Texas Mortgage Market Update – For the week of May 14, 2012

For the week of May 14, 2012 – Vol. 10, Issue 20

 

>> Texas Mortgage Market Update 

QUOTE OF THE WEEK…“I’ve been lucky. Opportunities don’t often come along. So, when they do, you have to grab them.” –Audrey Hepburn

 

INFO THAT HITS US WHERE WE LIVE… There are more and more opportunities to grab in the housing market. After almost six years of price declines, we’re finally seeing signs of stability, as home prices rose in the first quarter in more than half the U.S. metro areas tracked by the National Association of Realtors (NAR). The median price for existing homes sold was higher than a year ago in 51% of the areas — 74 of 146 metros.

 

That’s a nice turnaround from the fourth quarter of last year when median prices increased in just 29 of 149 metros. The small supply of lower-priced homes in many places should provide a price boost, according to the NAR’s chief economist, who added, “this is good news for many sellers who wish to list now, or for those waiting for prices to improve.” Home sales were UP 4.7% over the prior quarter and UP 5.3% from the first quarter a year ago.

 

BUSINESS TIP OF THE WEEK… Satisfied customers are your strongest source of leads. When clients have an experience worth talking about, the value of the referrals can be enormous.

>> Review of Last Week

HONEY FOR THE BEARS… The only investors who got a sweet treat last week were the bears who expect to see stocks go down. European worries and a big loss at a big bank sent the Dow on its biggest weekly dive in five months. JPMorgan revealed a pretax trading loss of $2 billion, partially offset by $1 billion in gains. The loss comes at a bad time, when banks are fighting increased regulations, which they and many economists say are unnecessary. Across the pond, a new French Socialist President and Greece’s failure to form a coalition government put austerity plans in doubt.

 

Weekly initial jobless claims remain elevated but not growing, staying just below 370,000. On the upside, there was a surprise gain in the University of Michigan Consumer Sentiment Survey. This was joined by an unexpected 0.2% dip in overall wholesale prices (PPI), with Core PPI, excluding food and energy, up just 0.2%, as expected.

 

For the week, the Dow ended down 1.7%, at 12821; the S&P 500 closed down 1.1%, to 1353; and the Nasdaq went down 0.8%, to 2934. 

 

Global economic worries, including a slowing of China’s economic growth, inspired this week’s flight to safety into bonds. The FNMA 3.5% bond we watch finished the week unchanged, at $104.01. In Freddie Mac’s weekly survey, national average mortgage rates hit record lows for certain types of mortgages for the second week in a row. This was due to the strength in mortgage bond prices due to the continued economic uncertainty.

 

DID YOU KNOW?… Investors see Building Permits as an indicator of consumer confidence. They watch monthly and yearly trends for signs of weakness that might suggest a contraction in consumer spending.

>> This Week’s Forecast

CONSUMER PRICES AND SPENDING, HOME BUILDING AND A PEEK INTO THE FED…  Tuesday we see how strongly consumers are spending, with April Retail Sales expected up, but not by as much as last month. Prices should hold, as the overall Consumer Price Index (CPI) is forecast flat, with “core” prices (excluding food and energy) up just 0.2%.

 

We’ll also look into home building, with April Housing Starts predicted up a little, but Building Permits (see above) down a bit. Wednesday’s FOMC Minutes will give us a closer look into what happened at the last Fed meeting.

>> 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 May 14 – May 18

 

 Date Time (ET) Release For Consensus Prior Impact
Tu

May 15

08:30 Retail Sales Apr 0.2% 0.8% HIGH
Tu

May 15

08:30 Retail Sales ex-auto Apr 0.2% 0.8% HIGH
Tu

May 15

08:30 Consumer Price Index (CPI) Apr 0.0% 0.3% HIGH
Tu

May 15

08:30 Core CPI Apr 0.2% 0.2% HIGH
Tu

May 15

08:30 Empire State Mfg May 8.4 6.6 Moderate
Tu

May 15

10:00 Business Inventories Mar 0.3% 0.6% Moderate
W

May 16

08:30 Housing Starts Apr 680K 654K Moderate
W

May 16

08:30 Building Permits Apr 730K 747K Moderate
W

May 16

09:15 Industrial Production Apr 0.5% 0.0% Moderate
W

May 16

09:15 Capacity Utilization Apr 79.0% 78.6% Moderate
W

May 16

10:30 Crude Inventories 05/12 NA 3.652M Moderate
W

May 16

14:00 FOMC Minutes 04/25 NA NA HIGH
Th

May 17

08:30 Initial Unemployment Claims 05/12 365K 367K Moderate
Th

May 17

08:30 Continuing Unemployment Claims 05/05 3.250M 3.229M Moderate
Th

May 17

10:00 Philadelphia Fed Mfg May 8.8 8.5 HIGH
Th

May 17

10:00 Leading Economic Indicators (LEI) Apr 0.2% 0.3% Moderate

 

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months… The Fed has stated its goal is to keep rates super low well into next year. 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
Jun 20 0%–0.25%
Jul 31 0%–0.25%
Sep 12 0%–0.25%

 

Probability of change from current policy:

 

After FOMC meeting on: Consensus  
Jun 20      <1%  
Jul 31      <1%  
Sep 12      <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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