Builder confidence hit 75 in December, a ten-year high. So it was no surprise that residential construction spending rose 1.4% for the month. This should start to relieve the tight supply in many markets.
That’s important as buyer demand increases. Black Knight’s latest Mortgage Monitor notes that even with rising home prices, there is an environment of increased affordability, thanks to falling interest rates.
Their Data & Analytics President said, “prospective homebuyers can now purchase a home that is $48,000 more expensive than a year ago, while still paying the same in principal and interest…a 16% increase in buying power.”
REVIEW OF LAST WEEK
After stocks tanked the week before, traders grabbed the bargains, bolstered by solid economic data and less economic concern over the coronavirus. The market posted its biggest weekly gain in six months.
China shored up its economy to offset negative impacts from the coronavirus, and announced, as part of the phase-one trade agreement, it would cut tariffs by 50% on $75 billion of U.S. imports on February 14.
Then we got a solid 225,000 new jobs in January, higher wages, and a larger workforce. Manufacturing is expanding again, the services sector grew more than expected, and weekly jobless claims sank to their lowest level in nine months.The week ended with the Dow UP 3.0%, to 29,103; the S&P 500 UP 3.2%, to 3,328; and the Nasdaq UP 4.0%, to 9,521.
Traders bid up bonds, feeling down about the coronavirus and weak Industrial Production in Germany and France. The 30YR FNMA 4.0% bond ended UP .39, to $104.84. The national average 30-year fixed mortgage rate hit a three-year low in Freddie Mac’s Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW?
Last week’s three-year low in mortgage rates drove the number of refi-eligible borrowers to 11.3 million, the second highest on record. Savings per borrower would average $268 a month.
THIS WEEK’S FORECAST
INFLATION OK, RETAIL SALES UP, CONSUMERS CONFIDENT… Economists say Consumer Price Index (CPI) inflation will remain mild, Retail Sales will keep growing, and University of Michigan Consumer Confidence will stay strong.
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.