“There are always flowers for those who want to see them.”—Henri Matisse, French visual artist
NATIONAL MARKET UPDATE
New Home Sales dove 8.1% in June, and are now down 17.4% from a year ago. This was blamed on declining affordability. Median prices are up 7.4% from a year ago. though they’ve fallen two months straight.
Pending Home Sales slipped 8.6% in June. The NAR’s chief economist blamed it on climbing mortgage rates, but added, “There are indications that mortgage rates may be topping or very close to a cyclical high in July.”
Home price growth is also slowing. The Case-Shiller index reported annual price gains decelerated in May, and the FHFA index of prices for homes financed with conforming mortgages dipped from its February peak.
REVIEW OF LAST WEEK
WEAK ECONOMY, STRONG MARKET… Investors digested disappointing economic news and a 0.75% Fed rate hike, yet they sent the three major stock indexes to big gains for the week and huge gains for the month.
They felt the bad news of a softer economy would bring the good news of slower Fed rate hikes. The bad news included a negative GDP read for the second straight quarter, the technical definition of a recession.
Investors shrugged off the highest PCE inflation reading since 1982, which could get the Fed hiking aggressively, and instead reveled in decent Q2 corporate earnings, with 76% of companies reporting beating forecasts.
The week ended with the Dow UP 3.0%, to 32,845; the S&P 500 UP 4.3%, to 4,130; and the Nasdaq UP 4.7%, to 12,391.
Bond prices gained overall, the 30-year UMBS 4.5% edging up to $101.25. After climbing for two weeks, the national average 30-year fixed mortgage rate fell in Freddie Mac’s Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW…Realtor.com reports active inventory keeps growing, “rising 29% above one year ago.” Plus, “homes sold in June spent a record low time on market” and “data continues to suggest that homes priced well are selling.”
THIS WEEK’S FORECAST
CONSTRUCTION SPENDING UP, MANUFACTURING AND SERVICES DOWN, MORE JOBS… June Construction Spending is expected to be up overall, but we’ll check the residential part. Both ISM Manufacturing and ISM Non-Manufacturing Indexes are forecast down for July, though still indicating expansion. Analysts predict a 250,000 bump in Nonfarm Payrolls for July and Hourly Earnings increasing, yet not as much as inflation.
FEDERAL RESERVE WATCH
Forecasting Federal Reserve policy changes in coming months. After last week’s 0.75% hike to 2.25%-2.50%, Fed watchers expect a half percent rise in September, followed by smaller bumps through the end of the year. Note: In the lower chart a 100.0% probability of change is a 100.0% probability the rate will rise.
AFTER FOMC MEETING ON:
Probability of change from current policy:
AFTER FOMC MEETING ON:
BUSINESS TIP OF THE WEEK
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