INFO THAT HITS US WHERE WE LIVE... Last week we got the good news that both New and Pending Home Sales are heading in the right direction--UP. October New Home Sales rose 6.2%, to a 685,000 annual rate, soundly beating forecasts for the second month in a row. That puts sales of new single family homes up 18.7% over a year ago, at their highest level since 2007. And this isn't just an artificial rebound from the hurricanes. All major regions saw sales gains, with the smallest actually coming from the south. The average sales pace for the past three months is also the highest since 2007.
For October, the Pending Home Sales measure of contracts signed on existing homes rebounded to a 3.5% gain following the 0.4% dip in September. This suggests existing homes sales should move up in November and December. Prices in many markets edge higher, as national measures continue to go up. Consequently, Fannie Mae and Freddie Mac are increasing the conforming loan limits in 2018 for most of the mortgages they insure. The baseline limit will go to $453,100, while the limit in "high-cost areas" will be $679,650. These conforming loan limits vary by county, so check with your mortgage professional.
BUSINESS TIP OF THE WEEK... Always set goals in everything you do. In any activity, setting a goal will steer your direction.
>> Review of Last Week
BULLISH ON TAX CUTS... The Senate kept sending signals it would pass its tax reform bill by the end of the week. While the vote didn't happen by Friday's market close, there was enough progress to fuel this week's stock rally. The Dow logged its biggest weekly gain this year, the S&P 500 its best since September, though the Nasdaq fell after profit taking on high flying tech stocks. The S&P 500 has been up (including dividends) 13 straight months, the longest streak in history, and the longest without as much as a 3% correction. Why? The economy keeps improving and corporate profits are up 6.1% the last quarter.
There was no stronger evidence of an improving economy than the latest Q3 GDP report. Real GDP was revised up from the original 3.0% estimate to 3.3% annual growth, beating expectations. Especially good was the gain in business investment. This suggests that healthier economic conditions are driving the rebound in capital expenditures our economy needs. The ISM Index dipped a bit in November but, at 58.2, shows manufacturing activity is still moving along briskly. In October, Personal Income was up 0.4% and Personal Spending up 0.3%, while Core PCE inflation is up only 1.4% the past year.
The week ended with the Dow UP 2.9%, to 24232; the S&P 500 UP 1.5%, to 2642; and the Nasdaq down 0.6%, to 6848.
With the tax bill vote delayed in the Senate, bond traders pushed Treasuries higher, though other bonds lost ground. The 30YR FNMA 4.0% bond we watch finished the week down .25, at $104.53. National average 30-year fixed mortgage rates inched lower again in Freddie Mac's Primary Mortgage Market Survey for the week ending November 30. But the survey closed before rates gained after the GDP report. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW?... The average first time home buyer is 32 years old with $75,000 household income, and buys a single-family suburban home for $190,000 with a 5% down payment, while still carrying $29,000 in student loan debt.
>> This Week's Forecast
JOBS GAIN, SERVICES GROW, CONSUMERS POSITIVE... The big data this week will be Friday'sNovember Employment Report, and economists predict another near-200,000 gain in Nonfarm Payrolls. This is less than October's blow-out number, but solid job growth nonetheless. Equally important to the housing market, Hourly Earnings are forecast to get back to their gaining ways. ISM Services should remain solidly in growth territory, well above 50, and important, since the services sector provides the bulk of our jobs. Analysts expect Michigan Consumer Sentiment to keep booking historically high numbers