Texas Mortgage Market Update – For the week of August 12, 2013

For the week of August 12, 2013 – Vol. 11, Issue 32

>> Texas Mortgage Market Update

QUOTE OF THE WEEK… “The best way out is always through.” –Robert Frost, American poet

INFO THAT HITS US WHERE WE LIVE… We’re definitely working our way through the housing recovery, with the latest data showing strong year-over-year gains in prices and sales. The National Association of Realtors (NAR) reported the national median existing home price increasing at an annual rate of 12.2% in Q2, from $181,300 to $203,500. That’s the biggest yearly price boost since Q4 of 2005. Sales didn’t do too badly either, up 12.3% annually in Q2 versus a year ago. The 5.06 million annual rate for the quarter was the highest reached since Q2 of 2007.

A leading provider of real estate data and analytics recorded home prices up 1.9% in June, gaining for the 16th month in a row. For the year, they had home prices increasing 11.9%, trending at the fastest upward pace since 1977. Finally, it was reported that Fannie Mae posted a $10.1 billion profit in Q2, almost double the Q2 profit of a year ago. They will now pay a $10.2 billion dividend to the Treasury, which owns $117.1 billion of the company’s senior preferred stock. This is quite a turnaround for Fannie Mae from the dark days of 2008.

BUSINESS TIP OF THE WEEK… The digital world has created some bad communication habits. Shooting emails back and forth can hurt productivity and distract you from doing tasks that really matter. If an email chain goes beyond two replies, pick up the phone.

>> Review of Last Week

QUIET DOWN… Those two words perfectly describe the week’s stock market performance. The Nasdaq was down, while the Dow and the S&P 500 fell from their record highs, with the Dow ending its longest weekly winning streak since August of last year. But these down movements could be explained by the fact that Wall Street was very quiet, with low trading volumes and a paucity of quarterly corporate earnings reports. There was also negative economic data, with wholesale inventories down 0.2% in June after being off 0.6% in May.

But the rest of the economic reports were actually encouraging. The trade deficit dropped by 22.4% in June, to $34.2 billion, the smallest recorded since October 2009. The ISM Services index showed stronger than expected growth in that important job-creating sector of the economy. Weekly initial jobless claims came in at 333,000 versus the 340,000 expected. And jobless claims have now fallen in the last month to their lowest level since 2007.

The week ended with the Dow down 1.5%, to 15426; the S&P 500 down 1.1%, to 1691; and the Nasdaq down 0.8%, to 3660.

Bonds were hurt by the good economic data, but helped by falling stocks. The FNMA 3.5% bond we watch ended the week up just .02, to $100.32. Freddie Mac’s Primary Mortgage Market Survey had national average fixed mortgage rates little changed for the week ending August 8. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information. The Mortgage Bankers Association’s purchase loan index was up 1% for the week ending August 2, and up 8% over a year ago.

DID YOU KNOW?… The median is a type of average found by arranging values in order and then selecting the one in the middle. The median is useful where there are very large extreme values that would skew the data.

>> This Week’s Forecast

CONSUMERS SPEND, PRICES HOLD, FACTORIES HUM, BUILDERS UPBEAT… With economic data, it’s feast or famine. This week offers a smorgasbord of statistics expected to show the recovery continuing its slow but steady pace. July Retail Sales should reveal another month of growth in consumer spending at stores. Maybe that’s because prices are still under control, according to the July Consumer Price Index (CPI) forecast. The prices businesses pay, measured by the Producer Price Index (PPI), are also predicted to be holding.

On the factory front, the Philadelphia Fed and NY Empire Manufacturing indexes and Industrial Production and Capacity Utilization should all register higher numbers. We’ll also take the pulse of home builders, who are expected to be feeling upbeat, if not yet thrilled, about the future. July Housing Starts and Building Permits are forecast modestly up for the month.

>> 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 12 – Aug 16

 Date Time (ET) Release For Consensus Prior Impact
M
Aug 12
14:00 Federal Budget Jul –$96.0B –$69.6B Moderate
Tu
Aug 13
08:30 Retail Sales Jul 0.2% 0.4% HIGH
Tu
Aug 13
10:00 Business Inventories Jun 0.1% 0.1% Moderate
W
Aug 14
08:30 Producer Price Index (PPI) Jul 0.3% 0.8% Moderate
W
Aug 14
08:30 Core PPI Jul 0.2% 0.2% Moderate
W
Aug 14
10:30 Crude Inventories 8/10 NA –1.320M Moderate
Th
Aug 15
08:30 Initial Unemployment Claims 8/10 339K 333K Moderate
Th
Aug 15
08:30 Continuing Unemployment Claims 8/3 3.000M 3.018M Moderate
Th
Aug 15
08:30 Consumer Price Index (CPI) Jul 0.2% 0.5% HIGH
Th
Aug 15
08:30 Core CPI Jul 0.2% 0.2% HIGH
Th
Aug 15
08:30 NY Empire Manufacturing Index Aug 6.0 9.46 Moderate
Th
Aug 15
09:15 Industrial Production Jul 0.4% 0.3% Moderate
Th
Aug 15
09:15 Capacity Utilization Jul 78.0% 77.8% Moderate
Th
Aug 15
10:00 Philadelphia Fed Index Aug 10.0 19.8 HIGH
F
Aug 16
08:30 Housing Starts Jul 895K 836K Moderate
F
Aug 16
08:30 Building Permits Jul 934K 911K Moderate
F
Aug 16
08:30 Productivity – Prelim. Q2 0.0% 0.5% Moderate
F
Aug 16
09:55 Univ. of Michigan Consumer Sentiment Aug 85.1 85.1 Moderate

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… There’s still a lot of yak about the Fed tapering its bond buying program, but no one expects them to touch the Funds Rate for quite some time. 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 18 0%–0.25%
Oct 30 0%–0.25%
Dec 18 0%–0.25%

Probability of change from current policy:

After FOMC meeting on: Consensus
Sep 18      <1%
Oct 30      <1%
Dec 18      <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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