Happy St. Patti’s Day!

Happy St. Patti’s Day!- I may have changed the spelling of this day…just a bit. 🙂

Whether you plan on celebrating with friends or family, I hope you enjoy this festive day. We had green beer at our event last night, which seemed to be a hit! And green yogurt!

May this day bring you much luck, hope and happiness!

Happy weekend.

Onto the market update…

As expected, the Fed at the March FOMC meeting this week, elected to raise interest rates by .25 percent. This did not surprise investors and both the stock and bond markets greeted the increase with little more than a yawn. The Fed has kept their forecast the same for the remainder of the year with the expectation of a total of 3 rates hikes. As strong as the economy appears to be, there continues to be areas of concern in which the Fed may alter their plans for rate increases.

The Housing Market Index jumped a very large 6 points in March to 71. This is the strongest reading for current economic cycle. Home builders appear very optimistic with the current index reading at 78, which is up 7 points from February. Future sales are also seen as strong with a gain of 5 points in the index. The strongest part of the report is that buyer traffic is way-up with a strong reading of 54. This represents an increase of 8 points and is the 3rd reading above 50 in the last 4 months. Analysts believe that part of the increase is representative of first time homebuyer activity increasing. The report on housing starts was more mixed, with an annualized rate of 1.288 million and a 1.213 million rate for total permits. Permits for single-family homes increased 3.1 percent in February to a rate of 832,000. The good news in this data is that even though the new home market has been struggling with very short supply, the current rate is up 13.5 percent from the same time last year. Housing starts for single-family homes were up a strong 6.5 percent to an 872,000 rate and a 3.2 percent year-on-year gain.

Despite the fact that mortgage rates have been rising, it does not appear to be holding back loan applications according to the Mortgage Bankers Association. For the week ending March 10th, purchase application rose 2.0 percent while refinances increased by 4.0 percent. The purchase index is up 6.0 percent from the same time last year.

Inflation appears to be heating up as producer prices are showing upward pressure. The latest increase of 0.3 percent was higher than expected. Even when the volatile food and energy component was removed from the equation, wholesale prices still showed an increase of 0.3 percent. Prices are up 2.2 percent from the same time last year and are at nearly the highest point in 5 years. Energy continues to be the main source of pressure on pricing increases.

Following in the path of wholesale prices, the latest readings on consumer prices show an upward trend as well. The most recent data indicates an annual increase of 2.7 percent. This is above the Fed’s goal of 2.0 percent, which likely was a contributing factor to the decision to raise rates.

Finally, first time jobless claims remain at the lowest point in 44 years. Essentially the economy is now considered at full employment with claims at 241,000 for the week ending March 11th.

Next week’s potential market moving reports are:

 

  • Wednesday March 22nd – MBA Applications, FHFA Home Price Index, Existing Home Sales
  • Thursday March 23rd – First Time Jobless Claims, New Home Sales

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at 661-618-1789.