Lake Tahoe, Regional and National Economic Market Update.  Posted by Tim Lampe, shared by Supreme Mortgage.

QUOTATION OF THE WEEK..."I admit that I may not always be right, but I am never wrong." --Samuel Goldwyn, American movie producer

INFO THAT HITS US WHERE WE LIVE...  Lake Tahoe, Northstar and North Lake Tahoe Real Estate. The Census Bureau and HUD reported that 2017's annual home building totals for starts, permits and completions all came in at their highest levels since 2007. Starts were at an estimated 1,202,100 units, 2.4% ahead of 2016. Completions totaled an estimated 1,152,300 units, up a solid 8.7% over the prior year. Permits hit an estimated 1,263,400 units, up 4.7% from a year ago. December did suffer an 8.2% dip in starts, but 90% of this came from the South, where the spike in storm-related construction has clearly ended.

Builders remain upbeat, as the National Association of Home Builders (NAHB) January confidence index registered 72, just two points down from December's 18-year high. The NAHB chair said, "Builders are confident that changes to the tax code will promote the small business sector and boost broader economic growth. Our members are excited about the year ahead." Mortgage applications were up 4.1%, according to the Mortgage Bankers Association Survey for the week ending January 12, with purchase applications up 3% from the week before.  

BUSINESS TIP OF THE WEEK... Don't sell yourself based on what you think will sound good to prospects, but on what your strengths actually are. It will always be your most authentic pitch. 

>> Review of Last Week Sock Market as it pertains to our local Incline Village Real Estate Market.

THE BULLS KEEP CHARGING... Bullish investors have sent market indexes northward three weeks in a row, and though the gains weren't quite as large last week compared to the first two, this has been a great year for stocks so far. In the first 13 days of trading in 2018, the broadly-based S&P 500 is up 5.1% and the tech-y Nasdaq up 6.3% on signs of higher corporate earnings and strong economic growth. And 2017 wasn't bad either, as the market hasn't had a serious pullback in more than a year, the S&P 500 not seeing as much as a 5% decline for 395 sessions.

Indicators of economic growth came with December Industrial Production gaining 0.9% and Capacity Utilization heading up to 77.9% from 77.2% the month before. Yes, the Philly Fed and New York Empire State indexes of manufacturing activity in those regions slipped slightly, but remain high. Initial weekly jobless claims, as well as continuing claims, hit their lowest levels in 45 years! In addition, payrolls are growing at a vigorous pace and wages are finally increasing faster for workers at the lower end of the income range than for those at the top.

The week ended with the Dow UP 1.0%, to 26072; the S&P 500 UP 0.9%, to 2810; and the Nasdaq UP 1.0%, to 7336.

Stocks up, bonds down is the classic relationship, and that's exactly how things played out last week. The 30YR FNMA 4.0% bond we watch finished the week down .51, at $103.58. In Freddie Mac's Primary Mortgage Market Survey for the week ending January 18, national average 30-year fixed mortgage rates rose to their highest level since May, but remain below where they were a year ago. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?... CoreLogic reports average fair market rents rose faster than weekly wages in 60% of housing markets, which could encourage many more renters to consider buying a home. 

>> This Week's Forecast

HOME SALES SLOW IN DECEMBER, GDP GROWS NICELY IN Q4... Analysts expect both the Existing Home Sales and New Home Sales reports to show slower annual sales rates for December, typical for that time of year. The GDP-Advanced read on Q4 should put economic growth just a tick under the 3% level reached in Q3. 

>> The Week's Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of Jan 22 - Jan 26

Date

Time (ET)

Release

For

Consensus

Prior

Impact

W
Jan 24

10:00

Existing Home Sales

Dec

5.70M

5.81M

Moderate

W
Jan 24

10:30

Crude Inventories

01/20

NA

-6.86M

Moderate

Th 
Jan 25

08:30

Initial Unemployment Claims

01/20

240K

220K

Moderate

Th 
Jan 25

08:30

Continuing Unemployment Claims

01/13

NA

1.952M

Moderate

Th 
Jan 25

08:30

New Home Sales

Dec

679K

733K

Moderate

Th 
Jan 25

10:00

Leading Economic Index (LEI)

Dec

0.5%

0.4%

Moderate

F
Jan 26

08:30

GDP - Advanced

Q4

2.9%

3.2%

HIGH

F
Jan 26

09:00

Durable Goods Orders

Dec

0.9%

1.3%

Moderate

 

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months... The Fed Funds futures market sees the central bank standing pat on rates at the end of this month. But a quarter percent hike should come in March, then a neutral stance from the Fed again in May. Note: In the lower chart, a 2% probability of change is a 98% certainty the rate will stay the same.

Current Fed Funds Rate: 1.25%-1.50%

After FOMC meeting on:

Consensus

Jan 31

1.25%-1.50%

Mar 21

1.50%-1.75%

May 2

1.50%-1.75%

 

Probability of change from current policy:

After FOMC meeting on:

Consensus

Jan 31

         2%

Mar 21

       74%

May 2

       28%