"Leap, and the net will appear."—John Burroughs, American essayist
NATIONAL MARKET UPDATE
April’s Pending Home Sales index of signed contracts on existing homes fell 21.8%, but the National Association of Realtors chief economist expects this will be the lowest point for contracts, and May the lowest for closed sales.
Zillow agrees. They report in the week ending May 10, newly pending sales nationwide were up almost 50% from the same period in April, plus, new for-sale listings were up 12.5% monthly and home values up 4.3% year-over-year.
New Home Sales already turned the corner in April, up 0.6%, to 623,000 annually. These deals were done at the height of state lockdowns, as buyers jumped on lower mortgage rates and affordable home prices.
REVIEW OF LAST WEEK
INVESTOR WALLETS REOPEN TOO... As the economy slowly reopened, investors reopened their wallets. Following the buying spree, the three major market indexes posted sharp gains for the week and month.
Uncertainty over Sino-U.S. relations arose after China tightened its grip on Hong Kong. The U.S. responded with strong measures, but investors were happy the President brought up neither tariffs nor the Phase One trade deal.
Personal Income spiked 10.5% in April, boosted by the CARES Act stimulus checks and extra jobless benefits. The personal savings rate rocketed to a record 33.0%, and that money could certainly help speed the recovery.
The week ended with the Dow UP 3.8%, to 25,383; the S&P 500 UP 3.0%, to 3,044; and the Nasdaq UP 3.4%, to 9,490.
There were enough China worries to lift bond prices. The UMBS 3.5% ended UP 0.11, to $105.50. The national average 30-year fixed mortgage fell to a new all-time low in the 50-year history of Freddie Mac's weekly 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?... Freddie Mac says “unprecedented rates” are why “purchase demand rebounded from a 35% year-over-year decline in mid-April to an 8% increase as of last week,” even with “the sharp contraction in economic activity.”
THIS WEEK'S FORECAST
FACTORIES, SERVICES, JOBS LOOK BETTER... We should still see contraction in manufacturing and services in May, but less than in April, as the ISM Manufacturing and ISM Non-Manufacturing indexes head closer to 50, signaling growth. A loss is also expected for May Nonfarm Payrolls, far less than April but enough to temporarily hike the Unemployment Rate.
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.
FEDERAL RESERVE WATCH
Forecasting Federal Reserve policy changes in coming months... Fed watchers feel we're a long way away from seeing economic data strong enough to spur a rate hike. Note: In the lower chart, a 3% probability of change is a 97% certainty the rate will stay the same.
Current Fed Funds Rate: 0%-0.25%
AFTER FOMC MEETING ON:
Probability of change from current policy:
AFTER FOMC MEETING ON:
BUSINESS TIP OF THE WEEK
Don’t skimp on prospecting. One study revealed that doubling the time spent prospecting from 3.5 to 7 hours a week took average individual revenues from $70,000 to $250,000--a 350% boost!