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Provided to you Exclusively
By
Mike Premny
 
Mike Premny
Broker/Owner
Office: 415-543-9300
Fax: 415-543-9301
E-Mail: mikep@iconcap.com
Website: www.iconcap.com
 
Mike Premny
 
For the week of Sep 25, 2017 --- Vol. 15, Issue 39
In This Issue
 
Last Week in Review: Housing Starts and Existing Home Sales wound down in August, and the Fed announced plans to unwind its balance sheet.

Forecast for the Week: Will mysteriously low inflation surprise us with a pop?

View: Propel your business with podcast insights.


Last Week in Review
 
"I can pick up some time to unwind and ease my mind." Eddy Arnold. Existing Home Sales and Housing Starts declined while the Fed announced plans to unwind.

High prices and low inventories curtailed Existing Home Sales in August. The National Association of REALTORS® (NAR) reported that Existing Home Sales fell 1.7 percent from July to an annual rate of 5.35 million units versus the 5.42 million expected. NAR said that gains in the Northeast and Midwest were outpaced by declines in the South and West. From August 2016 to August 2017, sales were up just 0.2 percent.

The median existing home price in August was also up 5.6 percent from August 2016, marking the 66th straight month of year-over-year gains.

New construction may still encourage buyers yet this fall, but the numbers weren't favorable in August. The Commerce Department reported that Housing Starts fell for the second straight month, slipping 0.8 percent from July to an annual rate of 1.18 million units. On a positive note, year-over-year Housing Starts rose 1.4 percent. Single-family starts, which make up the biggest share of the housing market, rose 1.6 percent. Multi-family dwellings fell 5.8 percent from July and are down 23 percent from August 2016. Building Permits, a sign of future construction, rose 5.7 percent from July, hitting their highest level since January.

Finally, Mortgage Bonds fell modestly after the Federal Reserve announced it will begin to unwind its massive $4.5 trillion balance sheet starting on the ninth business day of October and continuing every ninth business day of the month thereafter. The balance sheet is made up of Mortgage Backed Securities and Treasury Bonds. The plan is designed to have little disruption to the market. Seeing that this has never been done before, it remains to be seen what happens to Mortgage Bond prices and the home loan rates tied to them over time.

For now, home loan rates remain near historic lows.

If you or someone you know has questions about home financing or home loan rates please contact me. I'd be happy to help.


Forecast for the Week
 
Will the mystery of low inflation creep up on the Federal Reserve? No spoiler here. Stay tuned for Friday's release of the Fed's favorite inflation gauge.
  • Housing data will come from Tuesday's S&P/Case-Shiller Home Price Index and New Home Sales, followed by Pending Home Sales on Wednesday.
  • Consumer Confidence also will be released on Tuesday, followed by the Consumer Sentiment Index on Friday.
  • Durable Goods Orders will be released on Wednesday.
  • On Thursday, the third reading on second quarter Gross Domestic Product will be shared along with weekly Initial Jobless Claims.
  • On Friday, the Fed's favorite inflation gauge, Core Personal Consumption Expenditures, will be delivered along with Personal Income, Personal Spending and regional manufacturing data via the Chicago PMI.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bond prices dropped recently. Home loan rates are still in attractive territory.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Sep 22, 2017)
Japanese Candlestick Chart


The Mortgage Market Guide View...
 
3 Smart Podcasts to Propel Your Business

Podcasts deliver fresh ideas for just about any area of interest. The business podcasts below are no exception. Subscribe and listen and these might be just what you need for your next business breakthrough.

Success! How I Did It, hosted by Business Insider Editor-in-Chief Alyson Shontell, showcases interviews with entrepreneurs, leaders and winning personalities from all walks of life who share the steps they took to achieve success.

Office Hours with business journalist and best-selling author Daniel Pink features interviews with business leaders and thinkers and is billed as "Car Talk ... for the human engine."

The Tim Ferriss Show hosted by Tim Ferriss, best-selling author of "The 4-Hour Workweek," looks at top performers from different fields to find practical tools you can use in both business and life.

Keep your audio downloads organized with a podcast manager app like Overcast for Apple devices or Podcast Player FM for Android devices.

And if you just can't get enough, here are even more podcasts to inspire and propel you to success.

Economic Calendar for the Week of September 25 - September 29

Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Tue. September 26
09:00
S&P/Case-Shiller Home Price Index
Jul
5.8%
 
5.7%
Moderate
Tue. September 26
10:00
Consumer Confidence
Sep
119.4
 
122.9
Moderate
Tue. September 26
10:00
New Home Sales
Aug
577K
 
571K
Moderate
Wed. September 27
08:30
Durable Goods Orders
Aug
0.7%
 
-6.8%
Moderate
Wed. September 27
10:00
Pending Home Sales
Aug
-0.4%
 
-0.8%
Moderate
Thu. September 28
08:30
Jobless Claims (Initial)
9/23
275K
 
259K
Moderate
Thu. September 28
08:30
Gross Domestic Product (GDP)
Q2
3.0%
 
3.0%
Moderate
Thu. September 28
08:30
GDP Chain Deflator
Q2
1.0%
 
1.0%
Moderate
Fri. September 29
08:30
Personal Consumption Expenditures and Core PCE
YOY
NA
 
1.4%
HIGH
Fri. September 29
08:30
Personal Consumption Expenditures and Core PCE
Aug
0.2%
 
0.1%
HIGH
Fri. September 29
08:30
Personal Spending
Aug
0.1%
 
0.3%
Moderate
Fri. September 29
08:30
Personal Income
Aug
0.2%
 
0.4%
Moderate
Fri. September 29
09:45
Chicago PMI
Sep
58.0
 
58.9
HIGH
Fri. September 29
10:00
Consumer Sentiment Index (UoM)
Sep
95.4
 
95.3
Moderate

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

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