This Week's Market Update

NATIONAL MARKET UPDATE

Sales of new single-family homes rocketed ahead 12.2% in May, up for the third straight month. Reasons? The supply of completed homes has more than doubled since the bottom, and the median sale price is 7.6% below a year ago.

Existing home supply remains tight, so the index of signed contracts on those homes dipped in May. But demand is strong, the National Association of Realtors reporting “approximately three offers for each listing.”

The national Case-Shiller home price index moved up in April for the third straight month, though it’s still down a tad annually. The FHFA Index of prices for homes bought with conforming mortgages rose to a new all-time high.

REVIEW OF LAST WEEK

AHEAD AT THE HALF... The three major stock indexes finished the week, the month, and the first half of the year solidly ahead. Traders were feeling the economy can avoid a recession and the Fed is close to done hiking rates.

However, all was not perfect. Consumer spending rose in May a way-less-than-expected 0.1% and Core PCE Prices, the Fed's favorite inflation measure, moderated, but by a mere 0.1% year-over-year.

But a pile of data beat forecasts—Personal Income, Durable Goods Orders, New Home Sales, Consumer Confidence, and weekly Initial Jobless Claims. Plus, Q1 GDP was upwardly revised to report 2.0% economic growth.

The week ended with the Dow UP 2.0%, to 34,408; the S&P 500 UP 2.3%, to 4,450; and the Nasdaq UP 2.2%, to 13,788.

With so much money flowing into equities, bonds finished a bit down overall, the 30-Year UMBS 5.5% slipping 0.52, to $99.39. In Freddie Mac's Primary Mortgage Market Survey, the national average 30-year fixed mortgage rate edged up modestly. 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 reported for the week ending June 23, applications for purchase mortgages rose “for the third consecutive week, to the highest level of activity since early May.” 

THIS WEEK'S FORECAST

CONSTRUCTION SPENDING, MANUFACTURING, SERVICES, JOBS… May should see a small gain in overall Construction Spending, but we'll focus on the residential part. The June ISM Manufacturing Index is expected to have that sector of the economy still contracting, while the ISM Non-Manufacturing Index shows the dominant services sector barely expanding. About 200,000 new Nonfarm Payrolls are forecast for June, with the Unemployment Rate holding around 3.7%. 

In observance of Independence Day, U.S. financial markets will close early today, and will remain closed tomorrow, July 4.

FEDERAL RESERVE WATCH

Forecasting Federal Reserve policy changes in coming months. The futures market still sees the Fed hiking a quarter percent in July and holding there, although sentiment is growing for another bump in November. Note: In the lower chart, an 87.4% probability of change is an 87.4% probability the rate will rise. Current rate is 5.00%-5.25%

Probability of change from current policy:

Thank you to Sean Donahue and Supreme Lending for providing the content for this report