In Orlando, Florida, last week there were more housing market forecasts for the year just begun. Bottom line? Housing economists are being optimistic about a recovery during 2011. These economists were presenting their ideas at the annual meeting of the National Association of Home Builders (NAHB). None of the experts see a robust upturn for housing. But they do feel that home sales, which have been in a bit of a stall, may start to recover soon.
The opinion of all is that the residential market should pick up in the spring, thanks to low mortgage rates and home prices at bargain levels. The NAHB's chief economist feels that recent economic indicators are "signifying growing consumer confidence." These indicators include job creations, good retail sales, and increasing purchases of big ticket items like cars and furniture. Freddie Mac's chief economist sees home prices bottoming in the first six months. He expects mortgage rates to edge up slightly but still remain at historically low levels. Overall, home sales are forecast to be up from 4% to 10% year-over-year and for new construction to be up by 20%.
The opinion of all is that the residential market should pick up in the spring, thanks to low mortgage rates and home prices at bargain levels. The NAHB's chief economist feels that recent economic indicators are "signifying growing consumer confidence." These indicators include job creations, good retail sales, and increasing purchases of big ticket items like cars and furniture. Freddie Mac's chief economist sees home prices bottoming in the first six months. He expects mortgage rates to edge up slightly but still remain at historically low levels. Overall, home sales are forecast to be up from 4% to 10% year-over-year and for new construction to be up by 20%.
Review of Last Week
Investors are more positive about the U.S. economy and the European financial situation and things are looking up. They articulate those views by trading stock prices up and last week, they sent the Dow, the broadly based S&P 500, and the tech-heavy Nasdaq UP by solid percentages. Across the pond, Portugal, Italy, and Spain got some much needed support. Over here, Q4 corporate earnings season got off to a good start, supported by some encouraging economic data.
A slight glitch in the proceedings came from an increase in weekly unemployment claims to 445,000. But the four-week moving average is at 417,000 and continuing unemployment claims dropped by 248,000 to 3.88 million, the lowest it's been since October 2008. Strongly positive economic signs came from a shrinking trade deficit, with exports running ahead of imports over the past year.
A slight glitch in the proceedings came from an increase in weekly unemployment claims to 445,000. But the four-week moving average is at 417,000 and continuing unemployment claims dropped by 248,000 to 3.88 million, the lowest it's been since October 2008. Strongly positive economic signs came from a shrinking trade deficit, with exports running ahead of imports over the past year.
Retail sales were up slightly less than expected for December, but they did reach an all-time high, surpassing the November 2007 figure. For the last year, retail sales are up almost 8% and they've been growing at a 13% annual rate the past three months. In corporate Q4 earnings news, major players Alcoa, JPMorgan Chase, and Intel beat estimates and issued better than expected guidance going forward.
For the week, the Dow ended up 1.0%, at 11,787; the S&P 500 went up 1.7%, to 1,293; and the Nasdaq went up 1.9%, ending at 2,755.
Bond prices went on an up and down trip last week, with varied results at the finish. The FNMA 4.0% bond we watch ended all most flat, down 4 basis points for the week, closing at $99.14. According to Freddie Mac's weekly survey of conforming mortgages, average fixed-rate mortgage rates dropped for the second week in a row. The national average rate for 30-year fixed rate mortgages hit a four-week low after their slight uptick at the end of last year.
For the week, the Dow ended up 1.0%, at 11,787; the S&P 500 went up 1.7%, to 1,293; and the Nasdaq went up 1.9%, ending at 2,755.
Bond prices went on an up and down trip last week, with varied results at the finish. The FNMA 4.0% bond we watch ended all most flat, down 4 basis points for the week, closing at $99.14. According to Freddie Mac's weekly survey of conforming mortgages, average fixed-rate mortgage rates dropped for the second week in a row. The national average rate for 30-year fixed rate mortgages hit a four-week low after their slight uptick at the end of last year.
This Week’s Forecast
HOUSING, MANUFACTURING, THE ECONOMY OVERALL... Financial markets are closed Monday in observance of Martin Luther King Day. The rest of the week features some measures of the housing market. Wednesday's December Housing Starts and Building Permits will show us the mindset of home builders. Starts are forecast to be down a little, but the weather wasn't conducive to breaking ground in many regions of the country. Permits indicate starts a month or two out and they should be up a little, the same as December Existing Home Sales, coming on Thursday.
Manufacturing is expected to expand in the New York region, as measured by Tuesday's Empire State Index, but Thursday's Philadelphia Fed Index may show a slight manufacturing contraction. Also that day, the Leading Economic Indicators (LEI) Index for December is forecast to continue to improve, although at a slightly slower rate than the previous month.
Manufacturing is expected to expand in the New York region, as measured by Tuesday's Empire State Index, but Thursday's Philadelphia Fed Index may show a slight manufacturing contraction. Also that day, the Leading Economic Indicators (LEI) Index for December is forecast to continue to improve, although at a slightly slower rate than the previous month.
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.
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