Weekly Marketing Update

For the week of MAY 16, 2022

“You just can’t beat the person who never gives up.”—George Herman “Babe” Ruth Jr., American professional baseball player

Freddie Mac notes: “Homebuyers continue to show resilience even though rising mortgage rates are causing monthly payments to increase by about one-third compared to a year ago.”

Evidence of that came as the Mortgage Bankers Association said purchase applications rose two weeks in a row, even with the highest rates since 2009. Not surprisingly, there was also a rise in adjustable-rate loans.

A nationwide listing site reports that a record 15% of sellers dropped their asking prices during the four weeks ending May 1. However, in the same period, 56% of the homes sold for an average of 2.8% above list price, another record.

COULDN’T BEAR IT… The S&P 500 ended shy of a 20% drop into bear market territory after six straight weeks of declines for the first time in more than a decade. The Dow’s seven week losing streak was its longest since 2001.

Investors don’t like high rates, lower growth, and high inflation. Inflation may be peaking because April’s annual 8.3% rate was down from March’s 8.5%, though April’s 0.6% gain in core inflation was the largest in three months.

The University of Michigan’s measure of consumer sentiment dropped to its lowest level in more than ten years, a 59.1 read for May, compared to 82.9 a year ago! Initial jobless claims gained a tick, but continuing claims dropped.

The week ended with the Dow down 2.1%, to 32,197; the S&P 500 down 2.4%, to 4,024; and the Nasdaq down 2.8%, to 11,805

Safe-haven buying sent bond prices up strongly, the 30-year UMBS 4.5% UP 0.76, to $101.06. Higher bond prices signal lower rates, yet the national average 30-year fixed mortgage rate edged up a tick 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… Renters should note that increasing mortgage rates are still at historic lows, and with a fixed-rate mortgage, monthly payments don’t change over time. That’s why, with skyrocketing rents, buying a home should remain their top goal.

HOMEBUILDING, EXISTING HOME SALES STALL, RETAIL SALES ACCELERATE… Analysts expect Housing Starts, Building Permits, and Existing Home Sales to remain in a holding pattern, just slightly down in April. But the annual rates are good, with homebuilding well above 1.5 million units a year, and existing home sales well north of 5.5 million units. Retail Sales should continue to show growth in April, though some of the gain is of course due to inflation.

Forecasting Federal Reserve policy changes in coming months. The futures market still sees the Fed going for half percent rate hikes at the next three meetings, as they’ve said they would do. Note: In the lower chart a 100.0% probability of change is an 100.0% probability the rate will rise.

Probability of change from current policy:

Don’t rely solely on your computer and phone to stay in contact with your referral partners. Get out and meet them, if only for a cup of coffee. Nothing beats face-to-face encounters for building relationships.