Get ready for blast off. Many signs in the economy are pointing to a great start for 2015.
- Interest rates remain low and all indications are they will remain low for some time.
- GDP for the 3rd quarter was revised sharply higher to plus 5.0 percent.
- GDP for the 2nd quarter was revised up to a plus 4.6 percent.
- Consumer sentiment has held steady at very high levels.
- Consumer spending is way up on major purchases by 0.6 percent.
- Gas prices are expected to remain down creating more disposable income for consumers.
With the Dow Jones Industrial Average rocketing through 18,000 on Wednesday, that only added more optimism about the start for 2015 being far better than anything we have experienced since the great recession.
Housing data has come in a little weaker than expected however many experts are predicting that with the cost for oil being as low as it is, this could bring life to the housing market. Saudi Arabia announced this week that they have no plans curtail oil production, no matter the price of oil, so this creates pressure on virtually all other oil producing nations to do the same. Although low oil prices are bad for American oil companies, consumers are not shedding any tears or worry about how profitable they will be. All consumers care about is that it is costing a lot less to heat their homes and fill their car gas tanks.
Existing home sales, which had been showing signs of life, declined a larger than expected 6.1 percent for the month of November. This report caught many industry professionals by surprise as the declining cost of fuel as well as the mild start to the winter in most parts of the country was expected to help housing. The good news in the housing report is that even though sales have slowed, inventory has not increased which has kept stability in housing prices.
A positive for the housing industry is that the Federal Housing Finance Agency reported that home prices increased unexpectedly in October. With a no change in September, October’s increase of 0.6 percent was a pleasant surprise. Additionally home prices are 4.5 percent higher than the same time last year.
The final piece to my optimism for the coming year in housing is that in speaking with many real estate professionals, quite a few of them have indicated that they have been having many conversations with potential home sellers. A significant number of the current homeowners they have spoken with have indicated that they are likely to place their home on the market within the next 3-12 months.
With trading volume light with the holidays, and the lack of economic data being reported in the coming week, the markets are expected to remain quiet.
· Tuesday December 30th – S&P Case-Shiller Home Value Index & Consumer Confidence
· Wednesday December 31st - MBA Apps., First Time Jobless Claims & Pending Home Sales
· Thursday January 1st - New Year’s Day –All Markets Closed
· Friday January 2nd – ISM Manufacturing Index & Construction Spending
As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (707) 455-7070.