INFO THAT HITS US WHERE WE LIVE... People say home building can't recover any time soon. Yet the signs continue to mount that a recovery is underway. Off 5.8% for March, Housing Starts are up 10.3% from a year ago, to a 654,000 unit annual rate. The monthly drop came from volatile multi-family starts, while single-family units were down only 0.2%. And the number of homes under construction was up for the seventh month in a row! Even Building Permits are up 30.1% versus a year ago. It's early in the home building recovery, but some are saying we could get to 1.5 million units by 2016.
More signs the housing market is recovering slowly but surely came with March Existing Home Sales. Although off 2.6% for the month, at 4.48 million units, they're up 5.2% over a year ago. In addition, the median price rose in March to $163,800 and is up 2.5% over a year ago, while the months' supply of inventory stayed at 6.3. Frankly, no one expects a big bump in home sales soon, but the market is definitely beginning to heal, as it's obviously a great time to buy.
BUSINESS TIP OF THE WEEK... Take time to think. Get away from the day's chaos and ponder a while. Don't worry if a great idea doesn't come right away. Back on the job, your subconscious will continue to work.
Review of Last Week
UP AND DOWN... Markets went in both directions last week as the S&P 500, a broad market measure, clung to a fractional 0.6% gain, its first move upward in three weeks. Traders' moods were also up and down, as the economic data rolled in. The up mood was fueled by the strong earnings reports of a wide range of players, from McDonald's to GE to Microsoft. Also up were March Retail Sales, gaining a better than expected 0.8% and up 6.5% over a year ago!But other things economic were downers. Both the Empire State and Philadelphia Fed manufacturing indexes dropped for the month, reflecting a slowdown in growth. Industrial production was flat and manufacturing capacity edged down, both worse than expected. Worse than that, weekly unemployment claims headed up to 386,000, while continuing claims hit 3.30 million.
For the week, the Dow ended UP 1.4%, at 13029; the S&P 500 closed UP 0.6%, to 1379; and the Nasdaq edged down 0.4%, to 3000.
There was enough political and economic turbulence coming out of Europe to keep investors in the safe haven of bonds. This held prices up, with the FNMA 3.5% bond finishing the week UP .04, at $103.19. Inflation fears were kept in check as doubts about the economic recovery continue. So national average mortgage rates held steady, still at historically low levels, as reported in Freddie Mac's weekly Primary Mortgage Market Survey.
DID YOU KNOW?... CPI inflation is more widely reported, but the GDP Price Deflator is often the inflation measure of choice for economists. It takes a more comprehensive look at price levels for a more precise read on inflation.
This Week’s Forecast
NEW HOME SALES, PENDING HOME SALES AND THE FED... We'll have more reads on the housing market, with Tuesday's New Home Sales forecast to be up slightly for March. Thursday's Pending Home Sales, measuring signed contracts in March for existing homes, are expected up a bit, indicating sales a few months out.The Fed meets Wednesday and although no one expects the FOMC Rate Decision to change anything, we'll have a policy statement giving their opinion on the economy. For hard numbers, we'll have to wait until Friday for Q1 GDP-Advanced, projected to show economic growth slowing.
The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.Economic Calendar for the Week of Apr 23 – Apr 27
Date Time (ET) Release For Consensus Prior Impact
Tu Apr 24 10:00 Consumer Confidence Apr 69.5 70.2 Moderate
Tu Apr 24 10:00 New Home Sales Mar 320K 313K Moderate
W Apr 25 08:30 Durable Goods Orders Mar -1.9% 2.4% Moderate
W Apr 25 10:30 Crude Inventories 04/21 NA 3.856M Moderate
W Apr 25 12:30 FOMC Rate Decision 04/25 0%-0.25% 0%-0.25% HIGH
Th Apr 26 08:30 Initial Unemployment Claims 04/21 373K 386K Moderate
Th Apr 26 08:30 Continuing Unemployment Claims 04/14 3.300M 3.297M Moderate
Th Apr 26 10:00 Pending Home Sales Mar 0.5% -0.5% Moderate
F Apr 27 08:30 GDP-Advance Q1 2.6% 3.0% Moderate
F Apr 27 08:30 GDP Price Deflator-Advance Q1 2.2% 0.9% Moderate
FApr 27 08:30 Employment Cost Index Q1 0.5% 0.4% HIGH
F Apr 27 09:55 Univ. of Michigan Consumer Sentiment-Final Apr 75.7 75.7 Moderate
Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months... We'll see if this week's Fed meeting gives any indication of when they'll change their super low Funds Rate policy. No one sees a hike any time soon. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.
Current Fed Funds Rate: 0%–0.25%
After FOMC meeting on: Consensus
Jun 20 0%–0.25%
Jul 31 0%–0.25%
Sep 12 0%–0.25%
Probability of change from current policy:
After FOMC meeting on: Consensus
Jun 20 <1%
Jul 31 <1%
Sep 12 <1%
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