Thoughts to Ponder and The Market Update September 26

Thoughts to Ponder . . .

• Living on earth may be tough, but it includes a free ride around the sun every year.
• If only common sense were more common.
• I put my phone in airplane mode, but it’s not flying!
• Sharks are not so bad… If a stranger came into my house wearing only a bathing suit, I’d probably get angry too.
• Don’t give up on your dreams so soon, sleep longer.

 

And now on to The Market Update . . .

 

The likelihood of the Fed raising interest rates is creeping closer.

• The spread between board members for versus against an increase tightened.
• More members moving toward raising rates, but there continues to remain holdouts that want to wait a little longer.
• The tightening of the votes keeps the possibility of a rate hike alive before the end of the year.

 

The assessment of the economy by the Fed has changed minimally since the July meeting.

• The pace of the economy continues to be described as moderate with less emphasis of strength being placed on the labor markets.
• The pro’s and con’s to this month’s report is that household spending is described as strong and business investment is being seen as soft.
• Household spending is once again described as strong and business investment is once again noted as soft.
• Inflation remains the same and the concern over global affairs impacting the U.S. economy remains high.

 

This week contained a lot of real estate reports and data.

• New home sales remain strong and home builders remain optimistic about the near future.
• The housing market index jumped six points to the highest reading since October of last year.
• The expectation of future sales also is up more than expected to the highest level since 2005.
• Traffic to builder sites remains strong as well.

 

New home sales continue to be one of the positive areas of the current economy.

• Housing permits for single-family homes rose 3.7 percent in the month of August.
• Permit increases are a strong indicator for the expectation of future home sales.
• Actual housing starts and permits did fall in August down by 5.4 percent, however since single family permits are the strongest indicator of the future of housing growth, it makes sense to pay less attention to the headlines and more focus on the meat of the report.

 

The momentum of home prices, which had been softening in recent reports, seems to be firming back up with the July report.

• The FHFA house price index rose a solid 0.5 percent and June was revised up by 0.1 percent.
• The spread of prices from this year to last year increased slightly by 0.1 percent up to 5.8 percent.
• All nine-census divisions showed gains for the month.

 

The final report for the week on existing homes sales showed weakness.

• There was a decline of 0.9 percent down to an annualized rate of 5.33 million.
• This is only slightly above the reading of 5.29 million from the same time last year.
• The problem is simply a lack of inventory.
• There is plenty of buyer demand in almost all markets in the country, however the lack of inventory is stifling growth.
• Supply of homes is only 4.6 months.

 

Mortgage applications for both purchases and refinances declined for the week of September 16^th.

• Purchase applications were lower by 7.0 percent while refinances were hit even harder with an 8.0 percent decline.
• The edging up of interest rates in recent weeks is felt strongest in the refinance market.

 

This week’s potential market moving reports are:

• Monday September 26^th – New home Sales
• Tuesday September 27^th – S&P Case-Shiller House Price Index
• Wednesday September 28^th – MBA Mortgage Applications & Durable Goods Orders
• Thursday September 29^th – First Time Jobless Claims & GDP
• Friday September 30^th – Personal Income and Outlays