Austin Mortgage Market Update – For the week of August 29, 2011

For the week of August 29, 2011 – Vol. 9, Issue 35

Please note: We all know mortgage rates are extremely low and refinance activity has increased; however, our primary focus is, and always will be, on providing professional, caring service to our partners. Thank you for trusting us to get the job done for you and your clients.

>> Austin Mortgage Market Update 

QUOTE OF THE WEEK…“In the middle of difficulty lies opportunity.”–Albert Einstein

 

INFO THAT HITS US WHERE WE LIVE…Last week’s “difficulty” for the housing market came from the news that New Home Sales dropped 0.7% for July, to a 298,000 annual rate. They’ve been in this low range since May of last year, competing with existing homes selling at discounts. But there is opportunity. The inventory of new homes dropped to its lowest level on record. Equally encouraging, the new home median price is up 4.7% over a year ago and the average price is up 8.0%.

 

Some analysts feel home sales this fall will be better than last, as supply remains manageable and existing homes for sale are 20% below peak levels. We already see the FHFA index, measuring prices for homes financed by conforming mortgages, UP 0.9% for June, its third monthly rise in a row and the biggest monthly gain since 2005. But the index is still 4.3% under where it was a year ago.

 

BUSINESS TIP OF THE WEEK…Use the three-click rule on your website. Visitors need to find what they’re looking for in three clicks, or they leave. Simplify the search process with prominent icons and clearly labeled categories.

>> Review of Last Week

RALLY CAPS BACK ON…Investors, focused on some positive economic indicators, sent stock prices up for the week for the first time in over a month. There was some negative regional manufacturing data, but these surveys sometimes reflect sentiment more than business activity. Chain-store sales also slowed a little, typical for August, but they’re still comfortably above last year’s levels. Friday, real GDP growth was revised down to 1.0% for Q2, but business investment was revised up and inventories down, both good signs for better growth the last six months of the year. 

 

Indisputably positive news came with July Durable Goods orders UP 4%, a level of business investment that makes it hard to argue for a double dip recession. Shipments of core capital goods (no aircraft or defense items) are UP 9.5% for the year. Friday the focus was on Fed Chairman Ben Bernanke’s speech in Jackson Hole, Wyoming. He repeated his view that the recovery is slower than he had hoped for and he’s prepared to use whatever tools are needed, but there would be no changes to monetary policy right now.

 

For the week, the Dow ended UP 4.3%, to 11285; the S&P 500 was UP 4.7%, to 1177; and the Nasdaq was UP 5.9%, to 2480.

 

Better investor sentiment drove folks back into riskier stocks and sent bond prices down. The FNMA 3.5% bond we’re tracking closed Friday at $100.25, down .89 for the week. National average mortgage rates finally edged up a bit from their record low levels, but still remain at historically very attractive rates.

 

DID YOU KNOW?…A basis point is one hundredth of a percentage point, or 0.01%. It is used to measure changes or differences in yields on bonds, as these often move by very small amounts.

>> This Week’s Forecast

PENDING HOME SALES, INFLATION, FED MINUTES, AUGUST JOBS…You’d have to be a glutton for economic data to want more than we’re getting this week. People of our persuasion will focus on June Pending Home Sales, expected to be off a smidge. Personal Income and Spending should be up a tad and inflation measured by Core PCE Prices should also be up, but well within Fed guidelines.

 

FOMC Minutes from the Fed’s August 9 meeting might prove interesting, as that’s when our central bank promised to keep the Funds Rate super low for another two years, but there were some strong “nay” votes. Hmmm. Of course we’ll all focus on Friday’s August Employment Report, expected to show job growth, though no better than the mild levels we’ve had–and no improvement in the unemployment 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 Aug 29 – Sep 2

 

 Date Time (ET) Release For Consensus Prior Impact
M

Aug 29

08:30 Personal Income Jul 0.4% 0.1% Moderate
M

Aug 29

08:30 Personal Spending Jul 0.5% -0.2% HIGH
M

Aug 29

08:30 Core PCE Prices Jul 0.2% 0.1% HIGH
M

Aug 29

10:00 Pending Home Sales Jun -1.4% 2.4% Moderate
Tu

Aug 30

10:00 Consumer Confidence Aug 52.0 59.5 Moderate
Tu

Aug 30

14:00 FOMC Minutes 8/9 NA NA HIGH
W

Aug 31

09:45 Chicago PMI Aug 52.5 58.8 HIGH
W

Aug 31

10:30 Crude Inventories 8/27 NA -2.213M Moderate
Th

Sep 1

08:30 Initial Unemployment Claims 8/27 408K 417K Moderate
Th

Sep 1

08:30 Continuing Unemployment Claims 8/20 3.660M 3.641M Moderate
Th

Sep 1

08:30 Productivity-Rev. Q2 -0.5% -0.3% Moderate
Th

Sep 1

10:00 ISM Index Aug 48.5 50.9 HIGH
F

Sep 2

08:30 Average workweek Aug 34.3 34.3 HIGH
F

Sep 2

08:30 Hourly Earnings Aug 0.2% 0.4% HIGH
F

Sep 2

08:30 Nonfarm Payrolls Aug 75K 117K HIGH
F

Sep 2

08:30 Unemployment Rate Aug 9.1% 9.1% HIGH

 

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months…At their last meeting, the Fed said they intend to keep the Funds Rate at present low levels through the first half of 2013. No one expects anything different. 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
Sep 20 0%–0.25%
Nov 2 0%–0.25%
Dec 13 0%–0.25%

 

Probability of change from current policy:

 

After FOMC meeting on: Consensus  
Sep 20      <1%  
Nov 2      <1%  
Dec 13      <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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