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INFO THAT HITS US WHERE WE LIVE … A good trend for us to exploit is the upward trend that continues in home building. That may seem like a far-fetched statement if all you saw was the headline number for March Housing Starts–down 6.8%. But wait. That’s coming off their big February boost thanks to unusually mild weather–plus, the March Housing Starts 1.215 million unit annual rate is UP 9.2% over a year ago. Want more proof of the upward trend? New Building Permits were UP 3.6% in March, with single-family permits UP 13.5% versus a year ago. No wonder April’s National Association of Home Builders sentiment index sits at a solid 68.

Friday we learned that Existing Home Sales were UP 4.4% in March, hitting a 5.71 million annual rate, their highest pace in more than a decade! This puts those sales 5.9% ahead of where they were a year ago. Demand was so strong that 48% of the existing homes sold were on the market less than a month. Reflecting this trend, the Potential Home Sales model from a provider of settlement services shows the housing market performing 47% better than last year. Their chief economist said the model measures what “a healthy market level of home sales should be, based on the economic, demographic, and housing market environments.”

>> Review of Last Week

PARLEZ-VOUS ‘TAX CUT’?… Do you speak ‘tax cut’? Treasury Secretary Steven Mnuchin and White House chief economic advisor Gary Cohn did last week, and their talk of impending tax cuts sent the stock market up. But they didn’t speak French, uttering not a word about France’s presidential election. Smart move, as investors worry that two of the top four candidates in the first round want France to leave the European Union, not a popular idea on Wall Street. But Friday President Trump revealed he’d release a “massive tax cut package” this week and that was enough to push the three major stock indexes ahead for the five days of trading.

In addition to prospects for tax cuts, investors could feel good about some things going on in the economy. The Existing Home Sales upside surprise was a beaut, along with encouraging data on the manufacturing front. Industrial Production went up 0.5% in March, and overall Capacity Utilization increased to 76.1%. The New York Empire State Index showed continued manufacturing improvement in that region. The same goes for the Philadelphia Fed Index.
Healthier manufacturing means more good-paying jobs, and that’s great for the housing market. Finally, Continuing Unemployment Claims fell below the 2 million level.

The week ended with the Dow UP 0.5%, to 20548; the S&P 500 UP 0.8%, to 2349; and the Nasdaq UP 1.8%, to 5911.

U.S. Treasuries and other bonds made small gains, as investors shored up their safe harbor positions before those pesky French elections. The 30YR FNMA 4.0% bond we watch finished the week down .06, at $105.33. National average 30-year fixed mortgage rates dropped again in Freddie Mac’s Primary Mortgage Market Survey for the week ending April 20. This time they hit their lowest mark since November of last year. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?… A provider of loan origination software reports that the average time to close a loan is now at its lowest level in two years–43 days. 

>> This Week’s Forecast

NEW HOME SALES DIP, EMPLOYMENT COSTS UP, MANUFACTURING GROWS… We’ll get a look at March New Home Sales, which are predicted to slip a bit, remaining just south of the 600,000 units per year threshold. The Employment Cost Index is expected to edge up, good for wage growth (and housing!), though the Fed also sees that as an indicator of rising inflation, with rates eventually doing the same. The Chicago PMI is forecast to show Midwest manufacturing still growing at a nice pace.

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

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This material is not from HUD or FHA and has not been approved by HUD or any government agency. Equal Housing Opportunity Lender

Clift Enterprises Inc.
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224 W Washington #103, Sequim, WA 98382

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