Monday, 30 May 2011 12:09
QUOTE OF THE WEEK..."Genius is eternal patience."--Michelangelo
INFO THAT HITS US WHERE WE LIVE...Hopefully, we won't need the patience of a Michelangelo waiting for the housing market to achieve normalcy, but most of today's economic geniuses say we'll have to hang in there a bit longer. On the plus side, new single-family home sales for April were UP 7.3%, beating expectations two months in a row. For the first time in nearly four years, sales were up in every region. Inventory fell to 6.5 months, its lowest level since 1963 and the median price was UP 4.6% from a year ago. On the minus side, the Pending Home Sales index was down 11.6% for April after two months of gains. April wasn't the greatest home shopping month, with widespread severe weather, the heaviest rain in 20 years and rising oil prices slowing things down.
Back on the positive side, the Mortgage Bankers Association reported applications for purchase loans UP a seasonally adjusted 1.5% from the week before and UP 3.1% from a year ago. Smart buyers are taking action now. With mortgage rates super low and today's prices, housing affordability in the first quarter reached its highest level in more than 20 years. The Housing Opportunity Index revealed that 74.6% of new and existing homes sold at that time were affordable to families earning the national median income of $64,400, putting home ownership in the reach of many more households.
BUSINESS TIP OF THE WEEK...Maintain a positive attitude. Your outlook influences your ability to respond to challenges -- and opportunities. It also has a powerful effect on employees. It's easy to stay upbeat in a good times, but no matter what, always make the best out of the situation you're in.
>> Review of Last Week
FOURTH DOWN...Stocks were down for the fourth week in a row. But investors know that, unlike football, fourth down on Wall Street is not your last chance to hold onto the ball. The fumbling, however, continues with the economy. The good and not-so-good housing market news is covered above. Durable Goods Orders were down for April but revised strongly upward for March. Q1 GDP wasn't revised at all, unfortunately remaining at a lackluster 1.8% annual growth rate. But the report showed corporate profits hit a new record high, up at a 5.3% annual rate and up 8.5% over a year ago.
The University of Michigan consumer sentiment index rose for May, indicating people's expectations are improving. But the job market, so important to housing, suffered another weekly increase in Initial Unemployment Claims. More on this topic will come with Friday's May Employment Report. Finally, Core PCE prices rose just 0.2% in April, well within the Fed's comfort zone. But Core PCE excludes volatile food and energy prices, which have been uncomfortably rising for us ordinary folk.
For the week, the Dow ended down 0.6%, to 12,442; the S&P 500 was down 0.2%, at 1,331; and the Nasdaq was down 0.2%, at 2,797.
Bond prices were helped by continued fears about European sovereign debt, disappointing economic data and strong auctions. The FNMA 4.0% bond we watch ended the week up .13, closing at $100.19. With mortgage bond prices going up, national average rates for conforming mortgages dropped again last week, reaching new lows for the year, according to Freddie Mac's survey.
DID YOU KNOW?...You don't see any high-rise condominiums or office skyscrapers in Washington, D.C., because no building in that city may be erected taller than the U.S. Capitol, where the Senate and the House of Representatives have met for more than two centuries.
>> This Week’s Forecast
MANUFACTURING, SERVICES, JOBS...The markets are closed Monday in observance of Memorial Day when many Americans will observe the National Moment of Remembrance at 3 pm. Coming back to work Tuesday, we'll get May's Chicago PMI, reflecting the state of manufacturing in that area, expected to be down a little, though still well above 50, indicating growth. Wednesday's ISM Index measures manufacturing across the country and should also show a slower pace of growth, though growth nonetheless.
Friday, the ISM Services Index is expected to report a slight pickup in that sector where you'll find 85% of U.S. jobs. That growth could be a reason why, coming on the same day, the May Employment Report is projected to include 185,000 new jobs added, fewer than April, with the Unemployment Rate holding at 9.0%.