Austin Mortgage Market Update – For the week of December 19, 2011

For the week of December 19, 2011 – Vol. 9, Issue 51

Happy Holidays!

>> Austin Mortgage Market Update 

QUOTE OF THE WEEK…“Do what you can with what you have where you are.”–Theodore Roosevelt

 

INFO THAT HITS US WHERE WE LIVE…The famous President’s sage advice from a century ago is still the appropriate approach to today’s housing market. In the midst of all the media noise, it’s always good to check what we do have and where we really are. For example, the Census Bureau reported that although the median sale price of new homes in October was down 15% over the last five years, it’s actually up 26% over the last ten. More evidence that housing still is a good investment over the long term.

 

A recent economic forecast from the National Association of Realtors (NAR) reports existing home sales are expected to grow by 1.2% this year and 5.1% in 2012. And although the median existing home price is predicted to dip about 4% this year, it should recover and go UP 2.6% in 2012. Sales should also jump to 5.22 million units from this year’s projected 4.97 million.

 

BUSINESS TIP OF THE WEEK…Now is a good time to think about setting goals. The key is to make those goals concrete–as specific as you can–with a time frame for when you want to achieve them.

>> Review of Last Week

EURO TRASH…It was another week of European worries trashing stock prices. The Euro Summit the week before failed to come up with the “bazooka” solution investors had been looking for. Then ratings agencies warned of potential further downgrades in the region. All this made Wall Streeters feel quite risk averse, causing them to exit the equity markets, which sent all three major indexes decidedly down for the week.

 

With our own economy, things weren’t so bad. Retail Sales were up for November, though less than expected, but up 6.7% versus a year ago. This wasn’t enough to impress the Fed, whose meeting Tuesday made it three years of interest rates at near-zero levels. The economic data isn’t great, but it is somewhat improving. Initial weekly jobless claims hit a 43-month low of 366,000. The Empire State and Philadelphia Fed Surveys of manufacturing in those regions were better than expected, although industrial production overall dropped a bit. 

 

For the week, the Dow ended down 2.6%, at 11866; the S&P 500 slipped down 2.8%, to 1220; and the Nasdaq dropped 3.5%, to 2555.

 

Investors were still nervous about Europe and the Fed’s statement didn’t say anything to concern traders, so bond prices held up well. The FNMA 3.5% bond we watch ended the week UP .91, at $102.22. This is of course good for interest rates and, once again, Freddie Mac’s weekly survey had national average fixed mortgage rates remaining at or near their all-time lows.

 

DID YOU KNOW? This week’s PCE (Personal Consumption Expenditures) measures inflation by tracking changes in prices. Unlike last week’s Consumer Price Index, based on a fixed basket of goods and services, the PCE changes with consumer spending habits.

>> This Week’s Forecast

HOUSING, GDP, INFLATION…The week jams in a bunch of housing market reports and they’re mixed. On Tuesday, November Housing Starts and Building Permits should come in down a tad, but November Existing Home Sales are predicted to rise north of five million units. Friday, we’ll see November New Home Sales, forecast to edge up to a 313,000 annual rate.

 

Thursday will feature the Third Estimate for Third Quarter GDP, expected to stay an anemic 2.0%. Friday, Core PCE Prices, the Fed’s key measure of inflation, is forecast flat for November, which should make everyone happy. The stock market will be closed next Monday, December 26, in observance of the Christmas holiday.

>> 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 Dec 19 – Dec 23

 

 Date Time (ET) Release For Consensus Prior Impact
Tu

Dec 20

08:30 Housing Starts Nov 627K 628K Moderate
Tu

Dec 20

08:30 Building Permits Nov 633K 653K Moderate
W

Dec 21

10:00 Existing Home Sales Nov 5.03M 4.97M Moderate
W

Dec 21

10:30 Crude Inventories 12/17 NA -1.932M Moderate
Th

Dec 22

08:30 Initial Unemployment Claims 12/17 380K 366K Moderate
Th

Dec 22

08:30 Continuing Unemployment Claims 12/10 3.650M 3.603M Moderate
Th

Dec 22

08:30 GDP-3rd Estimate Q3 2.0% 2.0% Moderate
Th

Dec 22

08:30 GDP Deflator-3rd Estimate Q3 2.5% 2.5% Moderate
Th

Dec 22

09:55 Univ. of Michigan Sentiment-Final Dec 68.0 67.7 Moderate
Th

Dec 22

10:00 Leading Economic Indicators (LEI) Index Nov 0.3% 0.9% Moderate
F

Dec 23

08:30 Durable Goods Orders Nov 2.0% -0.5% Moderate
F

Dec 23

08:30 Personal Income Nov 0.2% 0.4% Moderate
F

Dec 23

08:30 Personal Spending Nov 0.3% 0.1% HIGH
F

Dec 23

08:30 Core PCE Prices Nov 0.1% 0.1% HIGH
F

Dec 23

10:00 New Home Sales Nov 313K 307K Moderate

 

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months…Last week, the Fed kept the Funds Rate unchanged and that’s where economists expect it to stay well into the future. 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
Jan 25 0%–0.25%
Mar 13 0%–0.25%
Apr 25 0%–0.25%

 

Probability of change from current policy:

 

After FOMC meeting on: Consensus  
Jan 25      <1%  
Mar 13      <1%  
Apr 25      <1%  
   
   

 

 

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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