IN THIS ISSUE
Last Week in Review: The housing sector is batting strong, while the overall economy showed signs of a slump. Mortgage Rates hit their highest levels of 2015.
Forecast for the Week: The markets may be closed on Friday, but not before key reports on housing, manufacturing and the labor sector are released.
LAST WEEK IN REVIEW
"You don't have to swing hard to hit a home run. If you got the timing, it'll go." Yogi Berra. May was a good time for the housing sector, as several reports came in strong.
New Home Sales hit their highest level in seven years in May, rising 2.2 percent from April to an annualized rate of 546,000. April's figures were also revised higher to 534,000. Sales of new single-family homes are up nearly 20 percent from May 2014! Existing Home Sales also rose 5.1 percent in May from April.
However, the economy overall isn't batting as well, as the final reading for first quarter Gross Domestic Product (GDP) showed that economic growth contracted by 0.2 percent, though less severe than the -0.7 percent from the second reading. In addition, the negative reading for the quarter was the fifth time in the six-year recovery that the economy couldn't produce at least an anemic reading of 1 percent.
Growth in the first quarter was stunted by a negative trade balance due to the stronger dollar, harsh weather and the West Coast port closing. And with inflation still tame, rest assured the Fed will be watching economic reports closely this summer, as they determine when to raise the benchmark Fed Funds Rate (the rate banks charge each other to lend money overnight).
Overseas, the uncertainty surrounding Greece continues. Mortgage Bonds reversed course and moved lower in recent days, in part because signs have pointed to a possible deal. Traders have been focused on the continued recovery in the economy and inevitability of the Federal Reserve raising short term rates in the next 3 months. Average 30 Year Fixed Rates as published by Freddie Mac were over 4%. This will be a key story to watch in the next week.
Home loan rates are near 2015 highs, but are remaining close to historic lows. If I can answer any questions at all for you or your clients about a home purchase or refinance, please get in touch with me at firstname.lastname@example.org
Forecast for the Week
The fireworks could begin early in this holiday-shortened but jam-packed week.
- In the housing sector, Pending Home Sales will be released on Monday, followed by the S&P/Case-Shiller Home Price Index on Tuesday.
- Look for manufacturing data from the Chicago PMI on Tuesday and the ISM Index on Wednesday.
- Consumer Confidence will also be released on Tuesday.
- The first of two key reports on the labor sector will be released on Wednesday with the ADP National Employment Report.
- Thursday is the big day with the June Jobs Report, which includes Non-farm Payrolls, Hourly Earnings and the Unemployment Rate. Weekly Initial Jobless Claims will also be reported on Thursday, as usual.
All U.S. markets will be closed on Friday in observance of the July 4th holiday.
By: Michael Borodinsky
Vice President/Regional Builder Branch Manager | Caliber Home Loans
Call Michael: 732-382-2654
Email Michael: Michael.Borodinsky@caliberhomeloans.com
Follow Michael on Twitter: @mikeborodinksy