The stock market recorded moderate gains with the S&P 500 notching another all-time record high on Friday, the first time since January 26th of this year.  Bonds also fared well with U.S. Treasury yields decreasing modestly during the week.  President Trump’s publicly pronounced unhappiness with Federal Reserve Chair Jerome Powell for raising interest rates in addition to voicing his desire for Fed policymakers to keep interest rates low may have helped boost buying demand for Treasuries, sending yields lower.  Because U.S. Treasury yields are substantially higher than many other industrialized nations, U.S. Treasuries remain attractive investments for foreign buyers.

 

President Trump also publicly blamed both the European Union and China of manipulating their currencies to weaken them relative to the U.S. dollar in an effort to boost their exports to the U.S. Although low-level trade talks between the U.S. and China took place in Washington, D.C. during the week, no real progress was made on tariffs and trade.  In fact, last Thursday the U.S. began to enforce an additional 25% in tariffs on Chinese imports ranging from machinery to motorcycles while China retaliated with corresponding tariffs on U.S. products from coal to trucks.  Trade resolutions may not be realized until later in the year when higher-level negotiations are scheduled to take place.

 

Meanwhile, the minutes from the Fed’s July 31–August 1 monetary policy meeting indicated the Fed expects to next raise rates at its September meeting.  Fed officials stated in the minutes that it would likely “soon” be appropriate to raise rates.  There currently is a 96.0% probability rates will be bumped up another 25 basis points on September 26.  Friday, in a speech at the Kansas City Fed’s annual economic symposium in Jackson Hole, Wyoming, Fed Chair Powell defended the gradual pace of the Fed’s rate hikes saying that the “slow increases are appropriate given current levels of inflation and unemployment.”

 

It was a big week for housing news.  Wednesday, the National Association of Realtors reported Existing Home Sales tumbled for the fourth straight month falling to a seasonally-adjusted annual rate of 5.34 million in July, down 0.7% from June.

 

Affordability issues are taking a toll on home buyers, especially for first timers facing ever-increasing prices on lower inventory and seeing home prices increasing faster than their incomes.

 

Total home sales in July were 1.5% lower than the same period a year ago.  The median existing home prices for all housing types increased 4.5% in July to $269,600 – the 77th straight month of year-over-year gains.

 

For sales of existing single-family homes, the median price has climbed 4.6% from a year ago to $272,300.  Unsold inventory remained at a 4.3-month supply, unchanged from June and last July and remaining below the 6.0-month supply typically associated with a more balanced market.

 

Thursday, the Commerce Department reported sales of New Homes fell 1.7% month-over-month in July to a seasonally adjusted annual rate of 627,000.  This was below the consensus forecast of 645,000 and also below an upwardly revised 638,000 (from 631,000) in June.

The median sales price increased 1.8% year-over-year to $328,700 while the average sales price increased 5.9% to $394,300.

Based on the current rate of sales, the inventory of new homes for sale increased to a 5.9-months’ supply, versus 5.2 months in June and 5.8 months in the year-ago period.

Homes priced below $400,000 accounted for 71% of new homes sold in July versus 70% in June.

 

 

Jefferies, LLC economist Ward McCarthy had this to say about the latest housing data.  “Housing activity in general has retreated from levels that were temporarily boosted by 2017 natural disasters –hurricanes and wild fires— that forced displaced households to seek alternative housing.  The housing sector is also undergoing an adjustment to affordability that is less attractive than it was for most of the cycle, as well as changes in the treatment of SALT deductions in the federal tax code.  That is the bad news.  The good news is that there is no evidence of the type of imbalances that could cause a sharp downturn, such as heavy inventories and/or rising mortgage default and delinquency rates.  We also note this is not the first temporary slowdown in housing activity this cycle.”

 

Also on Thursday, the Federal Housing Finance Agency (FHFA) released their latest House Price Index (HPI) showing home prices increased just 0.2% in June from May.  Economist William Doerner said although home prices rose in the second quarter, it was at a much slower pace than previously recorded in the past four years.  “Mortgage rates have increased by more than half a percentage point over the first six months of the year.  Rates are still inexpensive from a historical standpoint, but their bump-up appears to have gently pressed the brakes on house price increases.”

 

Nationally, home prices in all 50 states and the District of Columbia increased since the second quarter last year.

 

 

States with the largest gains are Nevada (+17%), Idaho (+13%), District of Columbia (+11.8%), Utah (+11.3%) and Washington (+11%).

 

States showing the least amount of annual appreciation are North Dakota (+2.1%), Louisiana (+2.3%), West Virginia (+2.3%), Connecticut (+2.4%) and Alaska (+2.6%).

 

Elsewhere, the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey showed an increase in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) rose 4.2% during the week ended August 17, 2018.  The seasonally adjusted Purchase Index increased 3.0% from the week prior while the Refinance Index jumped 6.0% higher from a week earlier.

 

Overall, the refinance portion of mortgage activity increased to 38.7% from 37.6% of total applications from the prior week.  The adjustable-rate mortgage share of activity increased to 6.5% from 6.2% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance was unchanged at 4.81% with points decreasing to 0.42 from 0.43 for 80 percent loan-to-value ratio (LTV) loans.

 

For the week, the FNMA 4.0% coupon bond gained 15.6 basis points to close at $101.984 while the 10-year Treasury yield decreased 5.10 basis points to end at 2.813%.  The Dow Jones Industrial Average gained 121.03 points to close at 25,790.35.  The NASDAQ Composite Index advanced 129.65 points to close at 7,945.98.  The S&P 500 Index added 24.56 points to close at 2,874.69.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 4.33%, the NASDAQ Composite Index has advanced 15.10%, and the S&P 500 Index has added 7.52%.

 

This past week, the national average 30-year mortgage rate fell to 4.63% from 4.64%; the 15-year mortgage rate remained unchanged at 4.14%; the 5/1 ARM mortgage rate decreased to 3.95% from 3.97% while the FHA 30-year rate remained unchanged at 4.37%.  Jumbo 30-year rates eased to 4.34% from 4.37%.

 

Economic Calendar – for the Week of August 27, 2018

 

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

 

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

 

The FNMA 30-year 4.0% coupon bond ($101.984, +15.6 bp) traded within a narrower 17.2 basis point range between a weekly intraday low of 101.828 on Monday and Friday and a weekly intraday high of $102.00 on Monday before closing the week at $101.984 on Friday.  Mortgage bond prices traded mostly in a sideways direction between technical support provided by the 100-day moving average and overhead resistance from the 76.4% Fibonacci retracement level located at $101.988.  The bond remains on a buy signal from August 10th but is now extremely “overbought” and susceptible to a pullback toward technical support.  However, support is close at hand, so we could see a continuation of a sideways trading pattern without much effect on mortgage rates.  Rates should continue to show stability in the coming week

 

 

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The stock market turned in a “mixed” performance while mortgage bonds and treasuries traded essentially flat on the week.  Both the Dow Jones Industrial Average and S&P 500 were able to advance while the technology-heavy NASDAQ Composite Index posted a modest loss.  Equity markets were influenced by continuing volatility in emerging market currencies, the Turkish Lira in particular.  Other factors included news of renewed trade negotiations between the U.S. and China and economic news of solid retail sales.

 

Thursday and Friday, reports surfaced that the U.S. and China will resume trade negotiations by the end of August.  U.S. and Chinese trade negotiators reportedly now have a goal of ending their trade disagreements ahead of multilateral meetings between President Trump and President Xi of China scheduled for November.

 

In economic news, the Commerce Department reported Retail Sales increased a robust 0.5% in July to easily surpass the consensus forecast of +0.1% and a downwardly revised 0.2% gain in June.  Core Retail Sales, sales excluding autos, gas stations, and building materials stores, rose by an even greater 0.6% and were driven by healthy spending at clothing stores, restaurants and bars, and online purchases.

Last Wednesday in housing, the National Association of Home Builders (NAHB) reported their Housing Market Index (HMI), a gauge of builder opinion on the relative level of current and future single-family home sales, fell slightly lower for August to 67 from last month’s reading of 68.  Readings above 50 indicate a favorable outlook on home sales while those below 50 indicate a negative outlook.

NAHB chairman Randy Noel had this to say “The good news is that builders continue to report strong demand for new housing, fueled by steady job and income growth along with rising household formations.  However, they are increasingly focused on growing affordability concerns, stemming from rising construction costs, shortages of skilled labor and a dearth of buildable lots.”

 

 

On Thursday, the Commerce Department reported Housing Starts increased 0.9% in July to a seasonally adjusted annual rate of 1.168 million.  This was below the consensus forecast of 1.256 million and followed a downwardly revised 1.158 million from an initially reported 1.173 million for June.  However, Building Permits increased 1.5% to 1.311 million.  Although the Permits number was slightly below the consensus forecast of 1.316 million, June’s number was revised higher to 1.292 million from an originally reported 1.273 million.

 

Permits for single-family units increased 1.9% to 869,000 while Permits for multi-unit dwellings increased 0.7% to 442,000.  Regionally, single-family starts were 5.7% lower in the Northeast, 22.3% higher in the Midwest, 2.0% higher in the South, and 10.0% lower in the West.  The number of units under construction at the end of July totaled 1.122 million units.  This is slightly below the second quarter average of 1.123 million, suggesting a slightly negative influence on third quarter GDP forecasts.

 

 

Overall, the fact that single-family starts increased by only 0.9% to 862,000 likely reflect some of the difficulties home builders are facing with higher costs for land, materials, and skilled construction labor.

 

Elsewhere, the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey showed another decrease in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) fell 2.0% during the week ended August 10, 2018.  The seasonally adjusted Purchase Index dropped 3.0% from the week prior while the Refinance Index remained unchanged from a week earlier.

 

Overall, the refinance portion of mortgage activity increased to 37.6% from 36.6% of total applications from the prior week.  The adjustable-rate mortgage share of activity decreased to 6.2% from 6.3% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance dropped to 4.81% from 4.84% with points decreasing to 0.43 from 0.45 for 80 percent loan-to-value ratio (LTV) loans.

 

For the week, the FNMA 4.0% coupon bond gained 1.5 basis points to close at $101.828 while the 10-year Treasury yield decreased 0.90 of one basis point to end at 2.864%.  The Dow Jones Industrial Average gained 356.18 points to close at 25,669.32.  The NASDAQ Composite Index fell 22.78 points to close at 7,816.33.  The S&P 500 Index added 16.85 points to close at 2,850.13.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 3.84%, the NASDAQ Composite Index has advanced 13.22%, and the S&P 500 Index has added 6.60%.

 

This past week, the national average 30-year mortgage rate remained unchanged at 4.64; the 15-year mortgage rate rose to 4.14% from 4.13%; the 5/1 ARM mortgage rate increased to 3.97% from 3.95% while the FHA 30-year rate remained unchanged at 4.37%.  Jumbo 30-year rates eased to 4.37% from 4.40%.

 

Economic Calendar – for the Week of August 20, 2018

 

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

 

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

 

The FNMA 30-year 4.0% coupon bond ($101.828, +1.50 bp) traded within a narrow 25.0 basis point range between a weekly intraday low of 101.641 on Tuesday and a weekly intraday high of $101.891 on Wednesday and Friday before closing the week at $101.828 on Friday.  Mortgage bond prices retreated slightly on Monday and Tuesday before recovering essentially to where they began the week during Wednesday through Friday.  Prices are trending along a convergence of the 25-day, 50-day, and 100-day moving averages that act both as technical support and resistance.  The bond is neither “overbought” nor “oversold” while remaining on a ‘buy” signal so we could likely see more of the same recent pattern where prices trend in a sideways direction with the above-mentioned major moving averages.  Continue to look for stable to slightly improved mortgage rates this coming week.

 

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Is the monthly payment more important than the total price of a home? from CNBC.

Is the monthly payment more important than the total price of a home?
Mark Fleming of First American says rising mortgage rates, home price appreciation and lack of new homes may be combining to put the squeeze on affordability.
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For many who enjoy semi-maintenance-free living and prefer living closer to city centers, (apart from having fewer windows) townhome-living feels no different than living a single family home. From the outside, however, one thing is very obvious: one or more shared walls.

 

This begs the question: who is responsible for issues that arise out of that common (or party) wall experience? What if you have leaks, pests, or mold growing inside? Unlike a condo, where you only own the airspace and none of the structure itself, townhome owners are liable for their common walls.

 

The owners of each lot are jointly responsible for maintenance and repair of these walls unless damage is caused by one owner’s negligence, in which case the negligible owner is responsible for repairs, according to real estate lawyer Gary M. Singer, writing for the Sun-Sentinel. He advises you not to consider your neighbors recognized authorities on matters like these, even saying the board of your association can be working under a misunderstanding of what your governing documents actually say.

 

“I have lost count of the times an association was trying to enforce a restriction that only exists in their ‘understanding’ of the rules,” says Singer. “To get to the bottom of this, you will need to review the documents to see what they actually say. Association rules are, in reality, nothing more than a contract between you and your neighbors, and the only way to know what is in a contract is to read it.”

 

He goes on to say that attached housing that shares a wall or fixture is governed by either the community documents or a private “party wall agreement” between direct neighbors. “If, for some reason, your community documents are silent on this sort of maintenance issue, and there is no party wall agreement in place, the general provisions of law — what lawyers call ‘common law’ — will give you the answer,” he says.

 

Under common law (as the word implies) problems with shared walls are split equally between the landowners that share the problem. “This means that unless your community’s governing documents state the association is responsible, you and your next-door neighbor are on the hook. If your neighbor is not cooperative in resolving the issue, you will need to take care of it and look to your neighbor for reimbursement of half the cost.”

 

Source: Sun-Sentinel, TBWS

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Another wave of trade disputes ignited by a somewhat unusual situation unsettled the stock and currency markets late in the week.  In a dispute with Turkey over that country’s jailing of an American pastor, President Trump announced the U.S. would be doubling its tariffs on steel and aluminum imports from Turkey.  This led to a significant currency decline in the Turkish lira which spilled over into other emerging market currencies.  This in turn led to lower equity markets in the U.S. and elsewhere globally.  Furthermore, the trade “war” between the U.S. and China continued to escalate with China announcing new tariffs on $16 billion worth of U.S. imported goods.  These geopolitical trade events promoted a modest “flight to safety” in U.S. Treasuries on Friday to push the yield on the 10-year Treasury note down to its lowest level in almost a month.

 

Meanwhile, second-quarter corporate earnings reports continue to be mostly better than expected among analysts.  According to the latest data from FactSet Research Systems, a financial data and software company catering to investment professionals, earnings for S&P 500 Index companies have grown 24.6% over the same quarter a year ago while keeping pace with the first quarter’s results which were the best earnings growth in nearly eight years.

 

In housing, the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey revealed last Wednesday showed a decrease in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) fell 3.0% during the week ended August 3, 2018.  The seasonally adjusted Purchase Index decreased 2.0% from the week prior while the Refinance Index decreased by 5.0% from a week earlier to its lowest level since December 2000.

 

Overall, the refinance portion of mortgage activity decreased to 36.6% from 37.1% of total applications from the prior week.  The adjustable-rate mortgage share of activity decreased to 6.3% from 6.4% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance remained unchanged at 4.84% with points remaining unchanged at 0.45.

 

For the week, the FNMA 4.0% coupon bond gained 14.1 basis points to close at $101.813 while the 10-year Treasury yield decreased 7.95 basis points to end at 2.873%.  The Dow Jones Industrial Average lost 149.44 points to close at 25,313.14.  The NASDAQ Composite Index added 27.09 points to close at 7,839.11.  The S&P 500 Index fell 7.07 points to close at 2,833.28.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 2.40%, the NASDAQ Composite Index has advanced 13.55%, and the S&P 500 Index has added 5.97%.

 

This past week, the national average 30-year mortgage rate declined to 4.64% from 4.72%; the 15-year mortgage rate fell to 4.13% from 4.18%; the 5/1 ARM mortgage rate dropped to 3.95% from 4.00% while the FHA 30-year rate fell to 4.37% from 4.42%.  Jumbo 30-year rates eased to 4.40% from 4.48%.

 

Economic Calendar – for the Week of August 13, 2018

 

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

 

 

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

 

The FNMA 30-year 4.0% coupon bond ($101.813, +14.1 bp) traded within a narrow 39.0 basis point range between a weekly intraday low of 101.516 on Wednesday and a weekly intraday high of $101.906 on Friday before closing the week at $101.813 on Friday.  Mortgage bond prices dipped slightly lower mid-week before turning higher toward resistance levels to end the week.  While the bond is no longer “oversold,” there is room for prices to run higher before becoming “overbought.”  So, we could likely see prices push higher this coming week to challenge resistance levels at the 25-day, 50-day and 100-day moving averages which are in close proximity to one another.  Bottom line, the technical chart continues to suggest there will be stable to slightly improved mortgage rates this coming week.

 

 

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Is there ever a question you CAN’T ask a Realtor? Never. When it’s your future and your money at stake, you owe it to yourself to pose any questions that eat at your gut, so ask away. With the help of ImagineYourHouse.com’s Lynna Pineda, we’ll answer a few common ones for you, but we think you’ll get the idea.

 

Do I really need to replace my carpeting before the first open house?

 

If it’s worn, smelly, discolored or worn out and YOU were a potential buyer walking through your house for the first time, how would you react? Buyers think about two things when they tour a property that has not been updated or repaired: time and money.

 

We are smokers. Do we really have to worry about what our home smells like?

 

Looking at online photos of your home show one thing. Walking through the front door and smelling the smoke that has permeated your flooring, drapery, cabinets and even furniture are an entirely different experience. Many a buyer will turn on their heels right there in your entryway and head for the next listing. So yes. Be concerned. Be very concerned.

 

Is it okay to decorate my home for the holidays while it’s on the market?

 

Absolutely. ’Tis the season. But if you are prone to filling every nook and cranny with happy Santas, hanging stars and extra Christmas trees, this is the time to scale back. You’ll obscure spaces that might otherwise be considered spacious.

 

Does having a dog make my house harder to sell?

 

Not if you’ve already dealt with and remediated (1) doggie odors (2) doggie damage and (3) your furry friend’s tendency to bark or scare homebuyers.

 

Can I keep my displays of vintage guns, religious paintings, and my grandmother’s doll collection while my house is on the market?

 

If you hope to get the highest prices and sell your home in the shortest length of time, remove as many of these things as possible so the widest range of buyers walking through there will not be distracted. It’s a great idea to pack them up early and have them waiting to grace the interior of your next home.

 

 

Source: Imagineyourhouse.com, , TBWS

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The National Association of Realtors reported gains in home prices holding steady in May, while a lack of inventory helped prevent an uptick in growth.

 

According to the S&P CoreLogic Case-Shiller National Home Price Index, average home prices in major metropolitan areas rose 6.4% in May, identical to the year-over-year increase reported in April. An index of 10 cities gained 6.1% over the year, down from 6.4% the prior month. The 20-city index gained 6.5%, down from 6.7% the previous month.

 

Since August 2016 the annual increase in the Case-Shiller national index has topped 5% each month. Pricing is one of the few strong spots in the housing market due to a low volume of homes being offered, arming sellers with continued pricing power despite slowing sales.

 

According to the S & P’s David Blitzer, rising prices are contributing to a slowdown in virtually every other housing-market indicator—from existing home sales to housing starts to pending home sales, which have lagged behind for six straight months.

 

“The combination of rising home prices and rising mortgage rates are beginning to affect the housing market,” Mr. Blitzer said in the article.

 

The West is still the price leader. with Seattle reporting a 13.6% annual gain in prices in May compared with a year earlier. Las Vegas followed closely behind with 12.6% and San Francisco saw a 10.9% increase.

 

Experts are saying that rising mortgage rates are no small factor in the slowed pace of home sales in recent months, potentially having put a slight downward pressure on prices. “Existing home sales have now declined on an annual basis in five of the first six months this year, as rising prices and mortgage rates and a lack of inventory have made it more difficult for would-be buyers to find and afford homes,” according to the report.

 

Source: Realtor Mag, NAHB,TBWS

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Trivia question of the day: what was the microwave oven originally called when it was introduced in the 1960s? Answer: the “Radarange.” It wasn’t until the ‘70s, however, that Sharp introduced low-cost microwave ovens for residential use.

 

When homeowners began buying countertop microwaves in droves, it wasn’t long before builders began integrating them into the cabinetry (often over the cooktop), almost as a feature of the newer kitchen. Now? They get hidden in lower cabinet drawers, nearly incognito in appearance.

 

While microwave remain popular no matter how you cut it, according to a report in Remodeling Magazine and reiterated by Builder Magazine’s Vincent Salandro, higher-end homeowners are opting for something different.

 

“For some high-income homeowners, microwaves are one of the first things they look to replace in their kitchens,” says Salandro. “Steam and speed ovens are two alternatives that provide many of the same functions as microwaves at a higher quality.”

 

More than 344.7 million microwave ovens were sold in 2017, included in 92% of homes. While the elite speed and steam ovens range from $1,700 to $8,000, microwave units cost in the hundreds, with smaller units available for as little as $70 at Target. Even the more stylish microwave-in-a-drawer can be had for less than $1,200.

 

Modifications like the microwave drawer (Sharp owns the patent, even though other product manufacturers put their names on them) are one of many options for homeowners who prefer to lessen the look of their microwaves as a stand-alone appliance. “The drawer microwave can be integrated into open floor plans, which typically don’t have much wall space in their designs,” says Salandro, although he admits that some homeowners see them as an accessible danger for children and a pain in the back for some homeowners.

 

The west coast seems to lead the way in “new stuff,” and alternatives to the microwave oven are no exception. The speed oven, a smaller appliance with convection cooking and microwaving capabilities, seamlessly fits into open design plans and kitchen islands. Homeowners are beginning to prefer them to traditional microwaves, citing how, especially when children leave the home, the quality of food preparation can become more important than speed.

 

Health-conscious homeowners are also opting for steam ovens rather than microwaves. However, for most remodelers across the country, the majority of kitchen jobs still include microwaves, especially important for families with smaller children because of the convenience of reheating and food preparation.

 

“Additionally, in order for substitutes like the steam oven or speed oven to become more reasonable for a broader range of consumers, manufacturers would need to invest in more cost-effective production to drive down the cost of the appliances,” says Salandro.

 

Today’s microwaves may now have a smaller role than envisioned 20 years ago when many expected the appliance to displace the range and oven and frozen food was more popular.

 

 

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The stock market posted modest gains this past week, as did mortgage bonds, while the 10-year Treasury yield pulled back on Thursday and Friday after hitting the 3% mark intraday on Wednesday.  This resulted in relatively stable equity, bond, and mortgage markets for the week.

 

There were a significant number of economic reports released during the week headlined by the Federal Reserve’s monetary policy decision on Wednesday and the Labor Department’s latest Employment Situation Summary on Friday.

 

As widely expected, Fed officials left interest rates unchanged to keep their target range from 1.75% to 2.00%.  The Fed’s policy statement characterized the economy as “strong,” suggesting the Fed remains on course to raise interest rates two additional times this year.  The Fed Funds Futures market is projecting the next rate hike will likely arrive at September’s policy meeting with a current probability of 93.6%.

 

On the job creation front, the Labor Department released a “not too hot, not too cold Goldilocks” jobs report revealing a below-forecast increase in nonfarm payrolls of 157,000 new jobs vs. a consensus forecast of 190,000 jobs.  However, June’s jobs number was upwardly revised to 248,000 from 213,000 while the three-month average of new job formation is trending noticeably higher.  Average Hourly Earnings increased 0.3% matching expectations, and the year-over-year increase in Earnings held steady at 2.7%.  The Unemployment Rate fell to 3.9%.  Overall, the financial markets were pleased with this report.

 

In housing, the National Association of Realtors reported Monday a week ago that Pending Home Sales edged higher for the month of June by 0.9%.  This was a slightly better number than analyst expectations of 0.5%, but was 2.5% lower year-over-year.  However, home inventory levels increased by 0.5% year-over-year, the first increase in three years, suggesting greater opportunities for future sales as many potential buyers are “waiting in the wings” to purchase a home.

 

 

The latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey released on Wednesday showed a decrease in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) fell 2.6% during the week ended July 27, 2018.  The seasonally adjusted Purchase Index decreased 3.0% from the week prior while the Refinance Index decreased by 2.0% from a week earlier.

 

Overall, the refinance portion of mortgage activity increased to 37.1% from 36.8% of total applications from the prior week.  The adjustable-rate mortgage share of activity increased to 6.4% from 6.3% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 4.84% from 4.77% with points remaining unchanged at 0.45.

 

For the week, the FNMA 4.0% coupon bond gained 10.9 basis points to close at $101.672 while the 10-year Treasury yield decreased 0.55 basis points to end at 2.9525%.  The Dow Jones Industrial Average gained 11.52 points to close at 25,462.58.  The NASDAQ Composite Index added 74.60 points to close at 7,812.02.  The S&P 500 Index advanced 21.53 points to close at 2,840.35.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 3.01%, the NASDAQ Composite Index has advanced 13.16%, and the S&P 500 Index has added 6.24%.

 

This past week, the national average 30-year mortgage rate remained unchanged at 4.72%; the 15-year mortgage rate fell to 4.18% from 4.19%; the 5/1 ARM mortgage rate remained unchanged at 4.00% while the FHA 30-year rate was also unchanged at 4.42%.  Jumbo 30-year rates eased to 4.48% from 4.50%.

 

Economic Calendar – for the Week of August 6, 2018

 

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

 

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

 

The FNMA 30-year 4.0% coupon bond ($101.672, +10.9 bp) traded within a narrow 37.5 basis point range between a weekly intraday low of 101.313 on Tuesday and a weekly intraday high of $101.688 on Friday before closing the week at $101.672 on Friday.  Mortgage bonds remain “oversold” while trading in a familiar sideways pattern between resistance and support.  The chart continues to suggest there will be stable to slightly improved mortgage rates this coming week.

 

 

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