Mel's Blog

Budget Plan Passes - Closer to a Middle Class Tax Break

October 20th, 2017 2:00 PM by Mel Samick

The passage of a budget plan was negative for mortgage rates this week. The economic data had little impact. As a result, mortgage rates ended the week higher.

 

Late Thursday, the Senate voted in favor of a 2018 budget plan. This was a key early step along the path to tax reform. Investors viewed the progress on tax reform as negative for mortgage rates for a couple of reasons. First, a new tax plan likely would boost economic growth, which would raise the outlook for future inflation. In addition, it would increase the budget deficit. The added supply of bonds needed to fund the deficit would push yields higher.

 

The headline figures released on Wednesday for housing starts in September were disappointing. However, digging deeper it was clear that the data was heavily influenced by the impact of the recent hurricanes, and the market reaction was small.

 

After three months of strong results, single-family housing starts in September fell 5% from August, which was a much larger than expected drop. While starts rose in the Northeast, the West, and the Midwest, they suffered a massive 15% decline in the South, where the bulk of the hurricane damage took place.

 Existing home sales in September posted their first gain in 4 months rising .7%. Overall sales are flat. Down 1.5% compared to sales one year ago. So even prior to the hurricanes sales of real estate have not been great. It is reported because of  tight inventory, which is true, however I feel for sales to start picking up again buyers need to start receiving higher wages. To date wages have risen 2.5% on average just barely helping families. Health care cost is not receiving enough blame for keeping our economy in the doldrums. Hopefully our government will wake up to this reality sooner than later.

Mel
Some information provided by MBS Quoteline

 


Posted in:General
Posted by Mel Samick on October 20th, 2017 2:00 PM

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