This is Ted Clay with your weekly update.
Mixed earnings results from corporations (UPS was up, Alcoa was down) show that the economic engine is sputtering as it starts back up. However, according to a survey from the National Federation of Independent Businesses, small business owners are still NOT confident enough to start hiring and they are a BIG piece of the employment picture. With unemployment high there is no purchasing power and so inflation stays low. This is backed up by the CPI numbers this week which came in basically flat last month. Remember, low inflation = low rates.
Another inflation factor is foreclosures. Nationally, 1st quarter foreclosures came in 35% over last year as banks work through their non-performing mortgages. This helps to keep the inflation factor OUT of housing which, as I mentioned last week, is a BIG reason the CPI numbers are so tame. Again, this is good for rates.
Finally, in March we saw a 1.6% increase in home starts and a 20% increase over this time last year. What this tells us is that, even with foreclosures, there is enough demand for builders to increase production….and that is good news for Realtors and Builders alike.
This week rates battled back against their recent rise due to the CPI numbers and ranged between 4.875% and 5.125%, depending on program, credit and points.
