MMG WEEKLY – WHAT ARE THEY SAYING THIS WEEK?

Forecast For The Week 

The economic calendar this week will give the investor a broad view of the U.S. economybut the Federal Open Market Committee (FOMC) meeting will be front and center in the minds of investors. Here’s a break down of what to watch:

  • Consumer Confidence will be released on Tuesday with Consumer Sentiment set to be delivered on Friday.
  • Also on Tuesday, New Home Sales for March will be released, followed by Pending Home Sales for March on Thursday.
  • On Wednesday, Durable Orders – which are products that are supposed to last at least three years – will be released.
  • Initial Weekly Jobless Claims will be released on Thursday. The number of new claims has been steadily rising in the past month, which is not a good sign for the labor markets. So all eyes will once again be on this report.
  • On Friday, the first reading on Gross Domestic Product (GDP) for the first quarter of 2012 will be announced.
  • Also on Friday, we’ll see the Employment Cost Index, which measures the costs of hiring and paying the American workforce. Higher costs could lead to inflation pressures, which could push Bond prices lower and home loan rates higher.

In addition to those reports, this week’s FOMC meeting will be closely watched by both the Bond and Stock markets for any clues on how the U.S.economy is holding up.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on.

When you see these Bond prices moving higher, it means home loan rates are improving – and when they are moving lower, home loan rates are getting worse.

To go one step further – a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, the mix of news last week benefitted Bonds and home loan rates. I’ll be watching closely to see what happens this week. 

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Apr 20, 2012)

 
The Mortgage Market Guide View  

Fun Housing Facts

The United States Census Bureau recently released some fun facts related to housing across the country, based on data for 2010. Here are just a few highlights from the release that you may find interestingand may want to pass on to others.

Heating Our Homes

  • 57 million = Number of houses heated by utility gas.
  • 2.2 million = Number of houses heated by wood.
  • 38,010 = Number of houses heated by solar energy.

From Home to Work

  • 25.3 minutes = Average time workers across the country spent getting from home to work.
  • 31.8 minutes = Longest commute time in the nation, which belonged to Maryland residents.
  • 16.1 minutes = Shortest commute time in the nation, which belonged to North Dakota residents.

Home Sweet Home

  • 2,392 square feet = Average size of a single-family house built in 2010. That number was down a little from 2,438 square feet in 2009.
  • 131.7 million = Number of housing units counted in the 2010 Census. Compare that to 37.2 million in the first housing census, which was conducted in 1940!

Bonus Fact!

The first housing census in 1940 featured 31 housing questions – including some we may find odd today, such as whether the house had a radio toilets or an outhouse electric lighting and running water.

Conversely, the 2010 census only included two housing questions: (1) whether the home was owned or rented and (2) whether the respondent sometimes lived or stayed somewhere else. The number of housing questions in the census has dropped because we now ask a number of housing questions in the American Community Survey, which is sent to about 3 million households nationwide every year.

Over the years, housing has really changed. But regardless of the time or location, one thing remains the same there’s no place like home!

Economic Calendar for the Week of April 23 – April 27

Date

ET

Economic Report

For

Estimate

Actual

Prior

Impact

Tue. April 24

10:00

Consumer Confidence

Apr

NA

 

70.2

Moderate

Tue. April 24

10:00

New Home Sales

Mar

NA

 

70.2

Moderate

Wed. April 25

08:30

Durable Goods Orders

Mar

NA

 

2.4%

Moderate

Wed. April 25

12:30

FOMC Meeting

Apr

NA

 

0.25%

HIGH

Thu. April 26

08:30

Jobless Claims (Initial)

4/21

NA

 

NA

Moderate

Thu. April 26

10:00

Pending Home Sales

Mar

NA

 

-0.5%

Moderate

Fri. April 27

01:00

Gross Domestic Product (GDP)

Q1

NA

 

3.0%

Moderate

Fri. April 27

01:00

GDP Chain Deflator

Q1

NA

 

0.9%

Moderate

Fri. April 27

01:00

Employment Cost Index (ECI)

Q1

NA

 

0.4%

HIGH

Fri. April 27

01:00

Consumer Sentiment Index (UoM)

Apr

NA

 

75.7

Moderate

 

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

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