Market Review

Market in Review for the Week of April 3, 2023

The February Pending Home Sales index of signed contracts on existing homes headed north for the third straight month. The National Association of Realtors noted, “the housing sector’s contraction is coming to an end.”

In line with this, the Mortgage Bankers Association reported demand for purchase loans moved up for the fourth week in a row, as mortgage rates continued to slide back from their 2023 highs.

Buyer demand is also growing as home prices ease. The S&P CoreLogic Case-Shiller Home Price Index in January fell month-over-month for the seventh straight month, though it’s still up modestly year-over-year.

OUT LIKE A LION... March ended well on Wall Street, with stock prices roaring ahead for both the week and the quarter. Worries about the health of the banking sector have obviously receded

University of Michigan Consumer Confidence dipped in March, yet the Conference Board's Consumer Confidence read held up well the week after the bank drama, though it still registered some future growth concerns.

The leonine finish to the month was jump started Friday by some pleasing inflation data. The PCE Price Index fell from January's 5.3% to February's 5.0%, while the Fed's favorite Core PCE number went from 4.7% to 4.6%.

The week ended with the Dow UP 3.2%, to 32,274; the S&P 500 UP 3.5%, to 4,109, and the Nasdaq UP 3.4%, to 12,222.

Bond prices slipped a little overall, the UMBS 5.5% down 0.06, to $101.01. The national average 30-year fixed mortgage rate decreased for the third straight 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… Attom Data reports that home flips last year reached 8.4% of all home sales, their highest level since 2005, even as flippers’ median gross profit dipped to $67,900, a 26.9% ROI, a 14-year low.

THIS WEEK'S FORECAST:

CONSTRUCTION SPENDING, MANUFACTURING, SERVICES, JOBS... Total Construction Spending is expected to come in flat for February, but we'll monitor the residential part. The ISM Manufacturing and Non-Manufacturing Indexes for March are forecast to fall, though Non-Manufacturing (the dominant services sector) should remain in growth territory. The March jobs report is predicted to show Nonfarm Payrolls down and the Unemployment Rate holding.

FEDERAL RESERVE WATCH:

The NYSE, Nasdaq, and bond markets will be closed this Friday, April 7, in observance of Good Friday.
Forecasting Federal Reserve policy changes in coming months. Wall Street expects rates to hold at the next two meets, but there's growing sentiment for a quarter percent hike. There's a better than 50% probability the rate will change in July, with a greater chance for a hike than for a cut. Note: In the lower chart, a 47.3% probability of change is a 52.7% probability the rate will stay the same. Current rate is 4.75%-5.00%

Thanks as always to Sean Donahue at Supreme Lending.............