Park City Mortgage Market Update

INFO THAT HITS US WHERE WE LIVE...What didn't make sense last week was the way the media reported the latest housing data. Housing Starts were UP a strong 15% in September, hitting a 658,000 annual rate. But the media chose to emphasize that the gain was mostly from multi-family starts which shows a big trend toward renting. Actually, multi-family units also include condominiums, which do make sense for first time buyers who don't have to deal with selling. The media also skimmed over the data that single-family starts were UP almost 2% for the month and starts overall are UP over 10% versus a year ago.

Then, Existing Home Sales came in 3% lower for September. The media reports by and large neglected to mention that this slight monthly drop followed a big increase achieved in August. In addition, Existing Home Sales are UP 11.3% year-over-year in September, the third straight month this figure has risen by double digits! Inventory is also down 13% in the last year and sales seem to be stabilizing around a 4.6 to 5.0 million annual rate. Not bad at all.

>> Review of Last Week

AN UP AND DOWN WEEK...Things were volatile last week on Wall Street with the proceedings even concluding in up-and-down fashion, the Dow and the S&P 500 up for the period, but the tech-heavy Nasdaq a bit down. As usual, the volatility was all Europe's fault, as a steady stream of news alternately stirred hopes and then fears that their debt problems would be solved. There will be an EU summit this weekend and another midweek, which could clear things up. Let's hope.

Over here, Q3 corporate earnings season got off to a nice start, with around 70% of the companies reporting beating estimates. One glaring exception was Apple, who missed as people waited for the new iPhone, and this dragged down the Nasdaq. PPI wholesale inflation was up sharply for the month, but the Core CPI consumer inflation the Fed follows came in lower than expected. Manufacturing continues to show no signs of recession, with the Philadelphia Fed manufacturing index and Industrial Production both UP nicely and factory capacity at its highest level since August 2008!

For the week, the Dow ended UP 1.4%, at 11809 and the S&P 500 was UP 1.1%, to 1238; but the Nasdaq slipped 1.1%, to 2637.

While most equities did well, bond prices didn't fare too badly either. The FNMA 3.5% bond we watch closed Friday at $100.31, up .08 for the week. National average mortgage rates held steady, remaining at last week's super low levels, according to Freddie Mac's weekly survey of conforming mortgage rates.

DID YOU KNOW?...Homes listed on a Friday are 18.8% more likely to be toured and 12% more likely to sell within 90 days than homes listed on other days. This is from a study of 1.2 million listings over 21 months in 16 markets nationwide.

>> This Week’s Forecast

NEW HOME SALES, PENDING HOME SALES, GDP AND THE CONSUMER MINDSET... Wednesday, New Home Sales for September, are expected to be up slightly to around a 300,000 annual rate. The next day gives us Pending Home Sales for August. This measure of signed contracts on Existing Homes can indicate actual sales a couple of months out and it's predicted to be down slightly from the prior month.

On the overall economy, we'll have the GDP Advanced reading for Q3, which ended September 30. The forecast is for an improvement, but with GDP still well below 3%, there isn't yet the strong growth needed for recovery. What consumers think of all this will be reflected in Consumer Confidence and the University of Michigan Consumer Sentiment index, which are expected to hold steady.

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months...Economists are still forecasting the Funds rate to remain at its super low level for some time. The Fed said it wants to keep the rate down through the summer of 2013.