Market News Update - Multifamily Construction Jumps



The stock market on Monday plunged 266 points in response to the terror attack as well as the slowing financial growth taking place in China.  It was reported that the Chinese economy grew only 7.7% in the first quarter when analysts were expecting 8%.  The report and the market reaction demonstrate a clear difference between the Chinese market and the U.S.  In the United States we would be happy with growth of just 3%, however in China less than 8% is considered poor.

Real estate market reports continue to indicate housing is improving.  Housing starts in March jumped 7.0% after the previous month’s 7.3% jump.  There is a difference in the report this month in that the increase came from multifamily construction which jumped 31.1%.  The demand for apartments throughout the country continues to rise and builders are doing what they can to meet the demand.  Single family starts declined 4.8% after rising 5.5% in February.  I personally am not too concerned about the one month drop in single family housing, as it is not uncommon to see these reports move back and forth between single and multifamily construction month to month.

Inflation in the U.S. is becoming dangerously low. The Consumer Price Index showed a decline of .2% indicating that consumers are still very frugal in their purchasing habits.  Even some of the Fed members are now beginning to express concern that inflation may be too low and that if it does not increase we could start seeing deflation take place in the U.S.  (Deflation is a pre-curser to heading back into a recession)  However, most economic experts believe that slow growth will continue in the United States and that the likelihood of going back into a recession is extremely low especially since housing continues to improve.

Mortgage rates have once again been dropping to near record lows and the positive results are showing up in the Mortgage Bankers Association weekly application report.  The MBA reported that purchase applications jumped 4% and refinances increased 5% in the prior week.

The economic reports on tap for next week are:

• Monday April 22^nd – Existing Home Sales
• Tuesday April 23^rd – New Home Sales
• Wednesday April 24^th - MBA Applications
• Thursday April 25^th - First Time Jobless Claims
• Friday April 26^th – GDP and Consumer Sentiment

I appreciate your business and look forward to talking to you soon! Have a great day!!!
 

Sincerely,

Cindy Tomlinson
Loan Officer

USLending Company

DRE Lic # 01520422
NMLS # 214851   

 

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