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For the week of Jul 24, 2017 --- Vol. 15, Issue 30

In This Issue

Last Week in Review: After months of decline, Housing Starts were on the up and up in June. Building Permits were up too.

Forecast for the Week: The Fed monetary policy statement could be the standout in an economic-data-filled week.

View: Tap into professional motivation with this week's icebreakers.

Last Week in Review

"I want to jump for joy." 2 Unlimited. After three straight monthly declines, Housing Starts jumped in June. Building Permits did too.

Housing Starts surged 8.3 percent from May to an annual rate of 1.215 million units, the Commerce Department reported. This is the highest level since February. Single-family starts, which represent the largest share of the residential housing market, rose 6.3 percent. The multi-family dwelling sector soared as well. Housing Starts also were up 2.1 percent from June 2016.

June Building Permits, a sign of future construction, also rose 7.4 percent from May's revised figure to an annual rate of 1.254 million.

While the increase in Housing Starts and Building Permits is positive news, both have some ground to cover. Inventories for existing and new home sales are still running below what is considered the normal six-month supply. In addition, higher prices for lumber and shortages of workers and land space could be potential hurdles to jump in the near future for new homebuilding.

At this time, home loan rates remain just above historic lows.

If you or someone you know has questions about home financing or home loan rates please contact me. I'd be happy to help.

Forecast for the Week

 

Fed monetary policy could be the cherry on top of this week's five-layer data cake.

  • Housing data kicks off on Monday with Existing Homes Sales, followed by the S&P/Case-Shiller Home Price Index on Tuesday and New Home Sales on Wednesday.
  • Consumer Confidence will be delivered on Tuesday while the Consumer Sentiment Index releases on Friday.
  • Though not an economic report, the Federal Open Market Committee meeting begins Tuesday and will end on Wednesday at 2:00 p.m. ET with the release of the monetary policy statement.
  • Durable Goods Orders and weekly Initial Jobless Claims will be delivered on Thursday.
  • And last but not least, the first reading on second quarter 2017 Gross Domestic Product will be released on Friday along with the wage-inflation-reading Employment Cost Index.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bond prices have edged higher in recent days leaving home loan rates in attractive territory.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Jul 21, 2017)

Japanese Candlestick Chart

Economic Calendar for the Week of July 24 - July 28

Date

ET

Economic Report

For

Estimate

Actual

Prior

Impact

Mon. July 24

10:00

Existing Home Sales

Jun

NA

5.62M

Moderate

Tue. July 25

09:00

S&P/Case-Shiller Home Price Index

May

NA

5.7%

Moderate

Tue. July 25

10:00

Consumer Confidence

Jul

NA

118.9

Moderate

Wed. July 26

10:00

New Home Sales

Jun

NA

610K

Moderate

Wed. July 26

02:00

FOMC Meeting

Jul

NA

1.125%

HIGH

Thu. July 27

08:30

Jobless Claims (Initial)

7/22

NA

NA

Moderate

Thu. July 27

08:30

Durable Goods Orders

Jun

NA

-1.1%

Moderate

Fri. July 28

08:30

Gross Domestic Product (GDP)

Q2

NA

1.4%

Moderate

Fri. July 28

08:30

GDP Chain Deflator

Q2

NA

1.9%

Moderate

Fri. July 28

08:30

Employment Cost Index (ECI)

Q2

NA

0.8%

HIGH

Fri. July 28

10:00

Consumer Sentiment Index (UoM)

Jul

NA

93.1

Moderate

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

As your mortgage professional, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.

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Fort Walton Beach

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