Shelter Six:  1st Quarter GDP Much Stronger Than Expected

April 29, 2019 by · Leave a Comment 

1st Quarter GDP was up an astounding 3.2%, much stronger than expected and significantly higher than the 4th Quarter’s 2.2%.

In fact, this was the best 1st Quarter since 2015, and came despite the government shutdown and severe weather across the country.

March Existing Home Sales were disappointing and 5% lower than a year ago.

March New Home Sales, however, were stronger than expected and at the highest level since November 2016.

An industry-wide event will take place over the next couple of years as the London Interbank Offered Rate (LIBOR), the leading index for ARM’s, is scheduled to terminate at the end of 2021 and be replaced with the Secured Overnight Financing Rate (SOFR).

Shelter’s Smart Series portfolio loan program now offers a 95% option with no PMI as well as a 40-Year Fixed-Rate Interest-Only option.

Rate Update

Rates normally shoot up when strong economic news is released, but actually fell last week despite the strong GDP figures because inflation was much tamer than expected.

This Week

The Core PCE Price Index is due out on Monday, the ISM National Manufacturing Index on Wednesday, and both the ISM National Services Index and Employment figures on Friday.  The next Fed meeting also takes place on Wednesday.

Shelter Six:  Retail Sales Surge

April 22, 2019 by · Leave a Comment 

March Retail Sales jumped a whopping 1.6% from February, which was far greater than forecasted and the largest monthly increase since 2017.

Retail Sales had actually declined slightly in February, so the March figures were particularly impressive.

The reason for the wide swings is probably mostly attributed to the government shutdown and the unusual volatility in the stock market at the end of last year.

Another factor is the size and pace of tax refunds.  Changes in the withholding tables have resulted in smaller refunds on average, and the IRS has been a little slower with distributions.

Home builder confidence is on the rise as the latest survey from the National Association of Home Builders was very strong relative to the weaker surveys from the end of last year.

A CNBC survey of Wall Street experts indicated that 96% do not anticipate a recession over the next year, with 70% optimistic about the economy and 30% neutral.

Rate Update

Despite unexpected strength in consumer spending, mortgage rates finished last week nearly unchanged.

This Week

Existing Home Sales will be released on Monday, New Home Sales on Tuesday, Durable Orders on Thursday, and First Quarter GDP on Friday.

Shelter Six:  Home Buying and Selling Optimism Explodes

April 15, 2019 by · Leave a Comment 

The weather warms up, spring begins to bloom, and Fannie Mae’s National Housing Survey shoots up a solid 7% on the buying side and 13% on the selling side in March.

After a winter of relative consumer pessimism, Fannie Mae’s Home Purchase Sentiment Index hit a low-point in December and had risen only slightly since.

But thanks to slowing home price appreciation and falling interest rates, 56% of respondents now think it is a good time to buy and 43% think it is a good time to sell.

Inflation continues to trend lower.  Core CPI rose less than expected in March at a pace of only 2% higher than a year ago, which is its lowest level in more than a year.

Low inflation along with weak global growth, trade tensions, and Brexit concerns have all contributed to central banks in both the U.S. and Europe delaying plans to increase short-term rates.

European leaders agreed last week to postpone Brexit until October 31, which removes the immediate economic risk but does not solve the long-term problem.

Rate Update

Mortgage rates have maintained their aggressive drop in March and remain in the low 4’s.

This Week

Retail Sales will be released on Thursday and Housing Starts on Friday.  Mortgage markets will close early on Thursday and all day on Friday in observance of Good Friday.

Shelter Six:  Economy Adds 196K Jobs in March

April 8, 2019 by · Leave a Comment 

A slowdown in the pace of wage growth offset stronger than expected job gains in Friday’s key Employment report, and the net impact to rates was small.

After rising steadily for the last several months, average hourly earnings unexpectedly reversed in March and were just 3.2% higher than a year ago, down from 3.4% last month.

On the other hand, job gains surpassed expectations.  Against a consensus forecast of 170K, the economy added 196K jobs in March.

Strength was seen in the Health Care and Leisure & Hospitality sectors.  The unemployment rate remained at 3.8%.

Another closely watched economic report released this week remained volatile.  Retail Sales declined a bit from the previous month, while the consensus was for a modest increase.

Retail Sales have been affected by a number of temporary factors including unusually high stock market volatility, the government shutdown, and delays in tax refunds.

Rate Update

After rates fell in March the most of any month in over a decade, the first week of April ended with rates bouncing a little higher.

This Week

Wednesday will be the big day with the next European Central Bank (ECB) meeting taking place, CPI figures being released, and minutes from the March 20 Fed meeting coming out.