The Fed changed its tone today taking a sharp turn toward dovish policy. The labor market continues to produce strong numbers while the U.S. economy remains on solid ground. ADP reports that private employment grew by 213,000 in January, well above the 170,000 expected. December was revised lower to 263,000 from 271,000 and also a strong number. “The labor market has continued its pattern of strong growth with little sign of a slowdown in sight. Midsized businesses continue to lead job creation, however the share of jobs was spread a bit more evenly across all company sizes this month," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.
Contracts signed but not yet closed for home purchases fell again in December, according the National Association of Realtors (NAR). Pending Homes Sales fell 2.2% from November to December and are down nearly 10% from December 2017. It was the lowest December reading since December 2013 and marks 12 straight months of annual declines. Lawrence Yun, NAR chief economist, cited several reasons for the decline in pending sales. “The stock market correction hurt consumer confidence, record high home prices cut into affordability and mortgage rates were higher in October and November for consumers signing contracts in December,” he said.
The Mortgage Bankers Association (MBA) reports that mortgage rates were essentially unchanged in the latest week and have remained near current levels for several weeks now. The MBA said the 30-year fixed-rate mortgage was at 4.76% in the week ended January 25 with 0.47 in points. Within the report it showed that the refinance index fell 6% while the purchase index fell 2%. The survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990.
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