For the week of November 16, 2009 – Vol. 7, Issue 46
>> Austin Mortgage Market Update

INFO THAT HITS US WHERE WE LIVE  Thursday the Wall Street Journal reported Q3 home sales at an annual rate of 5.3 million units. That was an 11.4% gain over Q2’s 4.76 million units. Experts put much of the rising sales to the tax credit of up to $8,000 for first-time homebuyers. A week ago Friday, the President signed a bill extending that tax credit well into next year and expanding it to first-time buyers with higher incomes as well as to existing homeowners, with a $6,500 limit. National Association of Realtors chief economist Lawrence Yun feels “rising sales from the expanded tax credit should stabilize home prices by next spring.”

That same tax credit bill also created a new tax break for businesses. The bill lets large firms claim cash refunds on taxes they paid going back five years, to offset current losses. The carry-back period had previously been just two years. Experts estimate this could improve the cash positions of big home builders by hundreds of millions of dollars to further help the recovery. Luxury home builder Toll Brothers is doing just fine already. Tuesday they announced their fiscal Q4 had a 42% jump in contracts over last year. And the value of those contracts was 62% higher than a year ago.

Finally, the NAR’s report on home prices said most U.S. cities saw gains in the median price of single-family homes for Q3–the second quarter in a row of price gains. Prices were still down from Q3 a year ago, but the pace of the decline has been slowing. Many experts feel the shrinking supply of unsold homes suggests the housing market is edging closer to price stabilization. Even foreclosure fillings fell in October for the third straight month.

>> Review of Last Week

HOLDING AT 10,000… We’ve now had two weeks in a row in which investors were confident enough in the recovering economy to keep the Dow Jones Industrial average north of that magic 10,000 number. The S&P 500, a broader indicator of business health, was also up nicely for the week, as well as the tech-heavy Nasdaq, which posted the biggest jump of all.

The week got off to a great start on the news that finance ministers and central bankers from 20 major world economies–the “G-20”–will keep their financial support coming until the global recovery is certain. Investors also liked the news that Hewlett-Packard made a deal to buy 3Com to expand its networking business and increase its position in China. Wal-Mart reported a better-than-expected 3.2% boost in Q3 profits and an improved outlook for the year, although it gave a cautious forecast for Q4.

The Trade Balance showed exports UP five months in a row since bottoming in April. This is a 24.1% annual growth rate, with imports up at a 32.6% rate. The discrepancy makes for a deficit, but it’s billions smaller than last year. The reality is, the spike in imports and continued export gains signal to many that the economy is getting better. Meanwhile, initial jobless claims fell again last week to 502,000 and the four-week moving average was the lowest in almost a year.

For the week, the Dow finished UP 2.5%, to 10270.47; the S&P 500 was also UP 2.3%, to 1093.48; while the Nasdaq went UP 2.6%, to 2167.88.

It was another week of stocks moving up AND bond prices doing well too. This was helped by the Fed stepping in with their buying progra. The FNMA 30-year 4.5% bond we watch ended up from the previous week’s close, finishing at $101.75. Not surprisingly, mortgage rates fell again last week, with Freddie Mac reporting long-term rates at the lowest levels in five weeks!

>> This Week’s Forecast

PLENTY TO PONDER… The week begins with the October Retail Sales report giving us another look at the consumer mindset. The Producer Price Index looka at the inflation situation for business but Wednesday’s Consumer Price Index is the inflation reading the Fed looks at to see if they need to raise rates. On Wednesday we also get Housing Starts and Building Permits. Friday’s Philadelphia Fed Index is another important measure of manufacturing.

>> 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 November 16 – November 20

Date Time (ET) Release For Consensus Prior Impact
M

Nov 16

08:30 Retail Sales Oct 0.9% –1.5% HIGH
M

Nov 16

08:30 Retail Sales ex-auto Oct 0.4% 0.5% HIGH
M

Nov 16

08:30 NY Empire State Manufacturing Index Nov 30.00 34.57 Moderate
M

Nov 16

10:00 Business Inventories Sep –0.7% –1.5% Moderate
Tu

Nov 17

08:30 Producer Price Index (PPI) Oct 0.5% –0.6% Moderate
Tu

Nov 17

08:30 Core PPI Oct 0.1% –0.1% Moderate
Tu

Nov 17

09:15 Industrial Production Oct 0.4% 0.7% Moderate
Tu

Nov 17

09:15 Capacity Utilization Oct 70.8% 70.5% Moderate
W

Nov 18

08:30 Housing Starts Oct 600K 590K Moderate
W

Nov 18

08:30 Building Permits Oct 580K 573K Moderate
W

Nov 18

08:30 Consumer Price Index (CPI) Oct 0.2% 0.2% HIGH
W

Nov 18

08:30 Core CPI Oct 0.1% 0.2% HIGH
W

Nov 18

10:30 Crude Inventories 11/13 NA 1.76M Moderate
Th

Nov 19

08:30 Initial Unemployment Claims 11/14 504K 502K Moderate
Th

Nov 19

08:30 Continuing Unemployment Claims 11/13 5.600M 5.631M Moderate
Th

Nov 19

11:00 Leading Economic Indicators (LEI) Oct 0.4% 1.0% Moderate
Th

Nov 19

08:30 Philadelphia Fed Index Nov 12.0 11.5 HIGH

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months.The Fed continues to maintain they will keep rates low until the economic recovery is on solid ground. Experts expect the present rate situation to continue a few more months. 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%

After FOMC meeting on: Consensus
Dec 15 0%–0.25%
Jan 27 0%–0.25%
Mar 16 0%–0.25%

Probability of change from current policy:

After FOMC meeting on: Consensus
Dec 15 1%
Jan 27 3%
Mar 16 9%

This blog entry is an advertisement for Max Leaman. 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, there is no guarantee of its accuracy. The material contained in the newsletter is copyrighted by PrimeLending, A PlainsCapital Company and cannot be reproduced for any use without prior written consent. It is designed for real estate and other financial professionals only. It is not intended for consumer distribution. The material does not represent the opinion of PrimeLending, A PlainsCapital Company. Š 2009 PrimeLending, a PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, a PlainsCapital Company is exempt from licensing in the following states: AL, AK, AR, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MN, MS, MO, MT, NC, NE, NV, NY, OH, OK, OR, PA, SC, SD, TX, UT, VA, WV, WY. Arizona Mortgage Banker Number License Number 0907334; California Department of Real Estate License Number 01857468; Connecticut Mortgage Lender License Number ML-13649; Illinois Mortgage banker License number MB.6760635; Maine Supervised Lender License Number SLM8285; Maryland Mortgage Lender License number 11058; Michigan First Mortgage Registrant License Number FR 0010163 and Second Mortgage Registrant License Number SR 0012527; New Jersey Licensed Lender Number 083659; New Mexico Mortgage Loan Company License Number 01890; North Dakota Money Broker License number MB101786; Tennessee Mortgage Registrant Number 4023; Texas Regulated Loan License Number 7293; Vermont Mortgage Banker license Number 6127; Vermont Mortgage Broker license Number 0964MB; Washington Consumer Loan License Number 520-CL-49075; Wisconsin Mortgage banker License number 214170. NMLS# 151263

About Max Leaman Austin Mortgage

GREAT RATES, LOW FEES, CLOSE ON TIME™ ---- 2012 Ranked #1 Austin Residential Mortgage Lender (Austin Business Journal) 2010, 2011 & 2012 Five Star Professional (Texas Monthly) 2009, 2010, 2011, 2012, 2013 PrimeLending Chairman's Circle Award 2009, 2010, 2011, 2012 Scotsman Guide Top Originator (Top 200 Mortgage Professionals in U.S.A.) Better Business Bureau "A+ Rating" National Lender Rankings (Scotsman Guide): Top Purchase Volume (No. 10) Most Loans Closed (No. 32) Top Dollar Volume (No. 88)

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