Market Update For the week of March 21, 2011

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Mortgage and Lending with Caliber Home Loans 176918

 

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April Diehl

 

April Diehl
Loan Officer
415 Hwy 95A, Suite K-1102
Fernley, NV 89408
Phone: (775) 575-1744
Mobile: (775) 830-4398
Toll Free: (866) 412-1740
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PrimeLending, A PlainsCapital Company

For the week of March 21, 2011 - Vol. 9, Issue 12

>> Market Update 

QUOTE OF THE WEEK..."To a journalist, good news is often not news at all."--Phil Donahue

INFO THAT HITS US WHERE WE LIVE
...Well, journalists had plenty of their kind of news to write about with last week's housing reports. The bad stuff began with February Housing Starts dropping 22.5% to a level close to the April 2009 low, which was the lowest on record. Most of the drop was from multi-family starts, which are volatile on a monthly basis. Single-family starts were down 11.8%. New Building Permits fell 8.2% for February. This gauges activity a few months out, indicating starts in the Spring ought to be up a bit from now.

Nonetheless, experts feel building and sales activity should normalize to much higher rates in the next few years. The population is growing and aging housing stock needs to be replaced. Analysts say builders usually need to put up at least one million homes a year to keep up with these demands. Maybe that's why an industry index of builder sentiment actually ticked up a point for March, putting it at its highest level since May 2010, when the homebuyer tax credits were making everyone feel good.

BUSINESS TIP OF THE WEEK...Don't forget to smile. You may think people buy from you because of price, quality and the fact you stand behind your work. Those factors count, but ultimately, people buy because they like you.

>> Review of Last Week

MELTDOWN ON WALL STREET...As of Friday, a nuclear disaster at Japan's Fukushima complex had been averted, but that didn't stop stocks from having their own meltdown. Investors sold off holdings, worried over Japan's nuclear crisis, Libya's civil war spreading to other oil producers, as well as the European Union's lingering sovereign debt problems. The market did manage two good days at the end, but they weren't good enough to prevent another weekly drop in all three major indexes, although many people felt things could have been a lot worse.

Economic news was mixed, the negative part being Housing Starts and Building Permits, covered above. On the very positive side was the Philadelphia Fed Index for March showing solid manufacturing growth in that region. Wholesale (PPI) and Consumer (CPI) Inflation were both up more than expected, thanks to higher energy and food prices. But the Fed focuses on Core CPI, which eliminates food and energy, and remains within an acceptable range. It seems like almost everyone but the Fed is concerned about inflation picking up. Homebuyers should note that real estate is still, even now, an excellent hedge against inflation over the long term.

For the week, the Dow ended down 1.5%, at 11,859; the S&P 500 was down 1.9%, to 1,279; and the Nasdaq was down 2.6%, ending at 2,644.


With Japan's nuclear fears prominent in the news all week, investors' "flight to safety" in bonds became a flat-out run. The FNMA 4.0% bond we watch ended up .95 for the week, closing at $99.10. In line with this, Freddie Mac's weekly survey of conforming mortgages showed national average mortgage rates easing a little more in their historically low range. Many economists forecast mortgage rates to rise this year as the economy recovers, but now feel low rates may remain a tad longer than expected.

DID YOU KNOW
?...This week's GDP estimate refers to our nation's Gross Domestic Product. This is the total final value of all U.S. goods and services produced in a year: all consumer, investment and government spending, plus the value of all exports, minus the value of all imports. GDP growth is what counts, with 2.5% to 3.0% the historical average.

>> This Week's Forecast

FEBRUARY HOME SALES AND ANOTHER LOOK AT Q4 GDP...February isn't usually a top month for home sales and the experts don't expect that situation to change. Monday's Existing Home Sales for February are expected to be down from January, coming in at a 5.05M annual rate. But Wednesday's New Home Sales for February should be up slightly from the prior month, at a 288K annual rate.

But the overall economic picture appears to be picking up. The Third Estimate of Q4 GDP is forecast up another 0.1%, to 2.9%, showing that the overall economy continues to grow. Consumers' attitudes are holding steady in the University of Michigan's Sentiment Index for March.

>> The Week's Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of March 21 - March 25

 Date

Time (ET)

Release

For

Consensus

Prior

Impact

M
Mar 21

10:00

Existing Home Sales

Feb

5.05M

5.36M

Moderate

W
Mar 23

10:00

New Home Sales

Feb

288K

284K

Moderate

W
Mar 23

10:30

Crude Inventories

3/19

NA

1.745M

Moderate

Th
Mar 24

08:30

Initial Unemployment Claims

3/19

384K

385K

Moderate

Th
Mar 24

08:30

Continuing Unemployment Claims

3/9

3.700M

3.706M

Moderate

Th
Mar 24

08:30

Durable Goods Orders

Feb

0.9%

3.2%

Moderate

F
Mar 25

08:30

GDP-Third Estimate

Q4

2.9%

2.8%

Moderate

F
Mar 25

08:30

GDP Deflator-Third Estimate

Q4

0.4%

0.4%

Moderate

F
Mar 25

09:55

Univ. of Michigan Consumer Sentiment-Final

Mar

68.0

68.2

Moderate

 

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months...The Fed's FOMC Policy Statement last week said that they weren't worried about inflation and that although the economy is improving, the recovery isn't strong enough to withstand a rise in interest rates. So economists are forecasting the Funds Rate to stay where it is well into the second half of the year. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%-0.25%

After FOMC meeting on:

Consensus

Apr 27

0%-0.25%

Jun 22

0%-0.25%

Aug 9

0%-0.25%


Probability of change from current policy:

After FOMC meeting on:

Consensus

Apr 27

     <1%

Jun 22

     <1%

Aug 9

     2%

Dce 

This e-mail is an advertisement for April Diehl. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice, or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in the newsletter is the property of PrimeLending, A PlainsCapital Company and cannot be reproduced for any use without prior written consent. It is designed for real estate and other financial professionals only. It is not intended for consumer distribution. The material does not represent the opinion of PrimeLending, A PlainsCapital Company. © 2011 PrimeLending, A PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, A PlainsCapital Company (NMLS no: 13649) is a wholly-owned subsidiary of a state-chartered bank and is an exempt lender in the following states: AK, AR, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MN, MS, MO, MT, NE, NV, NY, NC, OH, OK, OR, PA, SC, SD, TN, TX, UT, VA, WV, WI, WY. Licensed by: AL State Banking Dept.- consumer credit lic no. MC21004; AZ Dept. of Financial Institutions- mortgage banker lic no. BK 0907334; Licensed by the Department of Corporations under the California Residential Mortgage Lending Act- lender lic no. 4130996; CT Dept. of Banking- lender lic no. ML-13649; D.C. Dept. of Insurance, Securities and Banking- dual authority lic no. MLO13649; IL Dept. of Financial and Professional Regulation- lender lic no. MB.6760635; IN Dept. of Financial Institutions- sub lien lender lic no. 11169; ME Dept. of Professional & Financial Regulation- supervised lender lic no. SLM8285; MD Dept. of Labor, Licensing & Regulation- lender lic no. 11058; Massachusetts Division of Banking- lender & broker license nos. MC5404, MC5406, MC5414, MC5450, MC5405; MI Dept. of Labor & Economic Growth- broker/lender lic nos. FR 0010163 and SR 0012527; Licensed by the New Hampshire Banking Department- lender lic no. 14553-MB; NJ Dept. of Banking and Insurance-lender lic no. 0803658; NM Regulation and Licensing Dept. Financial Institutions Division- lender license no. 01890; ND Dept. of Financial Institutions- money broker lic no. MB101786; RI Division of Banking- lender lic no. 20102678LL and broker lic no. 20102677LB; TX OCCC Reg. Loan License- lic no. 7293; VT Dept. of Banking, Insurance, Securities and Health Care Administration- lender lic no. 6127 and broker lic no. 0964MB; WA Dept. of Financial Institutions-consumer lender lic no. 520-CL-49075. PrimeLending, A PlainsCapital Company is an Equal Housing Opportunity Lender. NMLS# 176918


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