NATIONAL MARKET UPDATE
New Home Sales were up 1.6% in December, ending the year up 15.2% from a year ago. Sales in 2020 of new single-family homes were the best in 14 years. The average price is up, but low mortgage rates keep properties attractive.
Inventories were up by 12,000 units, yet sales have slowed since summer because there still aren't enough finished new homes. Fortunately, the number of new single-family homes started is up 27.8% from a year ago.
Lack of inventory is also slowing existing home deals. The Pending Home Sales index of contracts signed on those homes dipped a smidge in December, but is up 21.4% year-over-year!
REVIEW OF LAST WEEK
A LITTLE TOO RISKY... Stocks posted their biggest weekly losses in three months, but it was volatile trading in certain risky pockets of the market that drove the indexes down, not any big concerns about our economic future.
The excessive speculation was a turnoff for investors, along with Q4 GDP of just 4% after record Q3 growth. We also saw a dip in personal spending in December as consumers reacted to a return of economic restrictions in some areas.
Yet housing and business investment performed well, we got some better-than-expected corporate earnings, and analysts say the economy should start rebounding as the $900 billion stimulus passed in December kicks in.
The week ended with the Dow down 3.3%, to 29,983; the S&P 500 also off 3.3%, to 3,714; and the Nasdaq down 3.5% to 13,071.
Benefiting from the carnage in equities, bonds edged higher, the UMBS 3.0% went UP .13, to $105.19. The national average 30-year fixed mortgage rate, near record lows, dropped slightly in Freddie Mac's latest Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
THIS WEEK'S FORECAST
MANUFACTURING, SERVICES, CONSTRUCTION, JOBS, UP… Our economy should stay solidly expanding, by both the ISM Manufacturing and ISM Non-Manufacturing Indexes. Analysts forecast a boost in Construction Spending; we'll keep an eye on the residential part. Forecasters also expect Nonfarm Payrolls to rise in January, following December's drop due largely to pandemic shutdowns.
NOTE: Weaker economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.
