Austin Mortgage Market Update – For the week of January 23, 2012

For the week of January 23, 2012 – Vol. 10, Issue 4

 

>> Austin Mortgage Market Update 

QUOTE OF THE WEEK…“Happiness is not a state to arrive at, but a manner of traveling.” –Margaret Lee Runbeck

 

INFO THAT HITS US WHERE WE LIVE…Well, we can all make our way with a bit of a smile on our faces, courtesy of the latest Housing Starts numbers. At first blush, the December report seemed disappointing, down 4% for the month. But starts overall are UP 24.9% from a year ago and December’s drop was all from multi-family starts, very volatile month-to-month. Single-family starts were UP 4.4% for the month and UP 11.6% for the year. No wonder the National Association of Home Builders confidence index went to 25, its highest reading since 2007.

 

For those who still couldn’t put on a happy face, Friday’s data should have done the trick. Existing Home Sales were UP 5% in December, their third consecutive gain, to their highest level since January 2011. The inventory of existing homes is down 21% from last year and the months’ supply dropped to 6.2, the lowest level since April 2006. For all of 2011, sales of single-family homes, townhomes, condos and co-ops rose 1.7%, to 4.26 million units.

 

BUSINESS TIP OF THE WEEK… There are so many variables in business, you can’t know exactly how you will reach your goal. So what matters most is your determination to get there.

>> Review of Last Week

HAPPY NEW YEAR SO FAR…All three major market indexes ended ahead again for the week, chalking up very nice gains for the very young year–the Dow UP 4.1%, the S&P 500 UP 4.6% and the Nasdaq UP 7.0% thus far. Investor sentiment is generally a good leading indicator for the economy, but the recovery is still slow and the economic reports continue to deliver mixed messages.

 

Industrial Production, up 0.4% in December, fell short of expectations. Yet two regional manufacturing indexes did better for the month: the Empire State and the Philadelphia Fed. On the inflation front, producer prices were down 0.1%, though Core prices excluding food and energy were up 0.3%. The Consumer Price Index was unchanged, but Core CPI went up 0.1%. The best news? Weekly Initial Unemployment Claims fell to 352,000, their lowest level since April 2008.

 

For the week, the Dow ended UP 2.4%, at 12720; the S&P 500 closed UP 2.0%, to 1315; and the Nasdaq gained 2.8%, to 2787.

 

With stocks rallying, heavy selling in the bond market sent prices southward. Investors were also calmed by hopes of a Greek debt deal, though that hasn’t happened yet. The FNMA 3.5% bond we watch ended the week down .87 to $102.21. Freddie Mac’s survey of conforming mortgages showed national average mortgage rates virtually unchanged, staying at record low levels for another week.

 

DID YOU KNOW?…This week’s Advanced GDP number will be revised twice, with next month’s Preliminary GDP and then Final GDP a month later. These revisions can impact financial markets.

>> This Week’s Forecast

PENDING HOME SALES, NEW HOME SALES, THE FED, THE GDP… This week isn’t missing much in the way of interesting topics. December Pending Home Sales come Wednesday, forecast down a bit after a November gain. The Fed’s FOMC Rate Decision shouldn’t change anything, but for the first time, Fed member’s outlooks on interest rates will be released. Following this will be Chairman Bernanke’s press conference and that could be interesting.

 

December New Home Sales happen Thursday, projected to inch up a bit. Friday we get how the overall economy did in Q4, with the Advanced GDP estimate. Gross Domestic Product is expected to climb from an anemic 1.8% to a more acceptable 3.1%.

>> 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 Jan 23 – Jan 27

 

 Date Time (ET) Release For Consensus Prior Impact
W

Jan 25

10:00 Pending Home Sales Dec -3.0% 7.3% Moderate
W

Jan 25

10:30 Crude Inventories 1/21 NA -3.438M Moderate
W

Jan 25

12:30 FOMC Rate Decision 1/25 0%-0.25% 0%-0.25% HIGH
Th

Jan 26

08:30 Initial Unemployment Claims 1/21 375K 352K Moderate
Th

Jan 26

08:30 Continuing Unemployment Claims 1/14 3.550M 3.432M Moderate
Th

Jan 26

08:30 Durable Goods Orders Dec 2.0% 3.7% Moderate
Th

Jan 26

10:00 New Home Sales Dec 322K 315K Moderate
Th

Jan 26

10:00 Leading Economic Indicators (LEI) Dec 0.7% 0.5% Moderate
F

Jan 27

08:30 GDP-Adv. Q4 3.1% 1.8% Moderate
F

Jan 27

08:30 GDP Chain Deflator-Adv. Q4 1.5% 2.6% Moderate
F

Jan 27

09:55 U. of Michigan Consumer Sentiment-Final Jan 74.2 74.0 Moderate

 

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months… Virtually all the experts say the Fed Funds Rate will stay at its super low level coming out of this week’s FOMC meeting. 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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