate untouched. The policy statement will of course be examined for any indications of future Fed moves, as well as for the central bank’s overall take on the state of the economy.

On the housing front, analysts predict May Housing Starts will move ever closer to an annual rate of one million units. While more new homes are going up, more Existing Home Sales are being closed. That number is forecast to hit the 5 million unit annual rate for May.

>> The Week’s Economic Indicator Calendar

Weaker 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 June 17 – June 21

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… Economists don’t see the Fed touching the super low Funds Rate at this week’s FOMC meeting. The Fed is waiting for a 6.5% unemployment rate or a serious spike in inflation. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

Probability of change from current policy:

>> Texas Mortgage Market Update 

QUOTE OF THE WEEK… “There is always room at the top.” –Daniel Webster, American statesman and senator

INFO THAT HITS US WHERE WE LIVE… Last week, Pending Home Sales took their place at the top, hitting their highest level since April 2010, when folks were rushing to close before the homebuyer tax credit expired. April Pending Home Sales, based on signed contracts for existing homes, were up 0.3% over March and up 10.3% over last year, according to the National Association of Realtors (NAR). Their chief economist predicts, “Total existing home sales are expected to rise just over 7%, to about 5 million this year.”

The NAR’s economic honcho also feels that in 2013, “Because of inventory shortages, higher home sales will push up home values to the highest level in five years.” Those values appear to be well on their way up. Evidence? The latest S&P/Case-Shiller 20-City Composite index was up 10.9% in March compared to a year ago, the highest annual home price gain since 2006. In addition, all 20 cities tracked registered annual increases and all showed monthly gains for the fifth month in a row!

BUSINESS TIP OF THE WEEK… Ask your clients how you could improve. Requesting their input helps you upgrade products and services and makes clients feel more invested in your brand. It’s a win-win.

>> Review of Last Week

UP MONTH ENDS DOWN… Stocks were down again for the week, yet all three major indexes ended up for the month: the Dow up 1.9%, the S&P 500 up 2.1%, and the Nasdaq up 3.8%. The Dow saw its sixth straight monthly gain and the S&P 500 its seventh, the longest monthly win streak since the one that ended in September 2009. All three indexes are also up solidly for the year. Dragging things down last week were a lower GDP-2nd Estimate (2.4%), flat Personal Income, and a drop in Personal Spending, all missing expectations.

But the good economic data was quite good. Pending Home Sales and the Case-Shiller Home Price Index showed housing recovering. Consumer Confidence and Michigan Consumer Sentiment both beat estimates, reflecting a more optimistic mindset among Americans. The Chicago PMI index indicated strong expansion for Midwest manufacturing. Core PCE Prices confirmed inflation is under control. So why did stocks dip for the week? Analysts say some investors are now afraid the economy is strengthening too quickly. Go figure.

The week ended with the Dow down 1.2%, to 15116; the S&P 500 down 1.1%, to 1631; and the Nasdaq down 0.1%, to 3456.

While stocks slipped, bonds plunged, as positive economic data made investors worry the Fed might soon slow its bond-buying program that’s kept prices up and interest rates down. The FNMA 3.5% bond we watch ended the week down .97, at $103.21. In Freddie Mac’s Primary Mortgage Market Survey, national average mortgage rates were up from both the week before and a year ago. But they’re still at attractive levels, so the Mortgage Bankers Association saw applications for purchase loans up a seasonally adjusted 3%.

DID YOU KNOW?… A service is an economic activity that is intangible, not stored, doesn’t result in ownership, and is consumed at the point of sale. This week’s ISM Services index measures the health of this business sector.

>> This Week’s Forecast

FACTORIES OK, FED OBSERVATIONS, A FEW MORE JOBS… This week’s ISM Index should show factory activity barely expanding in May, while ISM Services is forecast to report stronger growth for that sector. The Fed’s Beige Book reveals anecdotal economic info from Fed Districts across the country. Experts expect a tone of cautious optimism. Nothing new there.

Friday it’s the always important Employment Report. Economists think that new Nonfarm Payrolls in May will stay in the modest range we’ve been seeing. This job growth isn’t outpacing workforce growth, so the Unemployment Rate should remain at 7.5%

>> The Week’s Economic Indicator Calendar

Weaker 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 June 3 – June 7

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… Economists see no signs the Fed will touch its super low Funds Rate at the next FOMC meeting a couple of weeks away. The central bankers want to see unemployment down to 6.5%, which doesn’t look likely any time soon. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

Probability of change from current policy:

>> Texas Mortgage Market Update 

QUOTE OF THE WEEK… “Optimism is essential to achievement and it is also the foundation of courage and true progress.” –Nicholas Murray Butler, American diplomat and educator

INFO THAT HITS US WHERE WE LIVE… It definitely takes guts to remain optimistic in the face of some of the housing data coming at us these days. Last week, for example, we were greeted with a 16.5% drop in Housing Starts for April. It helps to dig into these reports. The dip was mostly due to multi-family starts, which are very volatile month to month, and were down 38.9%. Turns out, single-family starts were off just 2.1%. Taking a long-term view helps even more. Starts overall are up 13.1% versus a year ago, with single-family starts up a healthy 20.8%. So there.

It didn’t take any effort at all to stay optimistic in the face of the April Building Permits report. New building permits rose 14.3% during the month to a 1.02 million annual rate. Permits for single-family homes are now up 27.5% over a year ago, and multi-family permits are up a whopping 50.9%. An analysis of U.S. Department of Housing and Urban Development data revealed that 64% of building permits issued in the first quarter of this year were for single-family homes. And they were at the highest level since Q1 of 2008.

BUSINESS TIP OF THE WEEK… Use social media to give something back. Shining the light on others doing good in the community attracts attention to yourself in the best way possible.

>> Review of Last Week

BULL-IEVE IT!… Given the week’s mostly disappointing economic data, it was hard to believe the bulls prevailed on Wall Street again, pushing stocks to their fourth weekly gain in a row with the Dow and the S&P 500 indexes setting new records. To be fair, the bulls did have some decent reports on which to base their enthusiasm. April Retail Sales, Building Permits, and Leading Economic Indicators all surprised to the upside. The Michigan Consumer Sentiment index for May also handily beat estimates.

However, a plethora of indicators headed to the downside, starting with weak readings for April Industrial Production and the New York Empire Manufacturing Index for May. The disappointing economic news continued with higher than expected Initial Unemployment Claims, a dip in Housing Starts, and a lower than expected Philadelphia Fed Index of manufacturing for that region. But the CPI reading for April showed that consumer price inflation is staying well under control.

The week ended with the Dow up 1.6%, to 15354; the S&P 500 up 2.1%, to 1667; and the Nasdaq up 1.8%, to 3499.

As equity markets hit new all-time highs, bonds came under considerable selling pressure and prices slid. The FNMA 3.5% bond we watch ended the week down .14, at $105.04. National average mortgage rates rose again in Freddie Mac’s weekly Primary Mortgage Market Survey, although they remain well below levels of a year ago. The Mortgage Bankers Association (MBA) reported purchase loan demand off for the week but still up 10% from a year ago.

DID YOU KNOW?… A bond is a debt instrument issued for a period of more than one year with the purpose of raising capital by borrowing. An investor who buys a bond becomes a creditor of the issuer but does not gain any ownership rights, as in the case of stocks.

>> This Week’s Forecast

HOME SALES GAIN, DURABLE GOODS RECOVER, FED CHITCHAT… Additional data on the housing recovery comes in this week and more progress is expected for April. Existing Home Sales are forecast to inch higher to just below a 5 million unit annual rate. New Home Sales should also continue edging up farther into 400K territory.

Wednesday’s FOMC Minutes from the Fed’s May 1 meeting will spark interest, as we see whether the discussion sheds any more light on the central bank’s view of the economy. The week ends with April Durable Goods, predicted to bounce back into positive territory, showing a healthier market for long-term purchases.

>> The Week’s Economic Indicator Calendar

Weaker 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 May 20 – May 24

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… Nothing happened last week to change the prevailing view of economists that the Fed will keep the Funds Rate at exceptionally low levels at least until the last three months of this year. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

Probability of change from current policy:

>> Texas Mortgage Market Update 

QUOTE OF THE WEEK… “Saints are sinners who kept on going” –Robert Louis Stevenson, Scottish novelist, poet, and essayist

INFO THAT HITS US WHERE WE LIVE… Home prices also keep on going, and in a decidedly upward direction. The National Association of Realtors (NAR) reported that for Q1 of this year, the median existing home price jumped 11.3% over last year, the largest annual gain since Q4 of 2005. But Q1 inventory was down 16.8%. The NAR’s chief economist expounded: “Inventory conditions are expected to remain fairly constrained this year, so overall price increases should be well above the historic gain of one-to-two percentage points above the rate of inflation.”

A leading research analytics firm reported that home prices in March jumped 10.5% year over year, posting their biggest annual gain in seven years. Plus, the 1.9% price increase over February was the 13th monthly gain in a row. These analysts expect April to register a 12% annual and a 2.7% monthly price hike, if you exclude distressed sales. Finally, Fannie Mae reported a milestone in consumer optimism about home prices: the majority of Americans they surveyed now expect home prices to increase over the next year.

BUSINESS TIP OF THE WEEK… From Warren Buffett: “…the biggest thing that kills [businesses] is complacency. You want a restlessness, a feeling that somebody’s always after you, but you’re going to stay ahead.”

>> Review of Last Week

BREAKING RECORDS AGAIN… Investor enthusiasm pushed U.S. stocks to their third week of record-setting gains. Friday the Dow ended solidly above 15,000, at its highest close ever. Not to be outdone, the S&P 500 also hit an all-time high, well north of 1600. There wasn’t much economic data or financial news to distract investors and quite a few Q1 corporate earnings reports continued to surprise to the upside. Other points to ponder included a steep decline in commodity prices and the dollar’s surge in value over the Japanese yen.

Weekly Initial Unemployment Claims came in at 323,000, a five-year low. Continuing Unemployment Claims were barely above 3 million. The final source of good feelings came Friday, when the Treasury reported its monthly budget statement. In April, the U.S. registered the largest budget surplus in five years: $113 billion. Of course, income tax payments usually make April a surplus month. But, hey, through the first seven months of the government’s 2013 fiscal year, the deficit is down to $488 billion, 32% lower than the same period last year.

The week ended with the Dow up 1.0%, to 15118; the S&P 500 up 1.2%, to 1634; and the Nasdaq up 1.7%, to 3437.

With stocks soaring and the week bereft of worrisome news or disappointing data, bond prices suffered. The FNMA 3.5% bond we watch ended the week down .86, at $105.18. After five weeks of declines, national average mortgage rates rose in Freddie Mac’s weekly Primary Mortgage Market Survey, but remain near historical lows. The Mortgage Bankers Association (MBA) reported purchase loan applications were up 2% for the week and UP 12% compared to a year ago.

DID YOU KNOW?… The NAR reports: “Most Americans believe a housing recovery is truly occurring throughout the country. The share of Americans who think it is a good time to sell has doubled during the last year.”

>> This Week’s Forecast

RETAIL DOWN, MANUFACTURING UP, INFLATION SIMMERS, BUILDERS COOL… This week is packed with economic data, starting with Monday’s Retail Sales for April, expected down for another month. Nonetheless, factories are humming, according to both NY Empire Manufacturing and Philadelphia Fed forecasts.

Staying on simmer, inflation did not heat up in April, with wholesale PPI and consumer CPI numbers predicted slightly down overall and up only a tick in Core readings that exclude food and energy. Although the housing market is recovering, builder enthusiasm cooled off in April, with Housing Starts expected to dip below the 1 million annual rate.

>> The Week’s Economic Indicator Calendar

Weaker 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 May 13 – May 17

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… Economists expect the Fed to keep the Funds Rate at the present exceptionally low level at least through Q3 of this year. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

Probability of change from current policy:

>> Texas Mortgage Market Update 

QUOTE OF THE WEEK… “Great minds must be ready not only to take opportunities, but to make them.” –Charles Caleb Colton, English cleric and writer

INFO THAT HITS US WHERE WE LIVE… Both taking opportunities and making them have driven the housing market recovery to new accomplishments. For Q1 this year, existing home sales were at their highest level since Q4 of 2009 and new homes sales were the highest since Q3 of 2008. Last week, the National Association of Realtors (NAR) reported Pending Homes Sales were up 1.5% in March and up 7.0% compared to March a year ago. In fact, this measure of contracts signed on existing homes has now been above year-ago readings for 23 months in a row!

The NAR’s chief economist said, “Contract activity has been in a narrow range in recent months, not from a pause in demand but because of limited supply.” He added: “Job additions and rising household wealth will continue to support housing demand.” Finally, the 20-city composite of the S&P/Case-Shiller Home Price Index for February came in UP 9.3% versus a year ago. This was the highest annual growth rate since May 2006. In addition, all 20 cities showed price gains for at least two months in a row. That hasn’t happened since early 2005.

BUSINESS TIP OF THE WEEK… Start thinking of yourself as a brand. Then come up with a clear idea of where your brand stands and what sets it apart in the marketplace.

>> Review of Last Week

RECORD-BREAKING… Friday, new records were set for the Dow and S&P 500 stock indexes, as Wall Street went giddy over a better than expected (though still mediocre) April Employment Report. The Dow passed 15,000 during the day and ended at a record close just under that threshold. The S&P 500 nailed its record close just over 1600. The catalysts were a surprise gain of 165,000 nonfarm payrolls last month, an upwardly revised 138,000 jobs hike for March, and a drop in the unemployment rate to 7.5%, its lowest reading since December 2008. Better-than-expected Q1 corporate earnings also inspired investors.

Disappointing news did come with Personal Income, Q1 Productivity, ISM Manufacturing, and ISM Services all lower than forecast, though the manufacturing and services sectors of the economy are still showing growth. The Chicago PMI did have manufacturing contracting in that region. But Consumer Confidence and Pending Home Sales were both better than predicted, and PCE Prices, the Fed’s favorite measure of inflation, stayed well within the target range. Finally, weekly Initial Unemployment Claims fell to 324,000, their lowest level since January 2008.

The week ended with the Dow up 1.8%, to 14974; the S&P 500 up 2.0%, to 1614; and the Nasdaq up 3.0%, to 3379.

Over in the bond market, Treasuries gained following lower than expected Q1 GDP growth, then lost ground after Friday’s better jobs numbers. The FNMA 3.5% bond we watch ended the week down .12, at $106.04. National average mortgage rates slid for the fifth straight week in Freddie Mac’s weekly Primary Mortgage Market Survey. Their chief economist commented: “Near record low mortgage rates should further drive the housing market recovery over the near term.”

DID YOU KNOW?… The latest NAR survey reported the median days on market for all home sales was 62 days in March compared to 91 days a year ago, and 37% of respondents reported time on market at less than 1 month when sold.

>> This Week’s Forecast

JOBLESS PROGRESS, A MONTHLY FEDERAL SURPLUS, A QUIET WEEK… Compared to the last few weeks, this one is quiet in terms of economic reports. Both Initial and Continuing Unemployment Claims are expected to show the slow but steady progress they’ve been delivering for a while.

The Federal Budget for April should again report a surplus. Lest we think Washington has mended its profligate spending ways, remember that April always features more tax revenue coming in, while, this year, sequestration is limiting revenues going out. For now.

>> The Week’s Economic Indicator Calendar

Weaker 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 May 6 – May 10

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… Last week’s policy statement said the Fed would keep the Funds Rate “exceptionally low…at least as long as the unemployment rate remains above 6.5%.” Economists do not expect to see that number any time soon. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

Probability of change from current policy:

>> Texas Mortgage Market Update

QUOTE OF THE WEEK… “Perseverance is the hard work you do after you get tired of doing the hard work you already did.” –Newt Gingrich

INFO THAT HITS US WHERE WE LIVE… Even though the housing recovery is well underway, there still is evidence that more hard work needs to be done. Last week began with March Existing Home Sales off 0.6%, dropping to an annual rate of 4.92 million units. In addition, the months’ supply of existing homes edged up to 4.7 from 4.6 in February. But even though existing home sales seem to have leveled off in the last few months, they’re actually UP 10.3% versus a year ago. It’s also encouraging to note that the median existing home price, at $184,300, is up 11.8% over last year.

To further inspire us, March New Home Sales came in Tuesday up 1.5%, to a better than expected 417,000 annual rate. New home sales are now up 18.5% over a year ago, and Q1 of 2013 was the best quarter for new home sales since Q3 of 2008! The months’ supply of new homes remained at 4.4, as the faster sales pace was offset by a rise in inventory of 3,000 units. The median price of new homes sold, at $247,000, is up 3.0% over a year ago. Finally, the FHFA index of prices for homes financed by conforming mortgages was up 0.7% in February and up 7.1% versus a year ago.

BUSINESS TIP OF THE WEEK… Don’t be afraid to take small risks. Just spend the time to test things out. And trust your gut. Often our gut instincts lead the way to the success we’ve been looking for.

>> Review of Last Week

UPBEAT AGAIN… Solid corporate earnings and positive economic reports were enough to offset some negative data and get Wall Street investors back into an upbeat mood. All three major stock market indexes ended ahead for the week. The feeling on Wall Street was that the economy may be growing slowly, but it still is growing. Coming in below expectations were Existing Home Sales and Durable Goods Orders for March, and the GDP Advanced estimate for Q1, which only managed a 2.5% annual growth rate.

On the good side, initial jobless claims were down by 16,000 to 339,000, and continuing claims dropped 93,000 to 3.00 million, causing some analysts to anticipate stronger job growth for April’s numbers arriving this Friday. Other good notes were struck by the March gain in new home sales and Michigan Consumer Sentiment for April coming in higher than expected. The biggest positive news? Over 80% of the Q1 corporate earnings reported so far have met or beaten estimates.

The week ended with the Dow up 1.1%, to 14713; the S&P 500 up 1.7%, to 1582; and the Nasdaq up 2.3%, to 3279.

Even though stocks moved higher, bonds also gained, thanks to the mixed economic data. The FNMA 3.5% bond we watch ended the week up .07, at $106.16. For the fourth straight week, national average mortgage rates slid, approaching near historical lows. The seasonally adjusted Purchase Index of mortgage loan application volume was up 0.3% from the week before to its highest level since May 2010, according to the Mortgage Bankers Association.

DID YOU KNOW?… This week’s monthly Employment Report indicates both the strength of the economy, since companies hire when things are going well, and prospects for growth, since higher employment means more money available to be spent on goods and services.

>> This Week’s Forecast

INFLATION, PENDING HOME SALES, MANUFACTURING OK, THE FED MEETS, MORE JOBS… Before it meets Wednesday, the Fed will see its favorite inflation measure, Core PCE Prices, which are expected to remain within central bank guidelines. March Pending Home Sales are predicted to show existing home sales continuing to recover a few months out. No one expects a rate hike at Wednesday’s FOMC Meeting, but the policy statement will be read carefully.

The week’s two manufacturing readings, the Chicago PMI for the Midwest and the national ISM Index, are forecast above 50, indicating mild growth in that sector. But the big focus will be the monthly Employment Report come Friday. A gain of 150,000 Nonfarm Payrolls is expected for March, but the Unemployment Rate should remain at 7.6%

>> The Week’s Economic Indicator Calendar

Weaker 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 Apr 29 – May 3

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… No one expects the Fed to touch the Funds Rate at this week’s FOMC meeting, with unemployment above the target and inflation under control. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

Probability of change from current policy:

Our hearts go out to the Boston bombing victims and their families. Our pride goes out to the heroes who responded with sacrifice and courage. God Bless America.

>> Texas Mortgage Market Update 

INFO THAT HITS US WHERE WE LIVE… Last week Housing Starts were reported UP 7.0% for March to a 1.036 million unit annual rate, 46.7% higher than a year ago and the highest they’ve been since 2008. But wait. The boost was all due to multi-family units, up 31.1% for the month. Single-family starts were down 4.8%, although they actually are UP a very healthy 28.7% from a year ago. Analysts tell us the multi-family sector is super volatile from month to month, but they expect large gains for home building overall for at least two years.

Building Permits in March were down a bit, to a 902,000 annual rate, but almost all the drop was due to multi-families. Single-family permits slipped just 0.5% for the month and are now UP 27.7% versus a year ago. The National Association of Home Builders (NAHB) confidence index went to 42 from 44 in March. But get this. The NAHB index for future single-family sales rose from 50 to 53, a very positive sign. Economists say it’s OK in a recovery to see up and down indicators along the way, as long as the underlying trend is upward, which it is now in housing.

BUSINESS TIP OF THE WEEK… Focus. Set goals, make decisions, get organized. Don’t just watch life happen; take control of your destiny. As Yogi Berra said: “If you don’t know where you are going, you’ll wind up somewhere else.”

>> Review of Last Week

DOWN… It was a volatile week on Wall Street, with corporate earnings , economic data, commodities, and global growth worries keeping investors on edge. When all was said and done, it was no surprise that the three major stock indexes closed markedly down for the week. Q1 corporate earnings were a mixed bag, with IBM missing forecasts and Microsoft beating them. General Electric’s profits were in line with projections, but McDonald’s missed. Google happily reported a double-digit increase in net revenue from its core Internet business.

Economic data was also mixed. The New York Empire and Philadelphia Fed manufacturing indexes both missed estimates, indicating slowing activity in those regions. The NAHB Housing Market index and March Building Permits also came in lower than expected. But Industrial Production and Housing Starts both pushed past forecasts, clearly positive signs for factories and home builders. Yet crude oil and gold futures were hammered and global growth concerns returned, as China’s Q1 GDP rose at a 7.7% annual rate when 8.0% was expected.

The week ended with the Dow down 2.1%, to 14548; the S&P 500 also down 2.1%, to 1555; and the Nasdaq down 2.7%, to 3206.

Atypically, the heavy selling in stocks did not spur a flight to safety to bonds, which ended the week little changed. The FNMA 3.5% bond we watch ended the week up .01, at $106.09. After the prior week’s soft retail and consumer sentiment numbers, national average mortgage rates edged lower for the third week in a row. The Mortgage Bankers Association put purchase loan applications at their highest level since May 2010, up 4% for the week and up 20% versus a year ago.

DID YOU KNOW?… GDP, Gross Domestic Product, is the total value of all goods and services produced in a country in a year. It equals total consumer, investment, and government spending, plus the value of exports, minus the value of imports.

>> This Week’s Forecast

HOME SALES SOLID, DURABLE GOODS SINK, GDP SOARS… The week should begin with solid home sales numbers for March, the annual rate of Existing Home Sales surpassing the 5M threshold and New Home Sales moving ahead nicely. But as usual, any excitement will be tempered. In this case, Durable Goods Orders for March are expected to slide 3.1%.

In spite of this, the first Advanced Q1 GDP reading is forecast to show economic growth proceeding at an encouraging 2.8% annual rate. This is good news following the negative to anemic GDP growth numbers we saw for Q4.

>> The Week’s Economic Indicator Calendar

Weaker 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 Apr 22 – Apr 26

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… Last Thursday Minneapolis Fed president Narayana Kocherlakota said financial market conditions requiring the Fed to keep rates super low may persist for 5 to 10 years. More cause for economists to expect no change in the Funds Rate. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

Probability of change from current policy:

>> Texas Mortgage Market Update 

QUOTE OF THE WEEK… “That which grows fast, withers as rapidly. That which grows slowly, endures.”–Josiah Gilbert Holland, American novelist and poet

INFO THAT HITS US WHERE WE LIVE… Last week gave us more evidence that this housing recovery, though growing slowly, will in fact endure. According to a major online real estate portal, listing inventory rose 3.5% from January to March. This beat the gains going into the 2012 Spring selling season, although inventories are still 15% off last year’s levels, with only nine of 146 metros showing annual increases. Not surprisingly, the median age of inventory in March dipped to 78 days, down 12.3% from last year, and median asking prices were up 0.5% from February, gaining in 29 of the top 30 metro areas.

According to a housing consultancy, land values are up 13% on average over last year, their first annual rise since 2005. The increasing demand from builders for finished lots is driving the gain, as the rate of new home construction is up 27.7% the past year. Higher land values will mean higher prices for new homes, as land cost makes up 21.7% of the final sale price, according to the National Association of Home Builders. Finally, a first quarter survey of lenders reported that 71% are more confident about home prices, believing they’re rising at a “sustainable pace.”

BUSINESS TIP OF THE WEEK… More time savers: 1) write down agendas and time limits for phone calls and meetings; 2) group errands, hitting the post office, bank, and gas station in one trip, not three; 3) do more shopping online; 4) don’t try to be 100% perfect when 95% will do.

>> Review of Last Week

UP DOWN UP… An interesting week on Wall Street. Investors spent the first four days trading stocks UP, as the S&P 500 hit record closing highs two days in a row. An absence of news and market-moving economic data kept global equity markets on the ascent. Then came Friday, when the release of some disappointing consumer data sent stock prices back DOWN. Although investor optimism prevailed and prices recovered a bit during the day, all three major market indexes slipped, but still ended UP solidly for the week.

Friday’s unfortunate reads on the consumer included Retail Sales down 0.4% for March, way lower than expected, after being up 1.1% the month before. This was followed by Michigan Consumer Sentiment coming in with its lowest reading in nine months. Better news included Initial Unemployment Claims down by 42,000, to 346,000, and Continuing Claims 12,000 lower, at 3.08 million. Finally, the Producer Price Index (PPI) dipped 0.6% in March, indicating inflation at the wholesale price level remains within acceptable limits.

The week ended with the Dow up 2.1%, to 14865; the S&P 500 up 2.3%, to 1589; and the Nasdaq up 2.8%, to 3295.

Bond buying was strong on Friday as the weak consumer data sent investors seeking a safe haven. This, however, was not quite enough to reverse the losses suffered earlier in the week when stocks soared. The FNMA 3.5% bond we watch ended the week down .05, at $106.08. Thanks to the disappointing March jobs report, average fixed mortgage rates dipped for the second week in a row in Freddie Mac’s Primary Mortgage Market Survey. Purchase loan applications were down 1% for the week but up 4% from a year ago, according to the Mortgage Bankers Association.

DID YOU KNOW?… To create an income tax, the Constitution had to be changed because federal taxes could only be based on state population. In 1913, the 16th Amendment eliminated this and the federal government quickly passed its first income tax law.

>> This Week’s Forecast

HOME BUILDERS FEELING GOOD, MANUFACTURING MIXED, INFLATION TAME… A well-rounded view of the economy this week should show the housing recovery on track, as home builders actively fill their pipelines with new homes. Tuesday’s March Housing Starts should be up, with Building Permits extending the good feelings a few months more.

But manufacturing messages remain mixed, the New York Empire Index down and the Philadelphia Fed Index up, although both are now positive, indicating expansion. The Consumer Price Index (CPI) and Core CPI, excluding food and energy, are forecast virtually flat for March, a good thing. As long as inflation is tame, the Fed won’t think about raising the Funds Rate.

>> The Week’s Economic Indicator Calendar

Weaker 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 Apr 15 – Apr 19

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… Economists expect no change in the Funds Rate any time soon. Inflation is mild and the unemployment rate remains far from the Fed’s target. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

Probability of change from current policy:

>> Texas Mortgage Market Update

QUOTE OF THE WEEK… “Hold on; hold fast; hold out. Patience is genius.”–Georges-Louis Leclerc (1707–1788), French naturalist, mathematician, cosmologist, and author

INFO THAT HITS US WHERE WE LIVE… Patience may not quite be genius in the housing market, but it certainly is paying off. A report by a major real estate search and marketing site said home asking prices in March rose 7.2% annually, while rents on single-family homes were up just 0.1% for the year. Their chief economist explained: “Rising prices and flattening rents change the math. Investors will decide to sell units they’ve been renting, which would create new, desperately needed for-sale inventory. On the other hand, some renters watching prices rise will rush to buy before they rise further.”

In addition, a real estate analytics firm released a report that overall home prices were UP 10.2% in February compared to a year ago. This was the biggest year-over-year hike since March 2006. The firm’s home price index, UP 0.5% for the month, has now posted a gain twelve months in a row. Most significantly, this price index includes distressed sales, which aren’t doing much to slow down the overall upward price trend. Finally, a Fannie Mae survey says Americans expect home prices to rise 2.9% in the next year, the highest forecast reported since 2010.

BUSINESS TIP OF THE WEEK… To foster innovation, focus on understanding what your customers want and then think of fresh ways to offer it to them.

>> Review of Last Week

JOBS DISAPPOINT, STOCKS FOLLOW SUIT… Friday, the March Employment Report came in with just 88,000 new jobs added during the month, way lower than analysts had estimated. This sent stocks solidly southward, with the S&P 500 and the Nasdaq suffering their worst weeks yet in 2013. The Dow fared a little better but still ended lower than the week before. The jobs letdown came on the heels of other disappointing economic data earlier in the week. Finally, North Korea was busy backing up its belligerent rhetoric by moving a pair of mid-range missiles into threatening positions.

The weak job growth in March came after February posted 268,000 new payrolls and January 148,000. Curiously, the unemployment rate dropped from 7.7% to 7.6%. This was the result of fewer people being counted in the workforce, probably because more have given up looking for jobs. In fact, the labor participation rate (63.3%!) is the lowest it’s been since 1979. If the March level of job creation continues, it will portend very slow economic growth indeed. All eyes economic will therefore be focused on April jobs numbers. Earlier in the week, ISM Indexes for Manufacturing and Services showed both sectors slowing, though still growing.

The week ended with the Dow down 0.1%, to 14565; the S&P 500 down1.0%, to 1553; and the Nasdaq down 1.9% 0.7%, to 3204.

The disappointing economic data plus the North Korean saber-rattling incited a flight to safety that produced strong gains for bonds. The FNMA 3.5% bond we watch ended the week up .94, at $106.13. Average fixed mortgage rates slipped back down a bit in Freddie Mac’s Primary Mortgage Market Survey, staying near historical lows. The Mortgage Bankers Association reported purchase loan applications up 2% for the week and up 4% versus a year ago.

DID YOU KNOW?… The Retail Sales report is a monthly measure of goods sold at retail. It doesn’t include money spent on services, so it represents less than half of total consumption. But it’s still considered a key indicator of economic health.

>> This Week’s Forecast

RETAIL STAGNANT, NO SURPRISES EXPECTED IN FED MINUTES…  Retail Sales are key because consumer spending accounts for such a huge part of the economy. March numbers are expected to show sales stagnating at the same level they were the month before.

The FOMC Minutes from the Fed’s March 20 meeting will be released Wednesday. Economists anticipate no surprises, but you never know, as individual FOMC member’s views are not always in concert with Chairman Bernanke’s. Michigan Consumer Sentiment for April is forecast to fall a little, understandable given the pace of this recovery.

>> The Week’s Economic Indicator Calendar

Weaker 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 Apr 8 – Apr 12

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… Economists take Fed Chairman Ben Bernanke at his word and expect no change in the Funds Rate with inflation at bay and unemployment well above the Fed’s 6.5% target. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

Probability of change from current policy:

>> Texas Mortgage Market Update

QUOTE OF THE WEEK… “You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.”–Abraham Lincoln

INFO THAT HITS US WHERE WE LIVE… Today being April 1, it’s timely to note that fewer and fewer people are being fooled into thinking housing remains in the doldrums. Yes, the housing recovery has a distance to go, but there’s mounting evidence it’s well on its way. New Home Sales were up 12.3% in February compared to a year ago. After a super big hike in January, new home sales fell slightly in February, but they’re still at a 411,000 annual rate. Plus, the median price of new homes sold was up 2.9% versus a year ago, with the average price up an impressive 14.5%!

Speaking of prices, check out the closely watched Case-Shiller index of home prices in the 20 largest metros. Up 1% in January, prices are now up 8.1% over a year ago. That’s the largest annual gain in over 6 years! The chief economist at an online real estate site observed, “We’re seeing prices increase both in markets that had a really big decline during the bust, as well as markets that have really strong fundamentals.” Finally, Pending Home Sales in February were at their second-highest level in nearly three years, up 8.4% over a year ago, although slipping a tad for the month.

BUSINESS TIP OF THE WEEK… Beware of “analysis paralysis,” where you constantly pursue and analyze information and never make a decision. Don’t proceed blindly, but remember that no one ever has all the answers. Once you know the critical details, take action!

>> Review of Last Week

S&P 500 HITS HIGHEST ALL-TIME CLOSE… The S&P 500 ended a holiday-shortened week at its highest close ever, 1569.19, beating the record set on October 9, 2007. That means this major stock benchmark has now recouped all its losses since the 2008 financial crisis. The Dow Jones Industrial Average already beat its 2007 all-time high on March 5 and then set new records ten more times after that. But the new all-time high for the S&P 500 is considered more significant. As one analyst put it, “Having the Dow reaching new highs was good, but the S&P 500 is broader, it’s bigger…it’s an important message for investors.”

Investor behavior is seen as a leading economic indicator and last week offered more evidence their optimism is leading us in the right direction. We had year-over-year increases in New Home Sales and Case-Shiller home prices, up the most since 2006. GDP for Q4 was revised up to a 0.4% annual pace, not where it needs to be, but way better than the initial 0.1% reading. Even Durable Goods Orders gained more than expected. Eurozone worries dissipated with a bailout for Cyprus expected. Over here, Consumer Spending in February was up the most since last September, while personal income and consumer sentiment beat estimates.

The week ended with the Dow up 0.5%, to 14579; the S&P 500 up 0.8%, to 1569; and the Nasdaq up 0.7%, to 3268.

There are still enough concerns about our economy and Eurozone finances to keep investors interested in the safe haven of bonds. The FNMA 3.5% bond we watch ended the week up .07, at $105.19. In Freddie Mac’s Primary Mortgage Market Survey, average fixed mortgage rates edged up slightly for the week, but are still near historical lows. The Mortgage Bankers Association reported demand for purchase loans up 7% for the week and up 10% versus a year ago.

DID YOU KNOW?… A tax credit is a direct dollar-for-dollar reduction of your tax liability. It’s way better than a tax deduction, which only reduces your tax liability in proportion to your tax bracket.

>> This Week’s Forecast

FEWER NEW JOBS BUT THE UNEMPLOYMENT RATE HOLDS… The big news of the week will be Friday’s March Employment Report. Although fewer new Nonfarm Payrolls are forecast, the Unemployment Rate is expected to hold at 7.7%. There will be some statistical explanation for this, of course. The truth is, the economy plods along, but at least it’s plodding upward.

The week begins with the ISM Index of manufacturing, predicted off a smidge for March, but still over 50, registering expansion. ISM Services should give us a similar reading and since the services sector provides well over 80% of our jobs, that small drop in the index dovetails perfectly with the slight slide in new payrolls.

>> The Week’s Economic Indicator Calendar

Weaker 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 Apr 1 – Apr 5

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… Fed Chairman Ben Bernanke hasn’t been happy with the pace of the jobs recovery to this point. Nothing in the March Employment Report should inspire him to raise the Funds Rate any time soon. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

Probability of change from current policy: