Mortgage Economic Review: June 2019

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Angst on Wall Street soared in May, as tensions with China and Mexico heated up. Trade negotiations between China and the United States broke off all of sudden—which rattled the markets and sent stock charges on a roller coaster all month. In addition, President Trump threatened new tariffs towards Mexico because of the migrant situation at the border. The one big sticking point was Chinese espionage, especially the Chinese telecom manufacturer Huawei (reported Wah-Way). The U.S. Positioned intense restrictions towards Huawei, making it almost not possible for the organisation to sell its products within the US. If a complete-blown Trade War develops, permit’s not neglect that China is maintaining US debt to the tune of $1.12 trillion – which they can use to retaliate in a Trade War. However, China can’t hurt the US an excessive amount of – the reality is that to stay Economically wholesome, China wishes US Consumers to buy their products. This month’s Mortgage Economic Review summarizes Key Economic Data this is crucial to Mortgage and Real Estate Professionals.

 

Interest Rates and Fed Watch
The ultimate FOMC Meeting concluded on May 1st with the FOMC Minutes launched on May 22nd. Reading the Minutes, you get the impact that maximum Fed Governors are in want of keeping Interest Rates steady. The Fed has remained non-committal as to their next pass, but they’ve reiterated they may be “patient” and “information established”. Fed Speak translation: they may be in no hurry to raise or lower Interest Rates anytime soon as they take a seat again and watch the Economic Data roll in. That manner they’re watching Inflation and the all-vital yield curve – that is close to inverting. They are also monitoring trade tensions, Stock Market volatility, oil expenses, and European Economic stability. The next FOMC Meeting begins June 18th and Fed Watchers don’t count on any adjustments in Interest Rates – however odds of an Interest Rate cut earlier than yr cease have extended and at the moment are at eighty five%.

Housing Market Data Released in May 2019
Another month of mixed Economic Data from the Housing Market. With Interest Rates lower and a robust Labor Market, the Housing Market ought to be having a outstanding spring buying season – however it’s just good enough. Most Loan Officers I’ve talked to say they may be busy with each Refi and Purchase transactions. Plus, they are seeing an growth in 1st Time Buyers. The dip in Interest Rates and softening of domestic costs has helped affordability, so the standard spring shopping for season may additionally very well expand into the summer season and fall. If rates maintain losing, we ought to see a busy Purchase and Refi marketplace all yr.

Existing Home Sales (closed deals in April) fell 0.4% to an annual rate of five,a hundred ninety,000 houses, now down four.Four% within the last three hundred and sixty five days. The median charge for all types of homes is now $267,300 – up 3.6% from a year ago. The median Single Family Home rate is $269,three hundred and $251,000 for a rental. First Time Buyers have been 32%, Investors sixteen%, Cash Buyers 20%. Homes had been available on the market an average of 24 days, and fifty three% have been in the marketplace for less than a month. Currently, 1,830,000 homes are for sale, up from 1,800,000 a yr ago.

New Home Sales (signed contracts in April) fell 6.Nine% to a seasonally adjusted annual price of 673,000 homes. The median New Home rate become $342,two hundred and the common New Home rate was $393,seven hundred. The quantity of New Homes for sale is expected at 332,000 devices which represents a five.Nine month supply.

Pending Home Sales Index (signed contracts in April) fell 1.5% to 104.Three from one zero five.Nine the prior month.

Housing Starts (excavation started out in April) rose five.7% to a seasonally adjusted annual price of 1,235,000 devices – down 2.Five% YoY. Single Family Housing Starts rose 6.2% to an annual pace of 854,000 gadgets – down 4.3% YoY.

Building Permits (issued in April) rose zero.6% to an annual adjusted rate of 1,296,000 – down five.Zero% YoY. Single Family permits fell four.2% to 782,000 devices – down nine.Four% YoY.

Housing Completions (finished in April) fell 1.4% to an annual rate of one,312,000 devices – up 5.Five% within the final 365 days. Single Family Completions were down 4.1% to 918,000 devices – up sixteen.6% YoY.

Labor Market Economic Data Released in May 2019
The Labor Market maintains its robust pace. The Bureau of Labor Statistics stated the Economy added 263,000 new jobs during April (a hundred ninety,000 expected). For the ultimate three months, the Economy brought a mean of one hundred seventy,000 new jobs every month. Unemployment dropped to three.6% – the bottom rate in 50 years and there are now an expected 750,000 to one million process openings that are unfilled. Where were the new jobs created? Four,000 were in production, 33,000 in creation, seventy six,000 in enterprise services, seventy six,000 in schooling / fitness, 34,000 in hospitality, eleven,000 in transportation, 27,000 in government. Retail lost 12,000 jobs – bypass down to the Consumer segment and read approximately keep closings.

The Economy delivered 263,000 new jobs in April.

The Unemployment Rate fell to three.6% from three.8% the prior month.

The Labor Force Participation Rate fell to sixty two.8% from 63.Zero% the previous month.

The Average Hourly Wage rose 0.2% in April and 3.2% YoY.

Inflation Economic Data Released in May 2019
Another month of Inflation information coming in decrease than predicted. Inflation rose slightly in April because of higher charges for gas, refuge and health care. Shelter expenses, which include a 3rd of the CPI, rose zero.Four% (3.Four%YoY), electricity expenses up five.Four% (2.9% YoY) and health care up zero.3% (2.Three% YoY). Clothing charges were rapidly declining for the previous couple of months. They dipped zero.Eight% this month after falling 1.9% the prior month. New Car costs rose 0.1% even as Used Car prices declined 1.Three% – the 0.33 directly month of charge decline for Used Cars. Inflation has been modest considering that is the tightest Labor Market in 50 years. The Fed considers this recent lull in Inflation as “transitory”, and expects it to boom inside the future. Sooner or later, higher wages will translate into better Inflation, but it would not seem like as a way to take place any time quickly.

CPI rose zero.3%, now up 2.0% in the remaining 365 days.

Core CPI (ex-meals & power) rose zero.14%, now up simplest 2.1% inside the last 12 months.

PPI rose 0.2%, now up 2.2% in the remaining twelve months.

Core PPI (ex-meals & electricity) rose 0.1%, up 2.Four% in the last three hundred and sixty five days.

GDP Economic Data Released in May 2019
The 2nd estimate of 1st Quarter 2019 GDP confirmed the Economy expanded at a three.1% annual price (3.0% anticipated). That become a slight revision down from the primary estimate of 3.2% final month. The Economy continues to chug along mainly whilst you consider the first Quarter normally has slower increase due to bloodless weather in a great deal of the u . S . A .. 1st Quarter GDP information reflects growth in Consumer spending, state and nearby authorities spending, exports, inventories, and business constructing, while Federal authorities spending, commercial enterprise gadget, and residential constructing reduced.

Consumer Economic Data Released in May 2019
Retail Sales information remains weak in 2019 as Consumers keep to pinch their pennies. Consumers reduce again on buying motors, electronics, and clothing. Gasoline Sales turned into up, however that become because of better gas fees. This isn’t always top information for stores who are already hurting from online competition. So a long way this yr over 7,000 store closures were introduced, and that’s after 5,500 save closures in 2018. Speaking of on-line income – they have been down too. With such a robust Labor Market and Unemployment at a 50 12 months low – you would anticipate Consumers to be spending more on items and houses.