Texas Mortgage Market Update – For the week of September 24, 2012

For the week of September 24, 2012 – Vol. 10, Issue 39

 

>> Texas Mortgage Market Update 

QUOTE OF THE WEEK… “If we did all we were capable of doing, we would literally astonish ourselves.”–Thomas A. Edison, American inventor

INFO THAT HITS US WHERE WE LIVE… People indeed are astonished at how the housing market has started to recover and last week’s data just kept the ball rolling. Builders are busier as housing starts are up 2.3% from July to August. They’re now at a 750,000 annual rate, UP 24.5% over August 2011. Housing starts have been rising on an annual basis for the last 11 months and they’re now UP 57% from their April 2009 bottom. No wonder builder confidence in September was up for the fifth month in a row, hitting its highest level since 2006.

August Existing Home Sales were up 7.8% over July, reaching a seasonally adjusted annual rate of 4.82 million units. These sales are UP 9.3% for the year, while the national median price for all housing types is UP 9.5% versus a year ago, at $187,400. The National Association of Realtors (NAR) is forecasting overall home sales should be up 8% to 10% for 2012. The inventory of existing homes for sale is currently down to a 6.1-month supply, a level thought to favor neither buyers nor sellers.

BUSINESS TIP OF THE WEEK… To get more done, focus on the critical tasks that directly generate revenue, while eliminating, delegating, outsourcing or automating overhead activities like administration, travel planning, meetings and the like.

>> Review of Last Week

JUST A LITTLE SLIP… Wall Street saw a very slight dip in prices, its first weekly drop for September. But this comes after two huge upside weeks, so many analysts felt it was pretty good to get through the five trading days with stock prices virtually flat. Investors were happy to see the Fed pump more money into the system with the latest quantitative easing program. But there is still, as one observer put it, “more bad news than good in the economic data stream.”

The week in fact got off to a bad start as the Empire State index of manufacturing activity in the New York region dropped to its worst level since April 2009. Most glaring among the disappointing items was higher than expected weekly initial jobless claims, hitting 382,000 for the second week in a row. Thank goodness for the good housing news, covered above. On a cautionary note, 103 S&P 500 companies have provided a Q3 earnings outlook and 80% are below Wall Street consensus estimates. That’s the most negative corporate earnings outlook since Q1 of 2006.

For the week, the Dow ended down 0.1%, to 13579; the S&P 500 was down 0.4%, to 1460; and the Nasdaq was down 0.1%, to 3180. 

As expected, the bond market is getting a boost from the Fed’s s latest quantitative easing program (“QE3”), in which they’ll buy tens of billions in mortgage bonds each month with no time limit. That should keep mortgage bond prices up and mortgage rates down for a while longer. The FNMA 3.5% bond we watch ended the week UP .96, at $107.03. Last week, national average mortgage rates were at or near record lows. Demand for purchase loans was up a seasonally adjusted 8% over the prior week and up 7% versus a year ago.

DID YOU KNOW?… Quantitative easing is a monetary policy that increases the money supply by buying securities, such as mortgage bonds. This floods financial institutions with capital in an effort to promote increased lending and liquidity.

>> This Week’s Forecast

NEW HOME SALES, PENDING HOME SALES, GDP, INFLATION… This week features a good range of economic data. Wednesday should show August New Home Sales continuing their slow but steady rise. August Pending Home Sales are also forecast up but at a slower rate, still indicating a gain in existing home sales a couple of months out.

Thursday’s third estimate of Q2 GDP is predicted to be as disappointing as the first two, with anemic annual growth of 1.7%. But Friday’s Core PCE Prices should show inflation is still well within the Fed’s guidelines.

>> 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 Sep 24 – Sep 28

 Date Time (ET) Release For Consensus Prior Impact
Tu
Sep 25
10:00 Consumer Confidence Sep 63.0 60.6 Moderate
W
Sep 26
08:30 New Home Sales Aug 380K 372K Moderate
W
Sep 26
10:30 Crude Inventories 09/22 NA 8.534M Moderate
Th
Sep 27
08:30 Initial Unemployment Claims 09/22 380K 382K Moderate
Th
Sep 27
08:30 Continuing Unemployment Claims 09/15 3.270M 3.272M Moderate
Th
Sep 27
08:30 Durable Goods Orders Aug –5.1% 4.1% Moderate
Th
Sep 27
08:30 GDP-Third Estimate Q2 1.7% 1.7% Moderate
Th
Sep 27
08:30 GDP Deflator-Third Estimate Q2 1.6% 1.6% Moderate
Th
Sep 27
10:00 Pending Home Sales Aug 1.0% 2.4% Moderate
F
Sep 28
08:30 Personal Income Aug 0.2% 0.3% Moderate
F
Sep 28
08:30 Personal Spending Aug 0.5% 0.4% HIGH
F
Sep 28
08:30 PCE Prices-Core Aug 0.1% 0.0% HIGH
F
Sep 28
09:45 Chicago PMI Sep 52.8 53.0 HIGH
F
Sep 28
09:55 Univ. of Michigan Consumer Sentiment-Final Sep 79.0 79.2 Moderate

 

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months… The Fed now says it’s committed to keeping the Funds Rate at exceptionally low levels “at least through mid-2015.” 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
Oct 24 0%–0.25%
Dec 12 0%–0.25%
Jan 30 0%–0.25%

Probability of change from current policy:

After FOMC meeting on: Consensus
Oct 24      <1%
Dec 12      <1%
Jan 30      <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)

Comments are closed.