There Continues to be A Lot of Cash in the Housing Market

The stock market this week has been trading within a narrow margin, as there has been little economic data for investors to bite on for making big trading decisions.  Next week more of the same is expected, as there will not be many significant market moving reports once again.

After June's slowdown in the ISM Nonmanufacturing report, it appears that it was temporary, in that July’s data surged.  The ISM index is at the highest point since February, indicating that business activity is taking off.

The Mortgage Bankers Association reported that the purchase index, which has been on a three-month slide due to rising mortgage rates, reversed direction slightly by rising 1.0 percent for the week of August 2^nd.  The index continues to point towards weakness for home sales; however, the report covers only financed housing purchases.  There continues to be a lot of cash in the housing market and demand for housing is still higher than available inventory in most parts of the country.

Refinances have been on an even deeper slide, as they are much more sensitive to interest rate movements, and have remained unchanged in the week. Mortgage rates are up roughly 1 percent since May and rose again slightly in the latest week.

Mortgage rates overall continue to remain somewhat stable in recent weeks since the recent jump of over 1.0% just a few months ago.  The impact of rising rates is being felt in the housing market.  Since the initial shock to potential buyers from the recent rate jump slowed purchases down, it is expected that buyer expectations will be reset and they will jump back into the market.

On one hand, the national employment report from last week indicated more weakness in the job market than originally expected.  Payrolls grew less than expected in July even though the unemployment rate declined more than expected down to 7.4%.  Total payroll jobs in July increased only 162,000 after gaining a revised 188,000 in June (originally 195,000).  In May, the employment numbers were revised to a 176,000 increase.  The net revisions for May and June were down 26,000. The unemployment rate declined to 7.4 percent in July from 7.6 percent in the month of June.

On the other hand, reports regarding jobless claims indicate a different story.  First time jobless claims came in at 333,000 for the week of August 3^rd which is near the lows since the start of the recovery.  The employment claims 4 week average hit a new recovery low of 335,500 which is down 6,250 from the prior week.

Market moving reports for next week are:

• Tuesday August 13^th – Retail Sales
• Wednesday August 14^th - MBA Applications and Producer Price Index
• Thursday August 15^th - First Time Jobless Claims and Consumer Price Index

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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