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INFO THAT HITS US WHERE WE LIVE … It sure looked like the recovery in home building had come to a stop in April, as Housing Starts fell 2.6%, to a 1.172 million annual rate. But wait. Compared to a year ago, starts are still up 0.7% overall. Plus, the April drop was entirely due to a decline in multifamily starts, which are exceedingly volatile on a monthly basis. Single family starts were actually up 0.4% for the month and are now 8.9% ahead of their pace a year ago. New building permits also dipped 2.5%, to a 1.229 million annual rate. Yet permits for single-family units are up 6.2% versus a year ago, while multifamily permits are up 4.8%.

Much of the homebuilding recovery is still ahead of us. Experts say we need to build about 1.5 million units annually just to cover population growth and replace teardowns. And the mood going forward is good. The National Association of Home Builders (NAHB) reported builder confidence in the market for new single family homes went up two points in May, hitting its second highest reading since before the downturn. The NAHB also reported the median size for new single family homes decreased to 2,389 square feet from 2,465 square feet a year ago, because builders are bringing much needed entry-level homes to the market.

>> Review of Last Week

ROCKY ROAD… Stocks finished Friday just marginally down for the week, but they certainly traveled a rocky road getting there. The broadly based S&P 500 hit a record high on Monday, then fell big-time on Wednesday, as investors feared the turmoil in Washington might jeopardize the Trump administration’s pro-growth policies. The term “Trump Slump” emerged in the media, although the S&P 500 ended Wednesday less than 2% below Monday’s all-time high. Thursday and Friday, investors re-gained their sanity and stocks re-gained much of their losses, though not enough to end ahead for the five days of trading.

Expectations for tax reform, deregulation and infrastructure spending are certainly generating economic optimism.
The small business confidence survey is at a 13-year high, terrific for the sector that employs most Americans. Consumer confidence is at a 16-year high, fueled by healthy job growth, a pickup in wages, unemployment at a 10-year low, and encouraging housing market indicators. Industrial Production in April rose an unexpected 1.0% overall, the once moribund manufacturing sector growing steadily, along with mining and utilities. Manufacturing sentiment in New York fell, but Capacity Utilization climbed nationally.

The week ended with the Dow down 0.4%, to 20805; the S&P 500 down 0.4%, to 2382; and the Nasdaq down 0.6%, to 6084.

Volatility in the stock market generally bodes well for bonds, and that was demonstrated last week. The 30YR FNMA 4.0% bond we watch finished the week UP .30, at $105.44. National average 30-year fixed mortgage rates edged down, staying near their lows for the year, in Freddie Mac’s Primary Mortgage Market Survey for the week ending May 18. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?… In the latest Mortgage Bankers Association Weekly Mortgage Applications Survey, the average purchase loan size reached a new survey high. 

>> This Week’s Forecast

NEW HOME SALES AND EXISTING HOME SALES RELAX, THE ECONOMY GROWS… Analysts are predicting both New Home Sales and Existing Home Sales will take a breather in April, no doubt caused by dwindling inventories in some regions. But we should get a few more indications that the economy is expanding, with the rising numbers for the Q1 GDP – Second Estimate and April Durable Goods Orders ex transportation, which exclude that volatile sector.

>> 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

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224 W Washington #103, Sequim, WA 98382

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