Weekly Economic Report 04.02.19

KEY MARKET INDICATORS as of Apr 02, 2019

New Home Sales, Market Expectation of Fed Funds Rate

New Home Sales: Sales of new single-family homes increased 4.9% to a seasonally adjusted annual rate of 667,000 in February, the highest level since last March. Compared to a year ago, new home sales were up 3.7% in February, and up 2.9% in the first two months of the year. Lower interest rates since December has helped to stabilize the housing market. The South has been the best performing region so far this year, reporting a 14.5% growth from a year ago. New homes priced under $300,000 have sold well in the past two months, averaging 310,000 units at a seasonally adjusted annual rate, compared to around 270,000 units a year in the past three years.

Where is the Fed Funds Rate Headed: The interest rate on 30-year fixed-rate mortgages plays an important role in determining the level of housing affordability, and its decline since December has been the main driver for stabilizing the housing market. Its direction is influenced by both the actual and expected changes in the Fed Funds Rate as well as other factors. In October last year, the market expected the Fed to raise interest rate from one to three times by the end of 2019. But concerns about slower economic growth then shifted market expectations quickly. Today, the market expects the Fed Funds Rate to stay unchanged until December, with a growing likelihood for a rate cut.

Tian Liu, Genworth Mortgage Insurance Chief Economist
919 807.9584

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Disclaimer: Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinions of Genworth Mortgage Insurance and are subject to change without notice. Genworth Mortgage Insurance has no obligation to provide revised assessments and assumes no duty to update information in the event of changed circumstances. While we have gathered this information from sources believed to be reliable, Genworth Mortgage Insurance cannot guarantee the accuracy of the information provided. Certain data discussed in this report is publicly available only on a time delayed basis. Genworth Mortgage Insurance strives to analyze data as it becomes available, but makes no representation that all data is reviewed immediately upon release. 

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