INFO THAT HITS US WHERE WE LIVE... Our thoughts remain with the people of Texas recovering from Hurricane Harvey's dramatic devastation and tragic loss of life. Their acts of heroism have touched us all. Damage is estimated to be at least $35 billion, with much of it outside the Special Flood Hazard Areas identified by the Federal Emergency Management Agency (FEMA). This means only about 20% of affected homeowners are expected to have FEMA flood insurance. But the outpouring of help from across the country has been phenomenal. And relief is being offered to homeowners from Fannie Mae, Freddie Mac, FHA and mortgage servicers. Good stuff.
Pending Home Sales dipped just 0.8% in July, their fourth slip in five months. This National Association of Realtors (NAR) measure of contracts signed on existing homes is currently suffering from tight supply, not weak demand. The NAR chief economist explained, "The pace of new listings is not catching up with what's being sold at an astonishingly fast pace." He added, "the typical listing has gone under contract within a month since April." Some say rising prices are diminishing affordability, but First American's Real House Price Index reported increased affordability, thanks to "falling rates for 30-year, fixed-rate mortgages and modest wage gains."
BUSINESS TIP OF THE WEEK... Never lose sight of where you're headed. Start every project keeping in mind your overall goals--for your work, and life! Keep those goals in mind, fitting today's to-do list into your long-term plans.
>> Review of Last Week
BACK TO BREAKING RECORDS... The stock market moved up again for another week, as investors felt good enough about our economic prospects to buy up some of the bargains created by the mid-August dip from previous record levels. Spurred on by decent economic data, investors pushed all three major stock indexes up for the week, with the tech-heavy Nasdaq reaching an new all-time high. The GDP-2nd Estimate for Q2 showed the economy growing at an unexpected 3.0%. And the ISM Manufacturing index came in with a strong 58.8 growth reading for July, its highest level in more than six years.
This good news could have made Wall Street, and us, fearful the Fed would go for another rate hike. But those fears were calmed when Core PCE Prices showed inflation decelerated in July to 1.4% annually, far below the Fed's 2% target for boosting rates. August jobs data also helped, with 156,000 new Nonfarm Payrolls. This was seen by many as a "Goldilocks" report, strong enough to advance the economy but weak enough to check the Fed. Meanwhile, Consumer Confidence stays near its 16-year high, and Michigan Consumer Sentiment's chief economist reports that index "has been higher during the first eight months of 2017 than in any year since 2000."
The week ended with the Dow UP 0.8%, to 21988; the S&P 500 UP 1.4%, to 2477; and the Nasdaq UP 2.7%, to 6435.
Bond investors had a more negative take on August jobs than equity traders and pushed prices up. The 30YR FNMA 4.0% bond we watch finished the week UP .10, at $105.55. In Freddie Mac's Primary Mortgage Market Survey for the week ending August 31, national average 30-year fixed mortgage rates fell again, to a new yearly low. But the chief economist cautioned: "recent releases of positive economic data could halt the downward trend." Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW?... Experts predict that by 2025, there will be 5.2 million more homeowners in the U.S. Not surprisingly, Millennials born in the 1980's and 1990's will dominate the market