Mortgage Bonds were knocked down in the latter part of January, rallied as February picked up steam, and then dropped again.

Mortgage Backed Securities, the type of Bond to which home loan rates are tied, worsened after a five-day rally. These Bonds have not been able to break above the resistance level set in November 2016.

Mixed earnings reports in the U.S. coupled with a floundering Greek economy that grabbed headlines again both contributed to the recent rally in Mortgage Bonds. Close to a decade since its first bailout, Greece is in worse shape than it was in the financial crisis. Other countries like Italy, Portugal and Spain are also struggling with debt and tepid economic growth.

As global economic uncertainty continues, we may see the return of investment dollars to the safer haven of the Bond market. Home loan rates, in turn, may benefit as home loan rates are tied to Mortgage Bonds.

Improved Bond prices and home loan rates would be a welcome sign as housing prices continue to rise. Home price gains continued through the end of 2016, surging in December. CoreLogic, a leading provider of consumer, financial and property information, reported that home prices, including distressed sales, rose 7.2 percent from December 2015 to December 2016. From November to December, prices rose 0.8 percent. The U.S. has experienced 59 consecutive months of year-over-year increases. CoreLogic forecasts a 4.7 percent increase in prices from December 2016 to December 2017.

Despite the market volatility, home loan rates remain in attractive territory.

If you or someone you know has any questions, please don't hesitate to contact me.

Forecast for the Week

Inflation and housing news will stand out in a packed economic calendar.

Look for wholesale inflation data via the Producer Price Index on Tuesday. The Consumer Price Index follows on Wednesday.

Manufacturing data from the Empire State Index will be delivered on Wednesday, with the Philadelphia Fed Index on Thursday.

Retail Sales will be released Wednesday.

Housing news is abundant with the NAHB Housing Market Index on Wednesday, and Housing Starts and Building Permits on Thursday.

As usual, weekly Initial Jobless Claims will be reported on Thursday.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bonds rallied for several days before getting knocked down again. Home loan rates are still in attractive territory.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Feb 10, 2017)

Job growth jumped in January, but wage growth weakened.

The Labor Department reported that U.S. employers hired 227,000 workers in January, above the 170,000 expected and signaling the sector kicked off 2017 on a high note. All was not rosy within the report, however. Average hourly earnings rose by a scant 0.1 percent versus the 0.3 percent expected. The December number was revised lower to 0.2 percent from the original 0.4 percent reported. In addition, job growth in November and December was revised lower by a total of 39,000. The Unemployment Rate ticked up to 4.8 percent from 4.7 percent.

Weak wage growth could lead to tepid inflation if the pattern continues, and inflation ended 2016 on a tame note. Core Personal Consumption Expenditures (PCE), which strips out volatile food and energy, increased 0.1 percent versus the 0.2 percent in November. Year-over-year, Core PCE was up 1.7 percent.

And in housing news, the S&P/Case-Shiller 20-city Home Price Index rose by 5.3 percent from November 2015 to November 2016, up from October's annual increase of 5.1 percent.

Maximum employment, price stability and a strong housing sector are key measures considered by the Fed when setting the course of monetary policy. The Federal Open Market Committee (FOMC) kept its benchmark Fed Funds Rate unchanged when it met January 31 and February 1, despite indicating in December that three rate hikes were likely in 2017. At that time, the FOMC raised rates for only the second time in more than a decade.

While a "rate hike" may sound troublesome, purchase or refinance home loan rates are not directly tied to the Fed Funds Rate. The Fed Funds Rate is the short-term rate at which banks lend money to each other overnight. Instead, home loan rates are tied to Mortgage Backed Securities, which are a type of Bond.

For now, home loan rates remain in attractive territory.

If you or someone you know has any questions , please don't hesitate to contact me.

Forecast for the Week

The markets might take a breather in this week of light economic news.

Weekly Initial Jobless Claims will be released Thursday.

Friday brings the Consumer Sentiment Index.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bonds have stabilized in recent weeks. Home loan rates are still in attractive territory.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Feb 03, 2017)

2017 is going to be a great year for our local housing! If you are on the fence of when to buy, sooner than later is what I recommend. Interest rates are projected to rise steadily for the next 3 years. With home values going up along with interest rates, this creates a lower threshold for buyers to qualify-essentially, decreasing their buying power.

Existing Home Sales and New Home Sales followed a similar path downward in December. But the latest housing reports still had good news to share.

Existing Home Sales closed out 2016 as the best year in a decade, though December's numbers were below expectations at 5.48 million units on an annualized basis. The National Association of REALTORS® reported that sales in 2016 were 5.45 million units, above the 5.25 million in 2015 and the highest since the 6.48 million in 2006.

New Home Sales fell 10.4 percent from November to December. It was the lowest level since February 2015 and down 0.4 percent from December 2015. Although the news was disappointing, data showed a near six-month supply of new homes for sale, which finally signals a healthy balance between supply and demand.

These reports suggest a strengthening job market may have put potential homebuyers and sellers at ease this past year.

Weaker-than-expected economic growth in the final quarter of 2016 came as a surprise. The Bureau of Economic Analysis reported that Gross Domestic Product (GDP) grew by 1.9 percent in the final quarter of 2016, below the 2.2 percent expected and down from the 3.5 percent reported in the third quarter. For all of 2016, GDP grew by a tepid 1.9 percent, down from 2.6 percent in 2015 and at its worst level since 2011. On a positive note, within the report it showed that consumer spending rose 2.5 percent.

The disappointing GDP numbers did give Mortgage Bonds a slight boost, which was a welcome change from the declines experienced throughout January. When Bonds improve, the home loan rates that are tied to them can improve as well. The reverse is also true.

For now, home loan rates remain in attractive territory.

If you or someone you know has any questions , please don't hesitate to contact me.

Forecast for the Week

In a week fully loaded with economic news, employment data and monetary policy will command attention.

Monday kicks off with Personal Income, Personal Spending and the Fed's favorite inflation gauge Personal Consumption Expenditures.

Housing information will come from Pending Home Sales on Monday and the S&P/Case-Shiller Home Price Index on Tuesday.

From the manufacturing sector, Chicago PMI will be delivered on Tuesday followed by the ISM Index on Wednesday.

Labor market news will be plentiful with the ADP National Employment Report on Wednesday, worker Productivity and weekly Initial Jobless Claims on Thursday. The January Jobs Report will be released on Friday, which includes Non-farm Payrolls, Hourly Earnings and the Unemployment Rate.

Also this week, Consumer Confidence will be released on Tuesday, the FOMC Monetary Policy Statement on Wednesday and ISM Services Index on Friday.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bonds have been stutter stepping downward since mid-January. Although home loan rates increased slightly, they are still in attractive territory.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Jan 27, 2017)

While Housing Starts had positive news, inflationary pressures may leave some singing the blues.

December Housing Starts surged 11.3 percent from November, the Commerce Department reported, beating expectations. The numbers suggest that the pullback in November, following the nine-year high in October, could have been an anomaly. While multifamily starts rebounded, single-family starts were modestly lower.

For all of 2016, average monthly Housing Starts of 1.17 million units were the best since 2007 due in part to a strong labor market and rising wages. Building Permits, which signal future construction, fell just short of expectations.

On the consumer inflation front, the December Consumer Price Index (CPI) and Core CPI, which strips out volatile food and energy, were both in line with expectations. Year-over-year CPI is up 2.1 percent from December 2015. The 12-month measure marks the fastest pace of inflationary growth since the period ending June 2014. Rising inflation, at both the consumer and wholesale levels, is worrisome because it reduces the value of fixed investments like Mortgage Bonds and hurts the home loan rates tied to them.

Although Bond prices have dropped in recent days, home loan rates remain at attractive levels.

If you or someone you know has any questions, please don't hesitate to contact me.

Forecast for the Week

The final reading of fourth quarter Gross Domestic Product will close the book on economic growth in 2016.

Existing Home Sales will be released on Tuesday followed by New Home Sales on Thursday.

Also on Thursday, look for the usual weekly Initial Jobless Claims.

On Friday, the final reading for fourth quarter 2016 Gross Domestic Product, Durable Goods Orders and the Consumer Sentiment Index will be delivered.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bonds have not had a good run recently. Despite this, home loan rates are still in attractive territory.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Jan 20, 2017)

Summary

Foggy, mostly cloudy, and cold today with highs in the 30's. Foggy and partly sunny Tuesday with highs rising into the low 40's at lake level. Wednesday the next storm begins to move in. It will be cloudy and windy with gusts reaching 100 mph on the ridges by late afternoon. Light snow may begin to move in during the afternoon, especially West of the lake along the crest. Wednesday night heavier snowfall will move in and then taper to scattered snow showers Thursday. We could see 5-13 inches at lake level, and 6-16 inches on the mountains by Thursday afternoon. Then a break Thursday night but cold with lows in the 20's. Friday another cold storm moves in with heavy snow into Saturday night. Then tapering to snow showers on Saturday. We could see an additional 6-16 inches at lake level, and 7-22 inches on the mountains by Saturday afternoon. Then a break Saturday night with lows in the 20's. A final cold storm moves in Sunday with heavy snow into Sunday night. Then tapering to snow showers on Monday. We could see an additional 1-2 feet at lake level and 2-3 feet on the mountains. Then a pattern change as high pressure builds in near the West coast. We may see a break in the storms for at least a week starting next Tuesday.

Short Term Forecast

A couple of readers mentioned a 24 hour snowfall record last week. I checked with my official snowfall station the Central Sierra Snow Lab on Donner Summit. They reported that we saw 35 inches of snow in 24 hours during the big storm last Tuesday. The 24 hour record however is 59 inches, so not even close to the 24 hour record.

We have been dealing with fog in the mornings this week. It is pretty thick around the area again this morning. It has been causing ice on the ski lifts which has been an issue for the lower parts of the mountains at the ski resorts. Today will be colder than originally expected with mostly cloudy skies above the fog, and fog down low. The skies may clear a bit more Tuesday allowing the sun to burn off the fog.

The forecast has not changed much from yesterday. The GFS did continue to elongate the trough as it moves in Wednesday. Some runs were even splitting the storm at it hit the Sierra. The latest run this morning is holding it together better, as well as on the other models. It will get very windy on the mountains Wednesday and then we may see light snow move in during the afternoon. Snow levels look to lower faster, possibly to lake level by evening.

Here is the GFS total precip forecast. You can see better spillover East of the crest this morning.

This will be a fast hitting cold front that moves through Wednesday night. The GFS cuts off precip fast Thursday morning. The European model keeps snow showers going a little longer behind the front Thursday. The European model also moves in snow showers a little faster Wednesday afternoon, so it is wetter than the GFS. Expect a quick shot of several inches overnight Wednesday.

Here is the updated snowfall forecast that did tick up slightly with the lower snow levels and better spillover on the GFS. This is by Thursday afternoon as the storm clears the area.

We should have a break Thursday afternoon into Thursday night but then another cold storm may push in snow during the early morning hours Friday. This storm is colder than the first, and looks a little wetter as well. It will also last a little longer with heavy snow Friday into Friday night, before tapering to snow showers by Saturday morning and then moving out by Saturday afternoon.

Here is the GFS total precip forecast through Saturday.

A break Saturday night is short lived as a final cold storm moves in Sunday. This storm could bring heavy snow Sunday into Sunday night before tapering off to snow showers on Monday, and then clearing out Monday night.

Here is the GFS total precip forecast through Monday.

Too early for specific snowfall numbers, but we could see 1-2 feet at lake level and 2-3 feet on the mountains with this storm if the forecast holds.

So basically 6 days of snow starting Wednesday with 3 storms moving through. It appears that each storm will be progressively colder and wetter. That would bring nice powder to the mountains making for incredible skiing on top of the incredible base we have already.

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Extended Forecast Be sure to get out and enjoy the snow over the 6 day period because a pattern change is coming. The latest ensemble runs of the models show that the ridge sit over Western Canada starting next Tuesday and not Alaska yet, with high pressure extending over the Western U.S. That may bring a break in the storms for at least a week starting next Tuesday.

We may see a pattern that finally brings some Winter to the Eastern U.S. with a trough developing there. The AO and NAO are forecast to go negative and the PNA neutral. We could see a trough lock into the East for the end of the month into February and a ridge for the West. Hoping the ridge does shift North and West towards Alaska again so that we can get storms to cut underneath into CA.

Consumers spent more time ringing up sales in December.

The Commerce Department reported that Retail Sales rose 0.6 percent in December from November. The increase was due in part to strong sales for autos. The year ended with momentum that could signal sales growth in 2017. From December 2015, sales were up 4.1 percent year over year. Overall, sales were up 3.3 percent for 2016 after a 2.3 percent gain in 2015.

Meanwhile, wholesale inflation ticked up in December, increasing 0.3 percent from November, as reported in the Producer Price Index (PPI) from the U.S. Bureau of Labor Statistics. From December 2015 to December 2016, PPI climbed 1.6 percent, which was the largest 12-month gain since 2014. Core PPI, which strips out volatile food and energy prices, also increased 0.2 percent from November to December.

Inflation, at both the wholesale and consumer levels, is an important measure to track because increasing inflation reduces the value of fixed investments like Mortgage Bonds. When Bond prices worsen, the home loan rates tied to them can worsen as well.

Although Bond prices and home loan rates took a hit recently following economic news releases, home loan rates are still near historic lows.

If you or someone you know has any questions , please don't hesitate to contact me.

Forecast for the Week

The Consumer Price Index is a key report to watch in a week that kicks off Tuesday with a full slate of manufacturing, housing and other data. Markets are closed Monday, January 16 in recognition of Martin Luther King Jr. Day.

Regional manufacturing data will be released in the Empire State Index on Tuesday followed by the Philadelphia Fed Index on Thursday.

Wednesday brings the closely watched Consumer Price Index along with the Fed's Beige Book.

Look for housing data via the NAHB Housing Market Index on Wednesday and Housing Starts and Building Permits on Thursday.

As usual, weekly Initial Jobless Claims will be reported on Thursday.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bonds recently lost some of the footing gained heading into 2017.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Jan 13, 2017)

Unemployment edged higher in December with more Americans entering the labor market. Wages ticked up, too.

The Bureau of Labor Statistics reported U.S. employers added 156,000 new jobs in December, which was below the 175,000 expected. October and November job growth was revised higher by 19,000. In 2016, job growth totaled 2.2 million, down from a gain of 2.7 million in 2015.

The Unemployment Rate ticked higher to 4.7 percent in December. While this might seem negative, it's actually positive because more Americans sought out employment in December.

Average hourly earnings rose from -0.1 percent in November to 0.4 percent in December. In addition, average hourly earnings rose 2.9 percent year-over-year, the fastest pace since June 2009. Wage growth is a welcome sign for American workers, especially for those looking to buy a home.

Home price gains remained solid in November. CoreLogic, a leading provider of consumer, financial and property information, reported that home prices, including distressed sales, rose 7.1 percent from November 2015 to November 2016. Low inventories of homes for sale continued to push prices higher. The recent rise in mortgage rates and the expectation of higher rates in 2017 could slow home price gains in 2017, CoreLogic reported. Home prices are expected to rise 4.7 percent from November 2016 to November 2017.

Home loan rates were able to improve slightly after reaching two-year highs. They are still in historically low territory, though the volatility in the markets that followed the presidential election could continue.

If you or someone you know has any questions , please don't hesitate to contact me.

Forecast for the Week

News on wholesale inflation and Retail Sales highlight a quiet week for economic reports.

Thursday brings the first release with weekly Initial Jobless Claims.

On Friday, the wholesale inflation reading Producer Price Index, Retail Sales and Consumer Sentiment Index will be delivered.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bonds stopped their downward slide recently and made up some ground.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Jan 06, 2017)

Sierra Sotheby's Releases Year End Market Data

2016 was an exciting year for Lake Tahoe, Truckee and surrounding area real estate markets. With metrics pointing to some all time highs in sales volume coupled with market-wide price improvements, this year proved to be a prolific time for Lake Tahoe’s real estate climate.

As pricing inches back to historical highs of 2007, demand continues to outpace inventory. And because the market reacts differently throughout the region’s many diverse communities, 2016 showed variable success across different segments.

Click the links below to see how the market performed in your favorite Tahoe neighborhood(s). If you've considered selling, now may be a great time to weigh your options.

EAST SHORE | INCLINE VILLAGE | NORTH & WEST SHORE | RENO | SOUTH LAKE | TRUCKEE

Existing Home Sales hit nine-year highs, and the third reading of third quarter Gross Domestic Product charmed.

The National Association of REALTORS® reported that Existing Home Sales in November edged higher by 0.7 percent from October to an annual rate of 5.61 million units. Year-over-year, Existing Home Sales were up 15.4 percent, but that number could be distorted. "Know Before You Owe" or "TRID" rules went into effect November 2015, and many mortgage applications last year were pushed into December with the new requirements. November New Home Sales were also up 5.2 percent from October, coming in above expectations.

Economic activity was alive and well in the third quarter of 2016. The final reading for third quarter Gross Domestic Product (GDP) came in at 3.5 percent, above the 3.3 percent expected and well above the anemic readings of 1.4 percent in the second quarter and 0.8 percent in the first quarter. Within the report, consumer spending was up 3.0 percent from 2.8 percent. Business investments surged to 1.4 percent from 0.1 percent.

GDP represents the total dollar value of all goods and services produced over a specific time period, and it's one of the primary indicators used to measure the health of a country's economy. This report was welcome news.

For homebuyers and homeowners looking to refinance, a strengthening economy may seem like a mixed blessing. Why? If our economy continues to strengthen, and Stocks continue to improve at the expense of Mortgage Bonds, home loan interest rates could slide higher.

Although home loan rates rose to their highest levels in 2016 at the close of the year, they are still in historically low territory.

If you or someone you know has any questions , please don't hesitate to contact me.

Forecast for the Week

Trading volumes should decrease in the week between Christmas and New Year's, but data releases don't take holiday vacation.

The S&P/Case-Shiller Home Price Index will be released on Tuesday, followed by Pending Homes Sales on Wednesday.

Consumer Confidence will be delivered on Tuesday.

Thursday brings weekly Initial Jobless Claims.

Regional manufacturing data from the Chicago PMI will be reported on Friday.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bonds gained a little ground recently.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Dec 23, 2016)