January threw a variety of obstacles at investors around the world. Tensions seemed to flare between the United States and Iran, negotiations on trade continued between the U.S. and China, the coronavirus spread to several countries, and impeachment proceedings continued in the Senate. Despite all of this, the stock market entered February at an all-time high while several other signs of growth persist.
The Coronavirus Affects Investors and Mortgage Rates
Tensions between the United States and Iran have seemed to settle for the time being. This held mortgage rates pretty steady until developments surrounding the coronavirus hit mainstream media. Ultimately, the news of the viral outbreak in China, however, slightly lowered mortgage rates.
Since the initial outbreak, news surrounding the coronavirus has continued to spread, increasingly alarming many around the world; investors responded with uncertainty.
Decreased travel and trade resulting from the outbreak could negatively impact economic growth. So far, though, markets have remained fairly steady. Investors await further developments on the virus. In the meantime, investors expect the Fed to remain pretty steady with policy. Mortgage rates will likely be the first to be affected if the Fed moves position.
Real Estate Looks Up to Start the Year
There is some good news for the real estate industry. A lack of inventory will likely continue to hold the industry back, but a new report shows signs of improvement. New housing starts in December jumped 17% from the previous month, well beyond even the boldest predictions. In fact, the jump hit a record level last attained in 2006. The year-over-year increase was 41%, with growth in both single and multi-family units.
Sales of existing homes increased from November, up 11% for the entire year of 2019. And, the national median sales price for those existing homes increased 8% annually as well.
Eyes will remain on real estate inventory issues moving forward. The number of homes currently up for sale fell to only a three-month supply. This number is 50% lower than the benchmark six-month supply that is considered a sign of a healthy market. Inventory remains at its lowest level since the early 1980s.
Consumer Spending and Inflation
The latest data on consumer data indicates that spending over the holiday season was strong. Retail sales in December were up 0.3% from the previous month but 5.8% more than just one year prior. Online sales saw tremendous growth as well.
Inflation remained pretty steady as well to end the year. Based on the Consumer Price Index, core inflation in both November and December were up 2.3% from the previous year.
The most recent European Central Bank (ECB) meeting went as expected for investors. European benchmark rates held steady and the ECB announced a plan to review its current objective and technology.
Looking ahead, the announcement of first quarter GDP and the core PCE price index awaits investors. The coronavirus, trade tensions, and impeachment proceedings will also remain influential in the markets.
For further information on the loan and real estate market, get in touch with one of the title and escrow specialists at Plymouth Title Guaranty Corporation.
Information accredited to MBSQuoteline.