Weekly Economic Update

This is the week we’ve been waiting all month for, since the Federal Reserve Open Market Committee meets this week. We will see if the run of recent good news on housing and employment will “tip the scales” for the Fed to consider tapering the bond-buying program, which has kept rates low.

Last week CoreLogic reported a 30% drop in foreclosure activity in October, compared to last year. 

And after a run of weekly declines, Initial Jobless Claims jumped by nearly 70,000 last week, pushing claims to the highest level since early October.

Bottom Line for Mortgages

Activity in bond markets is light to start the week. It appears that many investors are taking a “wait and see” approach until after the Fed releases their statement this Wednesday at 1:00 p.m., CST.

Any indication that they will start slowing their bond purchases could push mortgage rates higher. 

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Weekly Mortgage Update

There was quite a bit of positive economic news last week:

1) Third Quarter GDP up 3.6%
2) Home prices, including distressed sales, up 12.5% in October, according to CoreLogic
3) More than 200,000 jobs added in November, higher than expected.

Bottom Line for Mortgages

Is all this good news enough to convince the Fed to begin “tapering” their bond-buying program? We will get an indication of how they’re leaning during next week’s Fed Open Market Committee meeting Dec. 17th and 18th. 

Any indication that they will start slowing their bond purchases could push mortgage rates higher. However, rates stayed flat to end the week.

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October Year-To-Date Stats

October Year-To-Date Sales

 

Kansas City Metro 2013 2012 Difference
Number of Homes Sold 27,477 25,707 7%
Average Sales Price $182,616 $167,041 9%
       
Missouri 2013 2012 Difference
Number of Homes Sold 14,986 13,822 8%
Average Sales Price $150,300 $136,700 9%
       
Kansas 2013 2012 Difference
Number of Homes Sold 12,491 11,885 5%
Average Sales Price $223,300 $207,100 7%
       
October Stats 2013 2012 Difference
Total Active Listings 13,735 14,230 -4%
Average List Price $174,523 $162,698 7%
Days on Market 82 93 -13%
List Price to Sales Price Ratio 96.20% 95.20% 1%
Total Sales To Date 27,477 25,707 7%
Average Sales Price $153,276 $136,294 11%
Months of Inventory 5.0 5.5 -1%

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Weekly Mortgage Update

Here’s hoping you had a great Thanksgiving with friends and family last week!

This week we will get two big reports that have the potential to move mortgage rates.

The first one is ADP’s employment report, coming on Weds., which is a preview for Friday’s updated Non-Farm Payrolls report from the Dept. of Labor.

This report will have extra significance since it comes after last month’s better-than-expected jobs report. If this one also looks strong, it may convince the Fed to start tapering their bond-buying program sooner.

Bottom Line for Mortgages

A strong jobs report on Friday may move mortgage rates up. If the Fed does signal they will begin tapering their bond purchases at this month’s meeting, it could send mortgage rates even higher. 

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Origins of “Black Friday”

It’s totally understandable if you think the term “Black Friday” is a direct linguistic descendant of “in the black,” accounting jargon for turning a profit. After all, the day after Thanksgiving is now one of the biggest shopping days of the year, an annual delight to retailers hoping to give their bottom lines a nice little boost in the year’s final weeks.

But the truth is that Black Friday owes its name to the Philadelphia Police Department, which did not have profitability in mind. One thing to remember is that, long before the rest of us started calling it Black Friday, retailers hoped to start the holiday shopping season with a bang by offering “can’t miss” deals right after Thanksgiving. (Note: These days, “holiday shopping season” can begin way before Turkey Day.) People being people, they have long stormed stores, caused traffic jams and been generally terrible to one another in an effort not to miss these deals.

In the middle years of the twentieth century, the scene was often particularly bad in Philadelphia, where the annual Army-Navy football game was regularly played on the weekend after Thanksgiving.

Lots of cars, lots of traffic, lots of chaos. Sound familiar?

So at some point in the 1950s or 1960s — some put the date exactly at 1966— the Philadelphia Police Department started to refer to the day after Thanksgiving as “Black Friday,” with the unrealistic hope that people would find the whole shebang distasteful and opt out of the collective consumer madness. At a minimum, it was a derisive way to describe an unpleasant day in the life of a Philly cop.

“It was not a happy term.” retail scholar Michael Lisicky told CBS Philly in 2011. “The stores were just too crowded, the streets were crowded, the buses and the police were just on over call and extra duty.”

The term took off in a big way, but not for the reasons the cops hoped. By the 1980s, the idea gained steam that “Black Friday” was named after retailers trying to hop into the black, according to The Telegraph.

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Then, somewhere along the way, Corporate America joyfully co-opted the phrase for their own purposes. Behold, modern-day re-purposing.

Weekly Economic Update

Existing home sales for October dipped 3.2 percent last week, and the National Association of Home Builders also reported a decline in their Housing Market Index.

Clearly the recent run-up in mortgage rates is having some impact on the housing recovery, which is still better than it was a year ago. 

The Fed will be looking closely at reports like these that come out before the end of the year as they weigh the decision to “taper” the bond-buying program that has been keeping interest rates low.

Bottom Line for Mortgages

Mortgage rates ticked up last week after the Fed released the minutes of their last meeting. Those minutes renewed fears about tapering. 

 

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Weekly Economic Update

Last week, incoming Federal Reserve Chairman Janet Yellen was on Capitol Hill for her confirmation hearings, and she signaled continued support for the Fed’s bond-buying program. This is good news for keeping rates at or near historic lows.

To stimulate the economy, the Fed has been buying $85 billion in bonds each month. In past monthly statements, they have said the timing of cutting back or “tapering” their bond purchases will depend on economic reports going forward. 

Yellen made the comment last week that “unemployment is down from a peak of 10%, but at 7.3% in October, it is still too high, reflecting a labor market and economy performing far short of their potential.

Bottom Line for Mortgages
Mortgage rates did improve slightly at the end of last week. It remains an excellent time to get pre-approved.

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