Home building rebounds: Housing Starts went up 4.3% in May, Building Permits spiked 14.4%, and the National Association of Home Builders confidence index’s biggest ever monthly gain took it into positive territory.
With the economy turning around, Freddie Mac noted, “one segment that is exhibiting strength is the housing market. Purchase demand activity is up over 20% from a year ago, the highest since January 2009.”
Fannie Mae sees record-low mortgage rates into 2021 helping prices and builds, and taking 2020 refinances to their highest level since 2003. Every month, this adds billions more of consumer spending to boost the economy.
REVIEW OF LAST WEEK
RECOVERY UNCOVERS BARGAIN HUNTERS… After their recent dive, the three major stock indexes rose last week as investors scooped up bargains, their risk sentiment buoyed by more signs of economic recovery.
Added to the encouraging housing market news and May’s 2.5 million new jobs, Retail Sales spiked 17.7% in May, the biggest monthly gain ever, also achieved by the Empire State Index of New York region manufacturing activity.
More good stuff: the Fed says it will buy corporate bonds to expand its support of the credit markets (that includes mortgages!), and the President is reportedly prepping a $1 trillion infrastructure proposal to further help the economy.
The week ended with the Dow UP 1.0%, to 25,871; the S&P 500 UP 1.9%, to 3,098; and the Nasdaq UP 3.7%, to 9,946.
The week’s positive economic vibes squelched bond buying. The UMBS 3.5% ended down 0.31, to $105.16. In Freddie Mac’s weekly Primary Mortgage Market Survey, the national average 30-year fixed mortgage rate dropped to a new all-time low. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW?… In a new survey, 53% of homebuyers say they’ll purchase in the next 12 months as a result of the pandemic. Many need more space and don’t have to be close to work, since they’ll continue doing their jobs remotely.
THIS WEEK’S FORECAST
HOME SALES MIXED, LIKE EVERYTHING ELSE… Analysts expect May Existing Home Sales down, but New Home Sales up. The Q1 GDP-Third Estimate should show the March shutdown shrank the economy 5%, but May Personal Spending grew with zero inflation by the PCE Prices read.
NOTE: Weaker economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.