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INFO THAT HITS US WHERE WE LIVE … The Nobel prize winning laureate probably didn’t have the housing market in mind when he penned his famous line. But his description of April might be apt for housing now, as both new and existing home sales dipped last month. New homes delivered the cruelest headline number, down 11.4%. But that was because revisions to March pushed new home sales up, to their fastest pace yet in the recovery. And at a 569,000 unit annual rate, April new home sales are still high compared to 2016. Plus, the median sales price dropped, indicating builders are more sensitive to affordability.

Existing home sales saw less of a drop in April, slipping just 2.3%. And, hey, they still hit a 5.57 million unit annual rate, up from a year ago. This monthly dip was also set up by fabulous numbers the prior month, when March existing home sales came in at their fastest pace in more than a decade. Nationally, supply remains tight, but inventories increased. Demand stayed strong, with properties typically on the market just 29 days, the shortest time period in the last six years. Freddie Mac’s chief economist opined, “With home sales, housing starts and home values up, 2017 is shaping up to be the best year for housing in over a decade.”

>> Review of Last Week

RAISING THE BAR… The mood on Wall Street went super positive once again. At the end of the week, the broadly-based S&P 500 and the tech-heavy Nasdaq both reached fresh all-time highs, while the blue-chip Dow finished just 0.2% below its all-time record close. FOMC Minutes from the last Fed meeting revealed “it would soon be appropriate” to tighten monetary policy again, meaning hike rates in June. This shows that the central bank has confidence in the economic outlook, attributing slower Q1 growth to transitory factors. Friday’s revised Q1 GDP had the economy growing at a better than expected 1.2% annual rate.

The largest contributions to that GDP growth came from upticks in home building and business fixed investment, which rose at an 11.4% annual rate, its fastest pace in five years. Corporations are doing better, with earnings among the S&P 500 up 13.6% versus a year ago, and revenues up 7.8% for the quarter, the biggest increase since Q4 of 2011. Yes, there was a dip in April Durable Goods Orders, but this followed a big upward revision to March.
Michigan Consumer Sentiment for May came in a tick higher than April. And the four-week moving average for initial unemployment claims hit a four-decade low, good for us all.

The week ended with the Dow UP 1.3%, to 21080; the S&P 500 UP 1.4%, to 2416; and the Nasdaq UP 2.1%, to 6210.

Bonds largely ended the week with modest gains in spite of the upwardly revised Q1 GDP number. The 30YR FNMA 4.0% bond we watch finished the week UP .01, at $105.45. In Freddie Mac’s Primary Mortgage Market Survey for the week ending May 25, national average 30-year fixed mortgage rates sank to a new low for the year. 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 that of the top 26 college degrees that would enable graduates to buy a home in four years, 22 were in engineering. Petroleum Engineering led, with a starting salary that could get the graduate a home in just 2.6 years .

>> This Week’s Forecast

PENDING HOME SALES, CONSUMER SPENDING, INFLATION REBOUND; MANUFACTURING, JOBS GROW…  It’s nice to see Pending Home Sales forecast back in positive territory in April. Likewise Personal Spending and the Core PCE Prices inflation measure are also expected to rebound. Manufacturing is predicted to stay in growth territory, according to the Midwest Chicago PMI and the national ISM Index. May Nonfarm Payrolls are forecast to come in just under 200,000, with Hourly Earnings continuing to rise, a good thing for housing.

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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

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