For the week of NOVEMBER 25, 2024

“When in doubt, look intelligent.”—Garrison Keillor, American author, singer, and humorist

October Existing Home Sales were almost 3% above a year ago, the first increase in over three years. With inventories up 19.1%, the National Association of Realtors feels, “the worst of the downturn in home sales could be over.”

But Housing Starts slowed in October, along with applications for new Building Permits. However, completions rose at a faster pace than any month for the last three years, and are up nearly 17% in the past year.

Plus, the National Association of Home Builders noted, “builders are expressing increasing confidence…in significant regulatory relief.... This is reflected in a huge jump in builder sales expectations over the next six months.”

BUYING THE DIP... Stocks rebounded as traders scooped up bargains from the prior week’s dip, bolstered by rising corporate profits, resilient consumers, and rate cut expectations. The Dow hit a fresh record high.

The S&P Global US Manufacturing PMI contracted again in November but at a slower pace, and November University of Michigan Consumer Sentiment fell from its preliminary read but rose above October.

Good news came with stronger-than-expected Existing Home Sales, another decrease in weekly jobless claims, and the S&P Global US Services PMI showing accelerated activity in the economy's dominant services sector.

The week ended with the Dow UP 2.0%, to 44,297; the S&P 500 UP 1.7%, to 5,969; and the Nasdaq UP 1.7%, to 19,004.

Bonds ticked to the upside, the 30-Year UMBS 5.5% UP 0.03, to $98.30. The national average 30-year fixed mortgage rate edged up just 6 basis points (0.6%) this week 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… The Mortgage Bankers Association reports purchase mortgage applications were up for the week—plus, mortgage applications for new homes jumped more than 8% year-over-year in October.

NEW AND PENDING HOME SALES, HOME PRICES, INFLATION, FED MINUTES... Both New Home Sales and the Pending Home Sales index of signed contracts on existing homes are expected to decline slightly for October. Analysts predict annual home price gains will continue to moderate in the September S&P Case-Shiller Home Price Index. The Fed's favorite inflation measure, PCE Prices, should hold for October. We'll check FOMC Minutes from the Fed's last meet for signs of future rate cuts.

U.S. financial markets will close Thursday, November 28, for Thanksgiving. The day after Thanksgiving, the stock market will close at 1 p.m., bond markets at 2.

Forecasting Federal Reserve policy changes in coming months. The futures market still expects another quarter percent rate cut next month, but now sees the Fed holding there through March. Note: In the lower chart, the 52.7% probability of change is a 52.7% probability the rate will drop. Current rate is 4.50%-4.75%.

Probability of change from current policy:

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