Real Estate & Market Report: May 23, 2014
With the exception of Tuesday, the equity markets were stable this week with gradual improvement through the end of the trading day on Thursday. Thursday's market rise was driven primarily by improvement in retail sales for some large national chain stores. The one setback for the week occurred on Tuesday with earning reports that came in worse than expected.
Some major players in the market not only came in with lower than expected profits, some of the also downgraded their expectations of income for the 2nd quarter of 2014. It is my belief that many companies have done such a great job cutting expenses since the start of the great recession, in addition to maximizing output, increasing employee productivity and capturing market share that eventually you squeeze all you can out of this economy and you get diminished returns on profits.
That in addition to a very slow growing economy, companies will continue to make profit but at lower percentages as in the past few years.
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On Wednesday, the FOMC released the minutes from their last policy meeting. There were no surprises in the report, which allowed the stock market to avoid any large movements based upon Fed policy expectations. The goal of the Fed is to continue on the path of gradually tapering the stimulus plan.
Despite mortgage rates sitting at 2014 lows, purchase application for mortgage loans declined 3.0% in the previous week according the Mortgage Bankers Association. The decline caught many experts by surprise, as with low interest rates, the expectation would be that more purchasers would pull the trigger on making loan applications.
Good news for the housing market came on Thursday with the release of the existing home sales report. The latest data from the National Association of Realtors showed an increase of 1.3% from the prior month. Sales of existing homes have been muted in part due to the lack of home inventory available. Great news for future housing reports is that the supply of homes for sale rose sharply from March to April by 16.%.
This brings the current existing home sale supply to 5.9 months versus 5.1 months. The single-family component of the report increased 0.5%, which is the first increase all year. The sale of existing homes still lags last year by 6.8%. The good news is that the gap between this year and last year is closing which indicates the housing market continues on its slow but steady path toward a stable market.
After two prior weeks of solid improvement, initial jobless claims rose a sharp 28,000 in the May 17 week to a 326,000. This week's data is well beyond the estimate in the Econoday consensus. Jobless claims have been quite inconsistent over the last few months.
At times, it appeared that the labor force was well on the path to sustained recovery while other times it seems to reverse course.
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Next week's market moving reports are:
- Monday May 26th - Memorial Day: All Markets Closed
- Tuesday May 27th - FHFA House Price Index and S&P Case-Shiller House Price Index
- Wednesday May 28th - MBA Applications
- Thursday May 29th - First Time Jobless Claims, GDP and Pending Home Sales
- Friday May 30th - Personal Income and Outlays and Consumer Sentiment
As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can 661-505-4300.