Market Update

QUOTE OF THE WEEK... "We are happy when we are growing." --William Butler Yeats, Irish poet INFO THAT HITS US WHERE WE LIVE... We were all very happy to see that Pending Home Sales grew for the second month in a row, up 0.4% in April. This National Association of Realtors (NAR) measure of contracts signed on existing homes indicates continued growth for these sales when contracts go to closing a couple of months out. The NAR's chief economist sees a gradual gain in sales: "Higher inventory levels are giving buyers more choices, and a slight decline in mortgage interest rates this spring is raising prospective home buyers' confidence. An uptrend in closed sales is expected." The NAR further projected that annual existing home sales should come in slightly below the almost 5.1 million closings we had in 2013, but then should hit nearly 5.3 million next year. The national median price for existing homes is expected to increase 5% to 6% this year and 4% to 5% in 2015. The S&P/Case-Shiller 20-City Composite Home Price Index continued rising in March, but at a slower 0.9% pace. However, the index is up 12.6% versus a year ago, and 19 of the 20 cities reported monthly gains. Most observers feel a moderation in price gains is healthy for the housing market. BUSINESS TIP OF THE WEEK... Document your wins to help you duplicate your efforts and cut your prospecting time. Likewise, analyze your losses to fine tune your message and presentation. >> Review of Last Week THE MERRY MERRY MONTH OF MAY... For those who make their living on Wall Street, May certainly was as merry a month as the Stephen Foster song purports. All three major stock indexes ended ahead for the month, with the Dow and the S&P 500 setting new records, while the Nasdaq posted its first monthly gain in three months. Bonds also did well for the week, which had stock traders a bit bemused, since bonds are the safety play when things seem uncertain. The economic reports for the week were mixed as usual, so it is hard for folks to be certain the economy will continue to recover without any hiccups. Last week's hiccup came when the GDP–2nd Estimate for Q1 showed the economy contracted –1.0%, the first negative reading since Q1 2011. Many economists put this poor showing to the severe winter weather in much of the country and most investors bought that. Positive feelings were supported when Initial Unemployment Claims fell to 300,000 for the week and Continuing Claims to 2.631 million. The Chicago PMI showed Midwest manufacturing stronger than expected, while Consumer Confidence and Michigan Consumer Sentiment also beat estimates. But consumer Personal Spending was down for April. The week ended with the Dow up 0.7%, to 16717; the S&P 500 up 1.2%, to 1924; and the Nasdaq up 1.4%, to 4243. The short trading week saw bonds dip at the start, but buying picked up at the end, pushing prices up and yields down. The 30YR FNMA 4.0% bond we watch finished the week up .10, at $105.29. After 5 straight weeks of declines, average fixed mortgage rates hit a nine-month low in Freddie Mac's Primary Mortgage Market Survey for the week ending May 29. That's good news for a housing market bounding back from a slow winter. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information. DID YOU KNOW?... Over the past three months, private sector wages and salaries have gone up at an accelerated 5.5% annual rate. Some economists expect incomes to keep growing at a healthy clip. >> This Week’s Forecast FACTORY AND SERVICE SECTORS GROW, JOBS HANG IN... Stocks did well in May, but the economic picture won't be quite as good. The ISM Index of manufacturing activity and the ISM Services index are expected to show growth, though not at any faster rate. Friday's May Employment Report should have fewer new Nonfarm Payrolls than April, but still above 200,000 jobs. This is predicted to nudge the Unemployment Rate back up a tick. It will also be worth looking at the Fed's Beige Book, which comments on the economic conditions in the twelve Federal Reserve Districts around the country.