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Jobless Rates Drop

a graph of the housing starts from January 2009 to 2012An improving US economic outlook was negative for mortgage rates this week. Reduced concerns about Europe also caused a partial reversal in the flight to safety trade. As a result, mortgage rates ended the week higher.

Early in the month, the December Employment report showed a larger than expected increase of 200K jobs, and the Unemployment Rate continued to move lower. This week, Weekly Jobless Claims fell to the lowest level since April 2008. The labor market is one of the most important factors in the health of the economy, and many investors now view the outlook as brighter than it has been since the financial crisis began. If this is the case, it will be great news for the economy, and job gains will increase the willingness and the ability of people to purchase homes.

The Housing sector data released this week was encouraging as well. January Existing Home Sales increased 5%, while the inventory of unsold homes declined 9%, to the lowest level since March 2005. December Housing Starts for single-family units increased 4%, and Building Permits for single-family units rose 2%. Finally, the January NAHB Home Builder confidence index rose for a fourth consecutive month to the highest level since 2007. Improving economic conditions, high affordability levels, and low mortgage rates provide solid reasons to be optimistic about the housing market.

Also Notable:
• Core CPI inflation was 2.2% higher than one year ago
• Existing Home Sales rose to the highest level in eleven months
• The Treasury will auction $99 billion in 2-yr, 5-yr, and 7-yr securities next week
• Greece moved closer to reaching an agreement with its creditors

Average 30 yr fixed rate:
Last week: -0.05%
This week: +0.08%

Stocks (weekly):
Dow: 12,650 +350
NASDAQ: 2,780 +80

Week Ahead
The most highly anticipated economic news next week will be Wednesday’s Fed announcement. Investors will be looking for hints about whether the Fed will provide additional monetary stimulus. The most significant economic report will be Friday’s GDP data for the fourth quarter. GDP is the broadest measure of economic activity. Before that, Pending Home Sales will be released on Wednesday. Durable Orders and New Home Sales will come out on Thursday. Leading Indicators and Consumer Sentiment will round out the schedule. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday.

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Roger is an owner and licensed Loan Officer at Blue Water Mortgage. He graduated from the University of New Hampshire’s Whittemore School of Business and has been a leader in the mortgage industry for over 20 years. Roger has personally originated over 2500 residential loans and is considered to be in the top 1% of NH Loan Officers by leading national lender United Wholesale Mortgage.