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Market Update February 1st

Market Update February 1st
February 1, 2016 devsite


The stock market is struggling while the housing market continues to improve.
• Home prices reported by the Federal Housing Finance Agency are up a solid 0.5 percent for November.
• Additionally, prices are 5.9 percent higher than the same time last year.
• The Mountain states led the way with price appreciation of 10.0 percent.
The Pacific region followed with a strong 8.6 percent.
• The weakest growth sector of the nine regions that are measured was the Middle Atlantic States, which were up only 2.6 percent.

On the heels of the FHFA report comes the Case-Shiller Home Price Index, which was also released on Tuesday morning.
• Case-Shiller numbers are relatively tracking along with the FHFA data in that their report shows an increase in the 20 major city index of 0.9 percent from October to November.
Year over year prices were up 5.8 percent virtually matching the FHFA report.
• What is very strong with the Case-Shiller report is that this is the 3rd consecutive month in which all 20 major cities were up in pricey

The 3rd housing report of the week in which sales of new homes was reported showed a higher than expected boost for the month of December.
New home sales jumped 10.8 percent to an annualized rate of $544,000.
• The increase was 44,000 over the high end of analyst’s predictions.
It is possible that the gain was driven in part by some discounts builders have offered.
• The median price of new home sales dipped 2.7 percent.
• Despite the drop in price, demand for homes remains strong.
• With builders continuing to move cautiously in starting new homes, home supply declined from 5.6 months down to 5.2 months.
• An inventory supply of 6 months is considered an ideal balance between construction and sales.

To continue on with the theme of the improving housing market, the Pending Home Sales Index rose 0.1 percent.
• Although not a significant jump, it is a positive move and it is also a reversal in trend after November’s report was revised to show a 1.1 percent decline.
• Additionally, it is believed that the new TRID regulations that went into effect last November, are playing a significant role in the delay of closings.
• Mortgage companies are improving their work flow related to the new regulations so it is likely that we will see even more market data improvement when January’s report is released next month.

As is typical, with the stock market taking it on the chin in recent weeks, investors have been moving their money into the bond markets.
• The bond rally means yields are declining which in turn moves mortgage rates lower.
• T he Mortgage Bankers Association report on purchase and refinance applications for the week of January 22nd shows that when rates drop, there are plenty of borrowers ready to take action.
Purchase applications increased 5.0 percent and refinances leaped 11.0 percent.

The major potential market moving reports are:
• Monday February 1st – ISM Manufacturing Report
• Tuesday February 2nd – Motor Vehicle Sale
• Wednesday February 3rd – MBA Applications & ADP Employment Report
• Thursday February 4th – First Time Jobless Claims
• Friday February 5th – National Employment Situation