FHA Changes

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Geralann Tabet
Production Manager
619 S. Bluff St. Tower 1, Ste 2012
St. George, UT 84770
Direct: 435.215.7342
Fax: 877.371.4777
Cell: 435.619.2452
Important FHA Changes
FHA has made changes to how Collections, Charge Offs, Judgments and Disputed Accounts are handled. These changes are effective as of October 15th, 2013. Please see below a summary of the FHA Mortgagee letters 2013-24 and 2013-25 and if you have any questions please contact us. Thank you.EFFECTIVE DATE
• These new rules are applicable for FHA case numbers issued on and after October 15, 2013COLLECTIONS AND/OR CHARGE OFF ACCOUNTS
• Medical collections and/or charge offs are excluded from this guidance.
• A letter of explanation from the borrower(s) is:
– Not required for loans receiving an approved/eligible from FHA Total Scorecard (DU).
– Is required for all manually underwritten loans. In addition to the letter of explanation, the borrower(s) must provide supporting documentation that provides the DE underwriter with evidence that the collection account was not the result of the borrower’s disregard for financial obligation and/or inability to manage debt.
• Payment plan
– Must be considered if the aggregate balance of all outstanding collections
is equal to or greater than $2000.
– Considered for both manual underwrites and loans receiving a FHA Total Scorecard (DU) A/E decision.
o Medical collections are EXCLUDED from this aggregate.
o Unless excluded by State law, the collection accounts of a non-purchasing spouse in a community property State are INCLUDED in this aggregate.
– One of the following actions MUST be taken if the aggregate from all borrowers is $2000 or higher. (Note: If borrower A total is $1500 and borrower B total is $600 the sum is over $2000 and therefore the guidance applies.)
o   Payment in full at or prior to closing (with the source of funds properly verified)
o   If a payment plan has been made with creditor, include the agreed upon amount in the DTI.
o   If a payment plan has not been made, 5% of the balance must be included in DTI.
JUDGMENTS
• Applies to all loans, whether approved by Total Scorecard (DU) or manually underwritten.
• All judgments (including medical) must be paid in full at or prior to closing.
– An exception may be given if the borrower has entered into an agreement with the creditor.   Full documentation of the payment agreement required AND a minimum of 3 months of scheduled payments have been made.   Borrowers may NOT prepay the scheduled payments in order to satisfy the 3 month requirement.
• Payments must be included in the DTI.
• Unless exempt by State law, the judgments of a non-purchasing spouse, in a community property State, included in this guidance.DISPUTED ACCOUNTS – DEROGATORY INFORMATION ON THE REPORT
• This category is used to determine if a manual downgrade to a loan is required, if the loan is approved by Total Scorecard (DU) and there are derogatory disputed items on the borrower’s credit report.
• Derogatory disputed information is defined as:
– Disputed collection accounts – OR
– Disputed charge off accounts – OR
– Disputed accounts with late payments in the last 24 months
• Excluded from the calculation are:
– Disputed medical accounts.
– Accounts that are the result of identity theft;   credit card theft and/or unauthorized use.   However, there must be appropriate documentation, such as a police report, to substantiate the theft and/or unauthorized use claim.   If proper documentation cannot be obtained, then the accounts are included in the calculation.
• Cumulative outstanding balances from all borrowers are $1,000 or higher the file must be downgraded to a “Refer”.   (Note:   If borrower A total is $500 and borrower B total is $600 the sum is over $1000 and therefore the guidance applies.)
– The DE underwriter will then consider this derogatory disputed information in the credit analysis as a manual underwrite.
– If the disputed information is isolated and the overall credit profile of the borrower is acceptable, the DE underwriter may leave the file with an open dispute.
– If the disputed information is not isolated and/or the overall credit profile of the borrower is not acceptable, the DE underwrite may require that the dispute be satisfactorily resolved before the loan can be closed.
• Cumulative outstanding balances from all borrowers are $999 or less, a downgrade is NOT required.DISPUTED ACCOUNTS – NON DEROGATORY INFORMATION ON THE REPORT
• Non-Derogatory disputed information is defined as:
– Disputed accounts with zero balance
– Disputed accounts that are current and paid as agreed
– Disputed accounts with late payments aged 24 months or longer
• Non-derogatory disputed accounts do NOT require a manual downgrade.
• The DE underwriter IS required to consider the disputed accounts and the potential impact to the borrower’s ability to repay the loan, including the impact to the DTI.

PrimeLending Newsletter OCT 14

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Geralann Tabet
Production Manager
619 S. Bluff St. Tower 1, Ste 2012
St. George, UT 84770
Direct: 435.215.7342
Fax: 877.371.4777
Cell: 435.619.2452

For the week of October 14th, 2013 – Vol. 11, Issue 41

 

>> Market Update

QUOTE OF THE WEEK… “The doors of wisdom are never shut.” —Benjamin Franklin

INFO THAT HITS US WHERE WE LIVE… The federal government may be shut down, but let’s hope the doors of wisdom are still open in Washington, so we can get back to business as usual. Fortunately, the good old American consumer has not lost faith in the housing market. Fannie Mae’s September 2013 National Housing Survey reported that the share of Americans who say now is a good time to buy a home went up by 1 percentage point, to 72%. The share who say now is a good time to sell went up by 2 percentage points, to 38%. In addition, it was reported that the majority of the mortgage market does not expect the government shutdown to impact the industry short term.

The biggest news of the week relating to mortgage rates was the President’s nomination of Fed vice chair Janet Yellen to the Fed chair post now held by Ben Bernanke. Yellen has supported the central bank’s mortgage backed securities (MBS) buying program that has kept rates low. One financial analyst noted, “She is a big supporter of the MBS buying spree, so mortgage rates will go down, not up, with this particular appointment.” Observers also believe she will not start tapering those bond purchases until unemployment drops to 6.5%, not expected any time soon. Her nomination should be approved by the Senate.

BUSINESS TIP OF THE WEEK
… Focus your sales process on helping prospects. Look at selling as simply doing everything you can to improve the customer’s current condition. 

>> Review of Last Week

THEY’RE GONNA DO A DEAL!… The politicians in Washington didn’t actually make a deal to end the budget stalemate, but there were indications they may be getting closer to a resolution. Investors got their hopes up after House Republicans proposed extending the debt limit by six weeks to make time for a deeper discussion of spending. This sparked a big enough jump in stocks on Thursday and Friday that the Dow and the S&P 500 registered their first weekly gains in three. Refusing to join the party, the tech-heavy Nasdaq dropped a tad after five straight weeks of gains. 

Nevertheless, no agreement was reached and the government remained partially shut down. What economic data we got wasn’t great. Weekly Initial Unemployment Claims soared to 374,000, up 66,000, the most since last November. FOMC Minutes from the Fed’s last meeting confirmed that the decision to delay tapering their bond purchase program was motivated by concerns it would hurt the housing recovery and the still weak jobs situation. Finally, was anyone surprised to see preliminary Michigan Consumer Sentiment drop to its lowest reading in nine months?

The week ended with the Dow up 1.1%, to 15237; the S&P 500 up 0.8%, to 1703; but the Nasdaq was down 0.4%, to 3792.

As investors became more hopeful about a Washington deal, money moved from the safe haven of bonds into riskier assets. But bond price drops were modest. The FNMA 3.5% bond we watch ended the week down .22, at $101.03. National average mortgage rates barely budged in Freddie Mac’s Primary Mortgage Market Survey for the week ending October 10. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.

DID YOU KNOW?
…  A research firm reported that homeowners saw their equity increase by $571 billion during Q2 of this year and by $2.2 trillion over the past year. 

>> This Week’s Forecast 

INFLATION HOLDS, MANUFACTURING AND HOME BUILDING GAIN, DEBT LIMIT DEADLINE… The government shutdown could delay some economic data, as noted below. Economists forecast inflation in check for September, as measured by the CPI and Core CPI (excludes volatile food and energy prices). Manufacturing should grow slower in October in the regions reported by the New York Empire and Philadelphia Fed Indexes, while Housing Starts and Building Permits are both predicted up in September. This Thursday is when the Treasury says it will run out of borrowing authority if Congress doesn’t raise the debt limit.

Happy Columbus Day! The stock market is open but the bond market is closed. 

>> 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 Oct 14 – Oct 18

 Date Time (ET) Release For Consensus Prior Impact
Tu
Oct 15
08:30 NY Empire Manufacturing Index Oct 4.5 6.3 Moderate
W
Oct 16
08:30 Consumer Price Index (CPI) (delayed) Sep 0.1% 0.1% HIGH
W
Oct 16
08:30 Core CPI (delayed) Sep 0.1% 0.1% HIGH
W
Oct 16
14:00 Fed’s Beige Book Oct NA NA Moderate
Th
Oct 17
08:30 Initial Unemployment Claims 10/12 330K 374K Moderate
Th
Oct 17
08:30 Continuing Unemployment Claims 10/5 2.900M 2.905M Moderate
Th
Oct 17
08:30 Housing Starts (likely delayed) Sep 915K 891K Moderate
Th
Oct 17
08:30 Building Permits (likely delayed) Sep 932K 918K Moderate
Th
Oct 17
09:15 Industrial Production (delayed) Sep 0.3% 0.4% Moderate
Th
Oct 17
09:15 Capacity Utilization (delayed) Sep 78.0% 77.8% Moderate
Th
Oct 17
10:00 Philadelphia Fed Index Oct 7.0 22.3 HIGH
Th
Oct 17
11:00 Crude Inventories 10/12 NA 6.807M Moderate
F
Oct 18
10:00 Leading Economic Indicators (LEI) (likely delayed) Sep 0.6% 0.7% Moderate

 

>> Federal Reserve Watch    

Forecasting Federal Reserve policy changes in coming months… The nominee for Fed chair is expected to keep the Funds Rate at its super low level through most of 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 
Oct 30 0%–0.25%
Dec 18 0%–0.25%
Jan 29 0%–0.25%

Probability of change from current policy:

After FOMC meeting on: Consensus 
Oct 30      <1%
Dec 18      <1%
Jan 29      <1%

Primelending’s Newsletter for Sept 30th

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Geralann Tabet
Production Manager
619 S. Bluff St. Tower 1, Ste 2012
St. George, UT 84770
Direct: 435.215.7342
Fax: 877.371.4777
Cell: 435.619.2452

For the week of September 30th, 2013 – Vol. 11, Issue 39

 

>> Market Update

QUOTE OF THE WEEK… “What is harder than rock, or softer than water? Yet soft water hollows out hard rock. Persevere.” —Ovid, Roman poet

INFO THAT HITS US WHERE WE LIVE… The Latin bard offers good advice in the wake of last Thursday’s Pending Home Sales, down 1.6% for August. Observers said rising interest rates were partially to blame for the dip in this measure of contracts signed but not yet closed on existing homes. But national average mortgage rates have dropped the last two weeks with the Fed’s announcement it would continue buying mortgage bonds, which should boost bond prices and keep rates low. Also helping us persevere is the fact Pending Home Sales are still up 5.8% for the year.

Further encouragement came from single-family New Home Sales, up 7.9% in August and 12.6% year-over-year. They’re now at a 421,000 annual rate, not where they need to be, but rebounding strongly. There were also signs of continued success for home prices. The S&P/Case-Shiller 20-city home price index was up 0.62% in July, its 18th consecutive monthly gain, with all 20 metros ahead. Its 12.39% annual gain was its biggest since early 2006. The FHFA price index of homes financed with conforming loans was up 1% in July, also gaining 18 months in a row, and up 8.8% annually.

BUSINESS TIP OF THE WEEK
… Understand your customers. When you know their wants and needs top to bottom, you can focus on giving them exactly what they want in a way no one else can. 

>> Review of Last Week

WATCHING THE BUDGET…  All week, the budget battle in Washington loomed large over Wall Street. The lack of progress, with the deadline for an agreement just days away, kept investors cautious, sending the Dow and the S&P 500 indexes down for the first time in four weeks, although the tech-heavy Nasdaq showed a miniscule gain. The Senate did pass a bill to avoid government shutdown, but as of Friday, it still needed House approval. The U.S. will also hit its borrowing limit on October 17 unless the debt ceiling is raised. With all this going on, economic data held little sway.

That data, as usual, was mixed. Durable Goods Orders were up 0.1% for August, following their drop in July. New Home Sales were up in August but Pending Home Sales were off. The Commerce Department left Q2 GDP, Third Estimate, unchanged, at an underwhelming 2.5% annual growth rate. The Fed’s favorite inflation measure, the Core PCE Price index, was up 0.2% in August and well within the Fed’s target range, up just 1.2% for the year. But Michigan Consumer Sentiment for September fell to its lowest final reading in five months.

The week ended with the Dow down 1.2%, to 15258; the S&P 500 down 1.1%, to 1692; but the Nasdaq was up 0.2%, to 3782.

The ongoing Washington budget wrangling drove many investors to the safe haven of bonds and prices continued to rise. The FNMA 3.5% bond we watch ended the week up 1.03, to $101.24. National average mortgage rates fell again in Freddie Mac’s Primary Mortgage Market Survey for the week ending September 26. Their chief economist commented, “These low rates should somewhat offset the house price gains… and keep housing affordability elevated.” Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.

DID YOU KNOW?
…  A recent survey by a consumer financial services company reported that the majority of Americans, 55%, are confident that home prices will increase over the next 12 months. 

>> This Week’s Forecast 

MANUFACTURING, JOBS GROPE FORWARD… The continuing story of an economy that’s growing but oh so slowly should continue to be told this week. We’ll see two key reads on manufacturing in September, the national ISM Index and the Chicago PMI for the Midwest. Both are forecast just over 50, indicating expansion. The ISM Services index is also expected to come in with a growth number, although slightly below August’s.

The first Friday of the month will feature, as always, the prior month’s Employment Report. September Nonfarm Payrolls are predicted to be up a little, although well under 200,000 per month. This should not budge the Unemployment Rate, still above the Fed’s 6.5% target. 

>> 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 30 – Oct 4

 Date Time (ET) Release For Consensus Prior Impact
M
Sep 30
09:45 Chicago PMI Sep 53.7 53.0 HIGH
Tu
Oct 1
10:00 ISM Index Sep 55.1 55.7 HIGH
W
Oct 2
10:30 Crude Inventories 9/28 NA 2.635M Moderate
Th
Oct 3
08:30 Initial Unemployment Claims 9/28 315K 305K Moderate
Th
Oct 3
08:30 Continuing Unemployment Claims 9/21 2.825M 2.823M Moderate
Th
Oct 3
10:00 ISM Services Sep 57.4 58.6 Moderate
F
Oct 4
08:30 Average Workweek Sep 34.5 34.5 HIGH
F
Oct 4
08:30 Hourly Earnings Sep 0.2% 0.2% HIGH
F
Oct 4
08:30 Nonfarm Payrolls Sep 183K 169K HIGH
F
Oct 4
08:30 Unemployment Rate Sep 7.3% 7.5% HIGH

 

>> Federal Reserve Watch    

Forecasting Federal Reserve policy changes in coming months… No one expects a hike in the Fed Funds Rate until well after it ceases its bond buying. As the Fed hasn’t even begun to taper that program, economists now expect a super low Funds Rate through much of 2014. 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 30 0%–0.25%
Dec 18 0%–0.25%
Jan 29 0%–0.25%

Probability of change from current policy:

After FOMC meeting on: Consensus 
Oct 30      <1%
Dec 18      <1%
Jan 29      <1%

PrimeLending’s Weekly Newsletter

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Geralann Tabet
Production Manager
619 S. Bluff St. Tower 1, Ste 2012
St. George, UT 84770
Direct: 435.215.7342
Fax: 877.371.4777
Cell: 435.619.2452

For the week of September 23rd, 2013 – Vol. 11, Issue 38

>> Market Update

QUOTE OF THE WEEK… “Society is always taken by surprise at any new example of common sense.” —Ralph Waldo Emerson, American essayist, lecturer and poet

INFO THAT HITS US WHERE WE LIVE… The Fed took the markets by surprise last week when it announced it would NOT begin tapering its Treasury and mortgage bond buying. But this was just common sense. Since May, the Fed’s been hinting it could start tapering bond purchases in September, which sent bond prices south and mortgage rates north. People then worried this might hurt housing, a bright spot in our slow overall recovery. So it makes perfect sense for the Fed to keep buying billions a month worth of bonds to, in their words, “maintain downward pressure on longer-term interest rates.”

This is all great for the real estate market, although its recovery hasn’t faltered just yet. Existing Home Sales in August hit their highest level in more than six years: a 5.48 million annual rate, up 13.2% from a year ago. Builders are on the bandwagon too. Single-family Housing Starts climbed 7% in August and are up 16.9% from a year ago. Single-family Building Permits reached a five-year high, and the home builders confidence index is at its best level in nearly 8 years. So if, thanks to the Fed, mortgage rates edge back down, things should really get interesting.

BUSINESS TIP OF THE WEEK
… To turn visitors into customers, optimize your website. Ask some current clients to test the site and tell you if it flows well. Then make the necessary adjustments.

>> Review of Last Week

FED, UP… All week, investors focused on Fed news and stocks finished up. Monday, former Treasury Secretary Larry Summers withdrew from consideration as the next Fed Chairman. The markets rallied, since it was feared Summers would quickly raise interest rates. Wednesday, we had the Fed’s surprise announcement it would not taper its bond buying program: “the Committee decided to await more evidence that [economic] progress will be sustained before adjusting the pace of its purchases.” Stocks hit an all-time high, then fell back Friday when two Fed members left the door open for tapering at the October meeting.

Meanwhile, the economy slowly moved ahead. Industrial Production and factory Capacity Utilization were up nicely in August. The Empire Manufacturing index dipped slightly for September but continued to show growth in the New York area, while the Philly Fed index of manufacturing in that region rose to its best reading in more than two years. Inflation stayed well under control, the Consumer Price Index up just 0.1% in August. Existing Home Sales, single-family Housing Starts and Building Permits, all up in August, show the real estate market continues to recover.

The week ended with the Dow up 0.5%, to 15451; the S&P 500 up 1.3%, to 1710; and the Nasdaq up 1.4%, to 3775.

Bonds benefited from the Fed’s commitment to keep buying them at the same healthy pace, as well as from Friday’s stock selloff. The FNMA 3.5% bond we watch ended the week up 1.91, to $100.21. Average fixed mortgage rates moved lower in Freddie Mac’s Primary Mortgage Market Survey for the week ending September 19 and mortgage applications were up 11.2% for the week ending September 13, according to the Mortgage Bankers Association. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.

DID YOU KNOW?
… The median price of an existing home sold in August was $212,100, up 14.7% from a year ago, the largest gain since October 2005.

>> This Week’s Forecast

HOME SALES MIXED, Q2 GDP HOLDS, INFLATION QUIET… New Home Sales are forecast up a notch for August, although Pending Home Sales are predicted off for another month. That measure of contracts signed indicates a dip in Existing Home Sales a few months out.

The economy still grows at a modest pace, with the GDP, Third Estimate, expected to remain at 2.5%. Inflation, however, should be benign, as Core PCE Prices are predicted to stay well within the Fed’s target range.

>> 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 23 – Sep 27

Date Time (ET) Release For Consensus Prior Impact
Tu
Sep 24
10:00 Consumer Confidence Sep 80.0 81.5 Moderate
W
Sep 25
08:30 Durable Goods Orders Aug 0.4% –7.4% Moderate
W
Sep 25
10:00 New Home Sales Aug 416K 394K Moderate
W
Sep 25
10:30 Crude Inventories 9/21 NA –4.368M Moderate
Th
Sep 26
08:30 Initial Unemployment Claims 9/21 325K 309K Moderate
Th
Sep 26
08:30 Continuing Unemployment Claims 9/14 2.775M 2.787M Moderate
Th
Sep 26
08:30 GDP – 3rd Estimate Q2 2.5% 2.5% Moderate
Th
Sep 26
08:30 GDP Deflator – 3rd Est. Q2 0.8% 0.8% Moderate
Th
Sep 26
10:00 Pending Home Sales Aug –2.3% –1.3% Moderate
F
Sep 27
08:30 Personal Income Aug 0.4% 0.1% Moderate
F
Sep 27
08:30 Personal Spending Aug 0.2% 0.1% HIGH
F
Sep 27
08:30 PCE Prices – Core Aug 0.1% 0.1% HIGH
F
Sep 27
09:55 U. of Michigan Consumer Sentiment – Final Sep 77.3 76.8 Moderate

 

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… With the Fed continuing its big bond buying program, many economists now expect the Fed Funds Rate to stay at its super low level through most of 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
Oct 30 0%–0.25%
Dec 18 0%–0.25%
Jan 29 0%–0.25%

Probability of change from current policy:

After FOMC meeting on: Consensus
Oct 30 <1%
Dec 18 <1%
Jan 29 <1%

PrimeLending Newsletter Sept 16

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Geralann Tabet
Production Manager
619 S. Bluff St. Tower 1, Ste 2012
St. George, UT 84770
Direct: 435.215.7342
Fax: 877.371.4777
Cell: 435.619.2452

For the week of September 16th, 2013 – Vol. 11, Issue 37

 

>> Market Update

QUOTE OF THE WEEK… “Small opportunities are often the beginning of great enterprises.” —Demosthenes, Greek orator and statesman

INFO THAT HITS US WHERE WE LIVE… Last week’s small opportunity that could turn into a great enterprise in the housing market came from reports by a few real estate data firms. One observed that as home prices continue to increase, demand from move-up buyers does too. After gaining value on rising equity, those buyers can then come up with a substantial down payment on a new home. Another firm pointed out that thanks to the recovery in home prices, 18.5 million homeowners now have at least 20% equity. That’s 40% of all homeowners who are in a prime position to sell.

The same firm added that there are an additional 8.3 million homeowners who should have at least 20% equity in the next 15 months. That’s assuming home prices keep appreciating at the rate they have. They very well may. A monthly real estate trends report from an online listing site said the median price of homes for sale in August was up more than 6% versus a year ago. Inventory, at 1.98 million in August, was up slightly from July, but down 2.5% from a year ago. The CEO commented, “… we are now looking at a housing market that much more closely resembles ‘normal.’” Nice words, those.

BUSINESS TIP OF THE WEEK
… Never provide a service without delivering at least just a little bit more than the client expects. 

>> Review of Last Week

TWO IN A ROW… Stocks last week posted their second consecutive gain, the Dow registering its best performance since January. Investors were starting to feel that this Wednesday’s FOMC meeting would result in a smaller reduction in the Fed bond buying program than had originally been feared. The thinking was that the disappointing August employment report might give the Fed pause about tapering its $85 billion a month in asset purchases to boost the economy. Some feel the central bankers might make a small reduction in Treasury purchases, but maintain mortgage bond buying at the current level to help keep mortgage rates low.

The week’s economic data certainly did not show much evidence of a strengthening economy. August Retail Sales, up 0.2%, fell short of expectations and University of Michigan Consumer Sentiment came in way lower than forecast. It was encouraging at first to see that Initial Weekly Unemployment Claims fell to 292,000, their lowest level since April 2006. Unfortunately this wasn’t a sign of a healthier job market, as a labor department official suggested the impressive drop was because of “faulty” reporting in two states that had experienced some computer glitches.

The week ended with the Dow up 3.0%, to 15376; the S&P 500 up 2.0%, to 1688; and the Nasdaq up 1.7%, to 3722.

Even though stocks were surging, Treasuries posted modest gains in a bond market that benefited from investors’ cautious tone approaching this week’s Fed meeting. The FNMA 3.5% bond we watch ended the week up .09, to $98.30. Average fixed mortgage rates remained unchanged in Freddie Mac’s Primary Mortgage Market Survey for the week ending September 12. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information. 

DID YOU KNOW?
… Fannie Mae reported that consumers polled in August anticipate home prices to go up 3.4% in the next 12 months.  

>> This Week’s Forecast 

INFLATION OK, HOUSING STILL HOLDING, BUT WILL THE FED TAPER?… The Consumer Price Index (CPI) for August is forecast to show inflation still in check. Housing Starts are expected up a little for August, and Building Permits should hold steady. Existing Home Sales are predicted to dip slightly but remain well north of the 5 million unit annual rate for August.

Interesting as all this is, the real focus will be on Wednesday’s FOMC meeting. We’ll finally learn if the Fed will begin tapering its bond buying program. If so, we’ll then want to note if that includes mortgage bonds. Any reduction of those bond purchases will negatively affect mortgage rates. 

>> 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 16 – Sep 20

 Date Time (ET) Release For Consensus Prior Impact
M
Sep 16
08:30 NY Empire Manufacturing Index Sep 9.0 8.6 Moderate
M
Sep 16
09:15 Industrial Production Aug 0.5% 0.0% Moderate
M
Sep 16
09:15 Capacity Utilization Aug 77.8% 77.6% Moderate
Tu
Sep 17
08:30 Consumer Price Index (CPI) Aug 0.2% 0.2% HIGH
Tu
Sep 17
08:30 Core CPI Aug 0.2% 0.2% HIGH
W
Sep 18
08:30 Housing Starts Aug 910K 896K Moderate
W
Sep 18
08:30 Building Permits Aug 943K 943K Moderate
W
Sep 18
10:30 Crude Inventories 9/14 NA –0.219M Moderate
W
Sep 18
14:00 FOMC Rate Decision 9/18 0%–0.25% 0%–0.25% HIGH
Th
Sep 19
08:30 Initial Unemployment Claims 9/14 340K 292K Moderate
Th
Sep 19
08:30 Continuing Unemployment Claims 9/7 2.880M 2.871M Moderate
Th
Sep 19
10:00 Existing Home Sales Aug 5.30M 5.39M Moderate
Th
Sep 19
10:00 Philadelphia Fed Index Sep 9.0 9.3 HIGH
Th
Sep 19
10:00 Leading Economic Indicators (LEI) Index Aug 0.6% 0.6% Moderate

 

>> Federal Reserve Watch    

Forecasting Federal Reserve policy changes in coming months… The FOMC meets Wednesday but no one expects the Fed Funds Rate to move from its super low level. 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%

PrimeLending September 9th newsletter

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Geralann Tabet
Production Manager
619 S. Bluff St. Tower 1, Ste 2012
St. George, UT 84770
Direct: 435.215.7342
Fax: 877.371.4777
Cell: 435.619.2452

For the week of September 9th, 2013 – Vol. 11, Issue 36

 

>> Market Update

QUOTE OF THE WEEK… “If you only care enough for a result, you will almost certainly attain it.” —William James, American philosopher and psychologist

INFO THAT HITS US WHERE WE LIVE… We all do care a lot about keeping the housing market on its steady path of recovery and last week saw more evidence of progress in that direction. An analytics and research firm that serves the industry reported home prices throughout the country were up 12.4% year-over-year in July, the 17th month in a row of annual home price growth. Another analytical company, specializing in property values, posted home prices up 10.2% year-over-year in August. They noted that the last time they saw double-digit annual home price growth was in mid-2006.

Home builders are aware of this. Private residential construction was up 0.6% in July, to its highest level since September 2008. The National Association of Realtors (NAR) forecast that existing home sales are expected to increase 10% for all of 2013, then hit 5.2 million by the end of 2014. And even with the recent rise in mortgage interest rates, the Mortgage Bankers Association reported mortgage applications up 1.3% for the week ending August 30. Economists also noted that rates now are roughly the same as they were two years ago, while housing affordability is at an all-time high.

BUSINESS TIP OF THE WEEK… Overcome your personal blind spots. Push yourself to try things that are alien to you. If you’re feeling comfortable, you’re probably not pushing yourself hard enough.

>> Review of Last Week

STOCKS UP ON BOTH GOOD NEWS AND BAD… The Dow ended its four-week losing streak, as Wall Street responded positively to developments regarding Syria, as well as to good and bad economic news, led by Friday’s disappointing Employment Report. Just 169,000 nonfarm payrolls were added in August, but June and July numbers were revised downward, so the net gain was only 95,000 jobs. The unemployment rate dipped to 7.3%, but this was again from a drop in the labor force participation rate to 63.2%, its lowest level in 35 years. But investors saw this all as good news, since the Fed may hold off on tapering its bond buying program.

There was also good economic news that actually was good. Better than expected reports came in for Initial Weekly Unemployment Claims, which dropped to 323,000. Productivity was up nicely in Q2, and ISM Services showed strong growth in that important sector. New car sales hit an annualized pace of 16.09 million vehicles, a rate not seen since before the financial crisis. Even the Syrian situation proved less worrisome to investors, who keyed on political assurances that any strike would be strategic and not require American forces on the ground.

The week ended with the Dow up 0.8%, to 14923; the S&P 500 up 1.4%, to 1655; and the Nasdaq up 2.0%, to 3660.

Decent economic data pushed bond prices down before the disappointing jobs report helped Treasuries, though not all bonds. The FNMA 3.5% bond we watch ended the week down 1.01, to $98.21. Average fixed mortgage rates edged up in Freddie Mac’s Primary Mortgage Market Survey for the week ending September 5. Their chief economist blamed it on “… signs of a stronger economic recovery. Real GDP was revised upwards to 2.5% growth.” Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.

DID YOU KNOW?
… Governments need to watch budget deficits, which are financed by government bonds. When more bonds are issued, more government revenues go to paying interest on them, instead of for productive purposes.

>> This Week’s Forecast

CONSUMERS SPENDING MORE AND SO ARE THE FEDS… This Friday, the important Retail Sales report for August is forecast to be up, as consumer spending keeps helping the economy. But federal government spending still exceeds monies coming in, so the Federal Budget should show a deficit for August.

We also want to watch Initial Unemployment Claims, predicted to stay at their recently improved level below 350,000. The August Producer Price Index (PPI) is expected to show a very modest inflation rate for wholesale prices.

>> 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 9 – Sep 13

Date Time (ET) Release For Consensus Prior Impact
W
Sep 11
10:30 Crude Inventories 9/7 NA –1.836M Moderate
Th
Sep 12
08:30 Initial Unemployment Claims 9/7 327K 323K Moderate
Th
Sep 12
08:30 Continuing Unemployment Claims 8/31 2.975M 2.951M Moderate
Th
Sep 12
14:00 Federal Budget Aug NA –$190.5B Moderate
F
Sep 13
08:30 Retail Sales Aug 0.4% 0.2% HIGH
F
Sep 13
08:30 Producer Price Index (PPI) Aug 0.2% 0.0% Moderate
F
Sep 13
08:30 Core PPI Aug 0.1% 0.1% Moderate
F
Sep 13
09:55 Univ. of Michigan Consumer Sentiment Sep 82.0 82.1 Moderate
F
Sep 13
10:00 Business Inventories Jul 0.3% 0.0% Moderate

 

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… Economists do not expect the Fed to raise the super low Funds Rate for a while, although observers think the central bankers could start tapering their bond buying program at next week’s meeting. 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%

PrimeLending Aug 26

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Geralann Tabet
Production Manager
619 S. Bluff St. Tower 1, Ste 2012
St. George, UT 84770
Direct: 435.215.7342
Fax: 877.371.4777
Cell: 435.619.2452

For the week of August 26th, 2013 – Vol. 11, Issue 34

>> Market Update

QUOTE OF THE WEEK… “Obstacles are those frightful things you see when you take your eyes off your goal.’” —Henry Ford, American industrialist

INFO THAT HITS US WHERE WE LIVE… The week ended with what some saw as an obstacle to reaching our goal of a full housing recovery. New Home Sales were reported down 13.4% in July to a 394,000 unit annual rate, well below consensus expectations. A disappointing report to be sure, but not the end of the recovery. We may have had one bad month, but we’re still on an upward trend, with new home sales up 6.8% and the median new home price up 8.3% versus a year ago. Also, the recent growth of existing home inventories is drawing buyers away from new homes.

Evidence of that buyer interest in existing homes came Wednesday with the news that Existing Home Sales grew 6.5% in July, at a 5.39 million annual rate. That’s the strongest pace since November 2009, and sales are now up 17.2% from a year ago. The median price dipped slightly, but is still up 13.7% versus a year ago. It was great to see sales up in all regions of the country, with single family homes leading the way, although condo/coop sales also gained. The FHFA index of prices for homes financed by conforming mortgages gained 0.6% in June and is up 7.8% in the past year.

BUSINESS TIP OF THE WEEK… In social media marketing, grabbing people’s attention is the key to success. Say something different, show something special, teach something terrific. Or just look at your competitors’ efforts and do the opposite. 

>> Review of Last Week

SECOND-GUESSING THE FED… It was a mixed week on Wall Street, as the S&P 500 and the Nasdaq snapped their two-week losing streaks, but the Dow dropped for the third week in a row. The focus was on how soon the Fed would begin tapering its bond buying program designed to keep interest rates down. Investors fear the economy is not strong enough yet for higher rates, but Fed meeting minutes released on Wednesday indicated tapering could begin in September. Freddie Mac’s chief economist observed, “Several members expressed confidence the housing recovery would be resilient in the face of higher rates.”

Investors were happier on Friday following comments at the Fed’s conference near Jackson Hole, Wyoming. One FOMC member felt they should proceed with caution, while another said there’s no reason to hurry tapering bond purchases. Friday’s deep drop in New Home Sales for July was looked at by the markets as another data point to support deferring tapering for now. The jobs situation watched closely by the Fed also remains iffy. Weekly Initial Unemployment Claims increased by 13,000, to 336,000, and Continuing Claims went up by 29,000 to just a tick under 3 million.

The week ended with the Dow down 0.5%, to 15011; the S&P 500 up 0.5%, to 1664; and the Nasdaq up 1.5%, to 3658.

Friday’s weak New Home Sales report for July boosted bonds on Friday. The FNMA 3.5% bond we watch ended the week up .09, to $99.10. Freddie Mac’s Primary Mortgage Market Survey showed average fixed mortgage rates edging higher for the week ending August 22. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information. The Mortgage Bankers Association purchase loan index was up 1% for the week ending August 16.

DID YOU KNOW?
… Residential construction employment is up 4.5% year-over-year, compared to overall employment growth of just 1.7%. 

>> This Week’s Forecast 

PENDING HOME SALES, GDP, MIDWEST MANUFACTURING UP, INFLATION OK… After their dip in June, Pending Home Sales are expected to recover in July. This measure of contracts signed on existing homes indicates the housing recovery should continue on course. Thursday’s GDP – Second Estimate is forecast to show a slightly higher growth rate for the economy in Q2, nudging just north of 2%.

The week ends with Core PCE Prices predicted to remain within the Fed’s inflation guidelines. The Chicago PMI should show manufacturing in the Midwest continuing to expand at a slightly higher pace. 

>> 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 26 – Aug 30

Date Time (ET) Release For Consensus Prior Impact
M
Aug 26
08:30 Durable Goods Orders Jul –5.0% 3.9% Moderate
Tu
Aug 27
10:00 Consumer Confidence Aug 77.0 80.3 Moderate
W
Aug 28
10:00 Pending Home Sales Jul 0.2% –0.4% Moderate
W
Aug 28
10:30 Crude Inventories 8/24 NA –1.428M Moderate
Th
Aug 29
08:30 Initial Unemployment Claims 8/24 330K 336K Moderate
Th
Aug 29
08:30 Continuing Unemployment Claims 8/17 2.969M 2.999M Moderate
Th
Aug 29
08:30 GDP – 2nd estimate Q2 2.1% 1.7% Moderate
Th
Aug 29
08:30 GDP Deflator – 2nd estimate Q2 0.7% 0.7% Moderate
F
Aug 30
08:30 Personal Income Jul 0.1% 0.3% Moderate
F
Aug 30
08:30 Personal Spending Jul 0.3% 0.5% HIGH
F
Aug 30
08:30 PCE Prices – Core Jul 0.2% 0.2% HIGH
F
Aug 30
09:45 Chicago PMI Aug 53.0 52.3 HIGH
F
Aug 30
09:55 U. of Michigan Consumer Sentiment – Final Aug 80.0 80.0 Moderate

>> Federal Reserve Watch 

Forecasting Federal Reserve policy changes in coming months… The Fed may start tapering its bond buying program soon, but no one expects the Funds Rate to move from its super low level until 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 
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%

 

PrimeLending Newsletter

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Geralann Tabet
Production Manager
619 S. Bluff St. Tower 1, Ste 2012
St. George, UT 84770
Direct: 435.215.7342
Fax: 877.371.4777
Cell: 435.619.2452

For the week of August 19th, 2013 – Vol. 11, Issue 33

>> Market Update

QUOTE OF THE WEEK… “The barriers are not erected which can say to aspiring talents and industry, ‘Thus far and no farther.’” –Ludwig van Beethoven, German composer

INFO THAT HITS US WHERE WE LIVE… There seem to be no barriers in sight to the housing market recovery. Friday saw Housing Starts up 5.9% in July, hitting an 896,000 unit annual rate. Those looking for signs of impeded progress were quick to point out that all the gain was due to multi-family starts, which rebounded after their steep drop in June, while single-family starts slipped 2.2% for the month. But the underlying home building trends remain upward. Single-family starts are up 15.4% over a year ago and the total number of homes under construction is up 30% versus a year ago.

Experts say the upward trend in home building should continue for at least a couple of years. They believe population growth and tear downs will require starts to ultimately rise to about 1.5 million units per year, most likely by 2015. This level of building puts the number of homes increasing at the same rate as the population. Building Permits headed up 2.7% in July, with permits for single-unit homes up 17.9% over a year ago. The National Association of Home Builders reported their Builders Confidence Index at its highest level since November 2005.

BUSINESS TIP OF THE WEEK… Grow your email list by offering on your website a free article, podcast, or other short piece that speaks to a question, pain, or concern of your audience. Visitors get the download by entering their names and emails.
>> Review of Last Week

SUMMER FALL… Stocks dropped, as the Dow suffered its worst week of the year. The S&P 500 didn’t do much better and the tech-heavy Nasdaq only dipped less because one major stock posted a strong gain for the week. Negatives included Michigan Consumer Sentiment way off the mark, Housing Starts down for single-family homes, and two corporate giants giving downbeat guidance going forward. But it was also true that many traders were away on vacation, so volumes were low, leaving markets vulnerable to big moves.

There was plenty of good economic data. Retail Sales were up 0.2% in July. With the PPI unchanged, wholesale price inflation remained under control last month, while consumer prices held too, as the CPI was up only 0.2%. Weekly Initial Unemployment Claims dropped by 15,000, to 320,000, and Continuing Claims fell by 54,000, to 2.97 million. The New York Empire and Philadelphia Fed manufacturing indexes both dipped from the prior month, but continued to signal expansion. Even Q2 Productivity beat expectations, posting a 0.9% annual rate.

The week ended with the Dow down 2.2%, to 15081; the S&P 500 down 2.1%, to 1656; and the Nasdaq down 1.6%, to 3603.

There was enough decent economic data, plus Fed worries, to inspire heavy bond selling. The FNMA 3.5% bond we watch ended the week down 1.31, to $99.01. Freddie Mac’s Primary Mortgage Market Survey showed average fixed mortgage rates largely unchanged for the week ending August 15. Their chief economist noted, “Rates have been bouncing around on market speculation that the Fed will taper some of its monetary stimulus.” Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.

DID YOU KNOW?… Economics has been defined as the study of how the forces of supply and demand allocate scarce resources.
>> This Week’s Forecast

LEADING INDICATORS AND EXISTING HOMES UP, NEW HOMES DOWN, AND THE FED SAID WHAT?… Thursday expect to see the Leading Economic Indicators (LEI) index up for July following an upbeat Existing Home Sales report on Wednesday. Unfortunately, the week will end with New Home Sales for July forecast at a slightly lower annual rate.

The FOMC Minutes from the last Fed meeting will be scrutinized as usual to see if the central bank will start tapering its bond buying program in September. This could send mortgage bond prices down and edge mortgage rates up.
>> 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.

PrimeLending August 5th Newsletter

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Geralann Tabet
Production Manager
619 S. Bluff St. Tower 1, Ste 2012
St. George, UT 84770
Direct: 435.215.7342
Fax: 877.371.4777
Cell: 435.619.2452

For the week of August 5th, 2013 – Vol. 11, Issue 30

>> Market Update

QUOTE OF THE WEEK… “Discontent is the first necessity of progress” —Thomas Edison, American inventor

INFO THAT HITS US WHERE WE LIVE… Many people were not very content with last week’s Pending Home Sales report. This measure of contracts signed to buy existing homes fell 0.4% in June. For some observers, that raised concerns about future Existing Home Sales. However, the prior month’s report measured Pending Home Sales up 5.8%, so one could reasonably expect a rebound in existing home closings come July. We’ll see.

There was absolutely no discontent expressed around the Standard & Poor’s/Case-Shiller home price index. This revealed home prices in 20 major U.S. metros were up 1% in May and up a very impressive 12.2% versus a year ago. By this index’s measure, home prices are still down from their peak in 2006. But the peak-to-trough decline is now about a third smaller than it was as recently as March 2012. This is a national average. Home prices in two of Case-Shiller’s 20 cities have actually hit all-time highs, going past peaks set in 2007 and 2006!

BUSINESS TIP OF THE WEEK… Productivity experts suggest following a simple daily routine to stay on track. Take 5 minutes at the start to set the day’s goals. Then check how you’re doing every hour. Spend a few minutes at the end of the day to evaluate your results. 

>> Review of Last Week

JOBS DOWN, STOCKS UP… Friday, the July Employment Report’s nonfarm payrolls number fell short of estimates, but two major stock indexes still logged small gains, to close the week at record highs, the Dow for the 30th time and the S&P 500 for the 25th time this year. The tech-heavy Nasdaq index didn’t do too badly either. July’s 162,000 new nonfarm payrolls were joined by downward revisions to prior months for a net gain of only 136,000 jobs. But the unemployment rate dipped to 7.4%, although about half of the decline was attributed to a reduction in the labor participation rate, resulting in a drop in the labor force of 37,000 people.

This weaker than expected jobs report followed a Fed meeting that called economic growth “modest” now, instead of “moderate.” Those words are synonyms in the real world, but in Fedspeak, they signal a downgrade. The Fed therefore said it wasn’t going to taper bond purchases just yet, which totally pleased investors. There was also good news that actually was good. The advanced estimate for Q2 GDP pegged growth at 1.7%, beating estimates. Manufacturing surprised to the upside, with the ISM up to 55.4, ahead of forecasts. In addition, new weekly jobless claims fell by 17,000 to 326,000.

The week ended with the Dow up 0.6%, to 15658; the S&P 500 up 1.1%, to 1710; and the Nasdaq up 2.1%, to 3690.

A roller coaster week in the bond market ended on an uptick, as the disappointing jobs report inspired a flight to the safety of bonds. The FNMA 3.5% bond we watch ended the week up .02, to $100.30. Freddie Mac’s Primary Mortgage Market Survey for the week ending August 1 reported national average fixed mortgage rates edged up after two weeks of declines. This didn’t reflect the bond market’s reaction to the Fed statement, which came the next day. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.

DID YOU KNOW?
… Fiscal policy refers to decisions by the President and Congress that usually relate to taxation and government spending and have the goals of full employment, price stability, and economic growth. 

>> This Week’s Forecast 

SERVICES SECTOR UP, TRADE DEFICIT DOWN… A very quiet week for economic reports, a welcome respite after last week’s data derby plus Fed meeting melodrama. The ISM Services index is expected to show continued expansion in July. That sector of the economy generates well over 80% of U.S. jobs, so growth there bodes well for the recovery.

The Trade Balance for June unfortunately is forecast still north of $40 billion for June, although this is down from May’s reading. It should be noted that a big part of the country’s imports expenditure is for oil.

>> 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 5 – Aug 9

Date Time (ET) Release For Consensus Prior Impact
M
Aug 5
10:00 ISM Services Jul 53.2 52.2 Moderate
Tu
Aug 6
08:30 Trade Balance Jun –$43.4B –$45.0B Moderate
W
Aug 7
10:30 Crude Inventories 8/3 NA 0.431M Moderate
Th
Aug 8
08:30 Initial Unemployment Claims 8/3 340K 326K Moderate
Th
Aug 8
08:30 Continuing Unemployment Claims 7/27 2.975M 2.951M Moderate

>> Federal Reserve Watch 

Forecasting Federal Reserve policy changes in coming months… With the Fed’s dimmer view of economic growth coming out of last week’s meeting, the Funds Rate is expected to remain super low well into 2014. 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%

 

For the week of July 29th, 2013

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Geralann Tabet
Production Manager
619 S. Bluff St. Tower 1, Ste 2012
St. George, UT 84770
Direct: 435.215.7342
Fax: 877.371.4777
Cell: 435.619.2452

For the week of July 29th, 2013 – Vol. 11, Issue 30

 

>> Market Update

QUOTE OF THE WEEK… “If you don’t understand the details of your business, you are going to fail.” —Jeff Bezos, founder and CEO of Amazon.com


INFO THAT HITS US WHERE WE LIVE… It was certainly important to understand the details of last week’s Existing Home Sales report. The headline numbers showed June Existing Home Sales were down a disappointing 1.2%, to a 5.08 million annual rate. But other details were encouraging. Existing Home Sales are up 15.2% over a year ago. The median price of an existing home rose and is now up 13.5% from a year ago. Sales are near their highest levels since November 2009, when they were spiked by the big home buyer tax credit. Existing home sales remain above the 5 million a year threshold, a very decent place to be.

No need to dig into the details of New Home Sales to see success. New single-family home sales shot up 8.3% in June, to a 497,000 annual rate, their highest level since May 2008. These sales are now up a humongous 38.1% versus a year ago. The median price of a new home also gained for the month and is now up 7.4% from a year ago. For those worried about how the recent uptick in mortgage rates would affect sales, this first look at purchase contracts signed in June shows no impact. The FHFA index of prices for homes financed with conforming mortgages was up 0.7% in May, up 7.3% over a year ago.


BUSINESS TIP OF THE WEEK… Learn all you can about the people you want as clients. Check into their social networks and blogs. Then when you get together, you can offer them something meaningful and create immediate rapport. 

>> Review of Last Week

TWO UP, ONE SIDEWAYS… The Dow and Nasdaq stock indexes both closed the week marginally ahead, while the S&P 500 essentially went sideways, off less than half a point. These tepid performances reflected the wary mood of investors, as corporate earnings reports were mixed, surprising both to the upside and the down. Wall Street may also have been cautiously looking ahead to this week, packed with market-moving items, including Q2 GDP, another Fed meeting, and the July Employment Report. This isn’t to say investors aren’t still hopeful, as the Dow and S&P 500 are up 19% on the year and the Nasdaq is up 20%!

The economic data reported during the week continued to deliver mixed messages. June Durable Goods Orders beat expectations, but when the volatile transportation sector was excluded, the number missed estimates, coming in flat. New Home Sales were up for June, but Existing Home Sales dipped. Continuing unemployment claims slid below the 3 million threshold, but new weekly jobless claims edged up to 343,000. Happily, on Friday, the University of Michigan Consumer Sentiment Index blew past analyst predictions.

The week ended with the Dow up 0.1%, to 15559; the S&P 500 flat, at 1692; and the Nasdaq up 0.7%, to 3613.


The bears were back in control of the bond market, as the light week of economic data was positive enough to nudge prices down. The FNMA 3.5% bond we watch ended the week down .82, to $100.28. Freddie Mac’s Primary Mortgage Market Survey for the week ending July 25 showed national average fixed mortgage rates easing for the second week in a row. 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 off 2% for the week ending July 19, but up 6% over a year ago.

DID YOU KNOW?
… This week’s Employment Report is released by the Commerce Department, one of 15 departments in the executive branch of the federal government. Commerce looks after a wide range of U.S. economic and business activities. 

>> This Week’s Forecast 

PENDING HOME SALES AND GDP SLIDE, THE FED MEETS, JOBS HOLD… What an action packed week if you’re into economic data (like we are). Pending Home Sales should be down a tad for June, and the Advanced GDP reading for Q2 is forecast to show economic growth even slower than it’s been. We’ll see what the Fed says about that, coming out of their FOMC Rate Decision meeting on Wednesday.

The week ends with the July Employment Report, expected to register 188,000 new Nonfarm Payrolls, as job creation holds to a moderate pace. The Unemployment Rate is predicted to inch down to 7.5%. Inflation should be OK, according to Core PCE Prices, and manufacturing should show growth in the ISM Index and Chicago PMI. Enough data for you?

>> 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 July 29 – Aug 2

Date Time (ET) Release For Consensus Prior Impact
M
Jul 29
10:00 Pending Home Sales Jun –1.7% 6.7% Moderate
Tu
Jul 30
10:00 Consumer Confidence Jul 81.6 81.4 Moderate
W
Jul 31
08:30 GDP – Advanced Q2 1.1% 1.8% Moderate
W
Jul 31
08:30 GDP Chain Deflator – Advanced Q2 1.2% 1.2% Moderate
W
Jul 31
08:30 Employment Cost Index Q2 0.4% 0.3% HIGH
W
Jul 31
09:45 Chicago PMI Jul 51.5 51.6 HIGH
W
Jul 31
10:30 Crude Inventories 7/27 NA –2.825M Moderate
W
Jul 31
14:00 FOMC Rate Decision 7/31 0%–0.25% 0%–0.25% HIGH
Th
Aug 1
08:30 Initial Unemployment Claims 7/27 345K 343K Moderate
Th
Aug 1
08:30 Continuing Unemployment Claims 7/20 2.995M 2.997M Moderate
Th
Aug 1
10:00 ISM Index Jul 51.5 50.9 HIGH
F
Aug 2
08:30 Average Workweek Jul 34.5 34.5 HIGH
F
Aug 2
08:30 Hourly Earnings Jul 0.2% 0.4% HIGH
F
Aug 2
08:30 Nonfarm Payrolls Jul 175K 195K HIGH
F
Aug 2
08:30 Unemployment Rate Jul 7.5% 7.6% HIGH
F
Aug 2
08:30 Personal Income Jun 0.5% 0.5% Moderate
F
Aug 2
08:30 Personal Spending Jun 0.4% 0.3% HIGH
F
Aug 2
08:30 PCE Prices – Core Jun 0.2% 0.1% HIGH

>> Federal Reserve Watch 

Forecasting Federal Reserve policy changes in coming months…Even if the Fed’s bond purchases start to taper, Chairman Bernanke has stated they won’t raise the super low Funds Rate until unemployment drops to 6.5%, a level not expected any time soon. 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 
Jul 31 0%–0.25%
Sep 18 0%–0.25%
Oct 30 0%–0.25%

Probability of change from current policy:

After FOMC meeting on: Consensus 
Jul 31 <1%
Sep 18 <1%
Oct 30 <1%