Business Market Commentary
Mortgage rates appear to have comfortably settled into the summer sun with a balance keeping them from moving significantly in any direction.
The economy is humming along, which would usually press rates higher.
However, slightly higher returns on US debt are nudging foreign money to move into US Treasuries, which helps press rates downward.
Both Retail Sales and Industrial Production posted solid 0.5% increases.
While chatter around trade wars is making some analysts nervous, the current level of tariffs is expected only to have a small impact. Of course, if the President’s bluster about significantly expanding tariffs comes to fruition, then we’ll see more economic impact.
This week starts with a focus on housing. Both New and Existing Home Sales reports are due. As the industry has not expanded at the same rate as the overall economy, the data has less impact than it did before the Great Recession. The big news of this week may be a greater-than-4.0% GDP estimate for Q2. If that number comes in short, rates are unlikely to move upward very much at all.
Existing Home Sales Fall 0.6% in June
Existing-home sales decreased for the third straight month in June, falling by 0.6%.
With the continuing imbalance between supply and demand, home prices rose to an all-time high. NAR chief economist, Lawrence Yun, says that high demand and lean inventory are having a major impact n the housing market. “The root cause is without doubt the severe housing shortage that is not releasing its grip on the nation’s housing market.
What is for sale in most areas is going under contract very fast and in many cases has multiple offers. This dynamic is keeping home price growth elevated, pricing out would-be buyers and ultimately slowing sales." Home sales are now sitting 2.2% below where they were a year ago.
Read more: https://www.nar.realtor/newsroom/existing-home-sales-subside-06-percent-in-june
Go FSBO and Find Yourself With Less Cash
While many people wonder whether using an agent is really worth it, an analysis in the 2017 Profile of Home Buyers and Sellers by NAR shows a vast difference.
Nationally, FSBO homes sold at a median price of $190,000, while agent-assisted sales garnered $250,000.
The variance was even greater if the seller personally knew the buyer, with those sales coming in at $160,300.
On average, FSBO sales resulted in an average $60,000 to $90,000 lower sales price.
This Week’s Top Economic Reports and Events
Existing Home Sales
Inventory continues to be the story. If we see a sizable uptick in both sales and the inventory levels, then rates might nudge upward slightly.
New Home Sales
Homebuilders continue to remain optimistic, and new home prices remain at a premium. Another solid reading will help hold rates steady.
Weekly Jobless Claims
Hovering near 1960’s levels, Claims continue to reveal a healthy labor market. If we dip below 200K, then we could see rates pressed upward.
GDP – 1st Estimate for Q2
If the GDP number powers past the expected 4.0% mark, and comes in over 4.2%, then we could see growing upward pressure on rates.
U of Mich. Consumer Sentiment
Consumer moods appear to have leveled off in the recent months. Another confirmation of this will tend to constrain rate movement.
Buying Or Selling A Luxury Home Or Mansion Please Contact Alan Ripa, P.C. With Realty Executives International at: 480-998-0676
Visit his website at http://www.alanripa.com