Discussing how household spending is important for the economy, property taxes and tax reform, mortgage rates and the biggest surprise for home builders in 2017!
Household Spending Remains Key to U.S. Economic Growth
From St. Louis Fed:
Since the U.S. economy began to recover in 2009, close to 83 percent of total growth has been fueled by household spending, said William R. Emmons, lead economist with the St. Louis Fed’s Center for Household Financial Stability.
“Hence, the continuation of the current expansion may depend largely on the strength of U.S. households,” noted Emmons.
The key is whether or not households are spending money they actually have or going further and further into debt. Some debt is OK but you must be sure you do not over extend yourself.
IRS Says 2018 Property Taxes Deductible If Assessed and Paid in 2017
From The Hill:
The Internal Revenue Service (IRS) announced Wednesday that homeowners can deduct their prepaid 2018 state and local property taxes on their 2017 returns if the taxes are assessed and paid this year, postponing possible hikes from the tax-reform legislation signed into law this month.
The changes from the tax reform are substantial and I am not a tax professional so it is best that you contact the appropriate professionals to advise you.
Mortgage Rates Increase
From Freddie Mac:
- 30-year fixed-rate mortgages averaged 3.99% with an average 0.5 point
- This is up from last week when it averaged 3.94%
- Last year at this time, 30-year fixed-rate mortgages averaged 4.32%
- 15-year fixed-rate mortgages averaged 3.44% with an average 0.5 point
- This is up from last week when it averaged 3.38%
- Last year ago at this time, 15-year fixed-rate mortgages averaged 3.55%
Len Kiefer, Deputy Chief Economist at Freddie Mac, said:
As we expected, mortgage rates felt the effect of last week’s surge in long-term interest rates in the final, shortened week of 2017. The 30-year fixed mortgage rate increased 5 basis points to 3.99 percent in this week’s survey. Although this week’s survey rate represents a five-month high, 30-year fixed mortgage rates are still below the levels we saw at the end of last year and early part of 2017. Mortgage rates have remained relatively low all year.
Remain calm since mortgage rates are STILL super low. Since these are the average mortgage rate, you must talk to the lender of your choice to find out what is possible for you and your options for getting a mortgages
No report from the MBA this week so we will have to assume they took the week off. Boy, it would be nice to take some time off…
Home Builders Biggest Surprise in 2017
John Burns just reported that they asked over 300 home building executives what their biggest surprises were in 2017. Increasing costs was the number one surprise despite the executives expecting cost increases.
Stronger than expected demand was the second biggest surprise. I am surprised they were surprised by the strong demand. After all, demand is high and supply is low in many areas.
The home builder execs expect new home prices to remain high and the number of new homes being built to stay below historical levels in 2018.
Business Conditions in the Carolinas Remained Positive in December
From Richmond Fed:
Business conditions in the Carolinas remained positive in December, according to the most recent survey by the Federal Reserve Bank of Richmond. Firms reported continued increases in sales, employment, and wages, although this growth was somewhat softer than in November.
Spending by Carolinas firms increased in December and firms expected expenditures to continue to rise in the coming months. Firms were optimistic, expecting strengthening business conditions and sales growth in the next six months. Conversely, firms did not expect to see improvements in the availability of skills, as both the current and expected skills indexes remained weak at a value of −2.
Carolina firms reported continued but slower growth in both prices paid and prices received in December. However, firms expect price growth to accelerate in the next six months.
A good sign for the coming year!
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