Texas Mortgage Market Update – For the week of April 16, 2012

For the week of April 16, 2012 – Vol. 10, Issue 16

 

>> Texas Mortgage Market Update 

QUOTE OF THE WEEK…“Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everyone gets busy on the proof.” –John Kenneth Galbraith, Canadian-American economist

 

INFO THAT HITS US WHERE WE LIVE… When people tell you the housing market isn’t showing many positive signs, here are some facts that may change their minds. As of January, the National Association of Realtors (NAR) reported the housing inventory of for-sale homes has fallen to its lowest level since March 2005 — 2.3 million homes, about a six-month supply. Meanwhile, total home sales rose 13% in the last six months, according to another industry survey.

 

The NAR also reports that sales of second homes in 2011 shot up to their highest market share since the height of the housing boom. This includes both vacation and investment homes. A survey of real estate economists and analysts reported home prices should stabilize this year, rebound in 2013 and accelerate in 2014. Finally, Freddie Mac’s weekly survey revealed that national average mortgage rates hit new all-time lows for 15-year fixed-rate loans and were just above the record low for 30-year mortgages.

 

BUSINESS TIP OF THE WEEK… When you have more problems than you can handle, start with the ones that are most important. Ask yourself, “what’s the most valuable thing I could be doing right now?”

>> Review of Last Week

SECOND DOWN… The S&P 500 and the Nasdaq lodged their first back-to-back weekly losses, while the Dow had its worst week of the year. Some observers felt stock prices were simply due for a correction after zooming UP 30% since October. But others pointed to genuine economic concerns after China reported its economic growth slowing more than anticipated, dropping from 8.9% in Q4 to 8.1% for Q1. Of course, that’s still over 2.5 times our growth rate! Spain’s rising borrowing costs also worried Wall Street.

 

Over here, corporate earnings season got off to a great start with Alcoa, Google, JPMorgan Chase and Wells Fargo all coming in better than expected. The February Trade Deficit was lower than expected, as U.S. exports gained, a good thing. BUT weekly unemployment claims shot up to 380,000, Michigan Consumer Sentiment dropped for April and the CPI inflation reading showed consumer prices shot UP 0.3% in March after being UP 0.4% in February.

 

For the week, the Dow ended down 1.6%, at 12850; the S&P 500 closed down 2.0%, to 1370; and the Nasdaq sank 2.2%, to 3011. 

 

Good corporate earnings and increasing inflation would have hurt bond prices, but worries over European sovereign debt and China’s economic growth kept investors committed to the safe haven of bonds. The FNMA 3.5% bond we watch finished the week off just .01, at $103.15. National average mortgage rates slipped again last week, as economic concerns kept investors in mortgage bonds, holding prices up and rates down.

 

DID YOU KNOW?… Crude Inventories is the DOE’s estimate of the weekly change in barrels of crude oil held by commercial facilities. Growing inventories may lower oil prices, diminishing inventories can raise them.

>> This Week’s Forecast

BUILDERS AND EXISTING HOME SALES HANGING IN THERE… A lot of this week’s economic indicators are expected to slip but stay in positive territory, as the economy continues to grow so slowly it’s barely perceptible. But our key points of interest — Tuesday’s Housing Starts and Thursday’s Existing Home Sales — are actually forecast UP, though just by a tick.

 

Keep an eye on today’s Retail Sales numbers, as they indicate consumers’ willingness to spend at the store on everything up through autos, which are included in the overall number. Cars, of course, are the second biggest consumer purchase after homes.

>> 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 16 – Apr 20

 

 Date Time (ET) Release For Consensus Prior Impact
M

Apr 16

08:30 Retail Sales Mar 0.3% 1.1% HIGH
M

Apr 16

08:30 Retail Sales ex-auto Mar 0.6% 0.9% HIGH
M

Apr 16

08:30 Empire State Manufacturing Apr 17.5 20.2 Moderate
M

Apr 16

10:00 Business Inventories Feb 0.5% 0.7% Moderate
Tu

Apr 17

08:30 Housing Starts Mar 700K 698K Moderate
Tu

Apr 17

08:30 Building Permits Mar 710K 717K Moderate
Tu

Apr 17

09:15 Industrial Production Mar 0.2% 0.0% Moderate
Tu

Apr 17

09:15 Capacity Utilization Mar 78.5% 78.4% Moderate
W

Apr 18

10:30 Crude Inventories 04/14 NA 2.791M Moderate
Th

Apr 19

08:30 Initial Unemployment Claims 04/07 375K 380K Moderate
Th

Apr 19

08:30 Continuing Unemployment Claims 03/31 3.275M 3.251M Moderate
Th

Apr 19

10:00 Existing Home Sales Mar 4.62M 4.59M Moderate
Th

Apr 19

10:00 Philadelphia Fed Mfg Apr 10.3 12.5 Moderate
Th

Apr 19

10:00 Leading Economic Indicators (LEI) Mar 0.2% 0.7% Moderate

 

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months… Last week, Fed Vice Chairman Janet Yellen suggested the central bank could keep the Funds Rate super low through 2015 if necessary. 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
Apr 25 0%–0.25%
Jun 20 0%–0.25%
Jul 31 0%–0.25%

 

Probability of change from current policy:

 

After FOMC meeting on: Consensus  
Apr 25      <1%  
Jun 20      <1%  
Jul 31      <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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