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Eric Painter Senior Loan Officer, Nova Home Loans
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Home Loan Specialist
Home Loan Specialist

33 followers
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January Pending Home Sales



Pending home sales for January 2012 were up 2.0% from December 2011. The reading of 97.0 was also the highest reading since April 2010, during the home buyer tax credit. Year-over-year pending home sales were up 8.0%.

Pending home sales is an index that measures housing contract activity. It is based on signed real estate contracts for existing single-family homes, condos and co-ops. A signed contract is not counted as a sale until the transaction closes.
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Core PPI Up



The Labor Department reported today that the Producer Price Index (PPI) increased .1% in January from December. However, Core PPI (minus the cost of food and energy) rose .4% in January, double expectations. As you can see from this chart, this is the largest month-over-month increase of the Core PPI reading since July 2011. The Core PPI is considered a more accurate look on inflation because it removes the highly volatile categories of food and energy.

The year-over-year Core PPI number also increased, up 3% from January 2011. This was also an increase from the previous year-over-year reading of 2.7% from December 2010 to December 2011.

The Producer Price Index (PPI) is a measure of price changes in the manufacturing sector of the average price level for a fixed basket of capital and consumer goods paid by producers. It's important to keep an eye on these numbers as inflation is the arch enemy of bonds, and therefore home loan rates.
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Retail Sales Climb



According to the U.S. Census Bureau, retail sales increased .4% in January to $401.4 billion. Though below expectations, it was the largest increase in 4 months. The data fell short due mainly to lower sales of automobiles. When factoring out the auto sector, retails sales increased .7%, the highest level in 10 months.

This chart shows the retail sales data minus the automobile sector since January 2011. Not only did retail sales excluding auto increase .7% from December, it was also up 5.5% from January of last year.

The retail sales report is a measure of the total receipts of retail stores from samples representing all sizes and kinds of business in retail trade throughout the nation. It is the most timely indicator of broad consumer spending patterns and is adjusted for normal seasonal variation, holidays, and trading-day differences.
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Velocity of Money



Since the early part of the recession in 2008, the Velocity of Money (M1) has dropped over 30%. Velocity measures how fast money changes hands within the economy. Having it slow significantly while the Fed boosts the M1 money supply suggests that added liquidity is not spurring economic activity or inflation...at least not yet.

Velocity is important for measuring the rate at which money in circulation is used for purchasing goods and services. Higher velocity means the same quantity of money is used for a greater number of transactions and is related to the demand for money. This data can help investors determine how healthy the economy is.
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Nonfarm Employment Jumps

According to the Bureau of Labor and Statistics, nonfarm payrolls increased in January by 243,000. This marked the largest gain in nonfarm employment since April 2011. The average 2011 gain per month came in at 152,000. Since a decline in nonfarm payrolls in early 2010, 36% of the jobs lost between January 2008 and February 2010 have been recovered. Nonfarm payrolls measure the number of people on the payrolls of all non-agricultural businesses.

This report combined with other strong economic news from today has had a positive result on stocks. Which has had a negative impact on bonds today as money flows out of bonds and into stocks.Edit
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Private-Sector Employment Increases



According to the ADP National Employment Report, private-sector employment increased 170,000 from December to January. This marks the 24th consecutive month of increases. The average for the last three months of gains has been 223,000 versus an average of 163,000 per month for all of 2011.

The ADP National Employment Report is a measure of nonfarm private employment, based on a subset of aggregated and anonymous payroll data that represents approximately 392,000 of ADP's 500,000 U.S. business clients and roughly 24 million employees working in all 19 of the major North American Industrial Classification (NAICS) private industrial sectors.
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Featured Chart for Tuesday, January 31st

Home Prices Fall in 19 of 20 Cities



According to the Case-Shiller Home Price Index, prices in the 20-City Composite fell in 19 of the 20 cities from October to November. Only Phoenix saw an increase, with prices moving up .6% from October to November. Prices were also down 3.7% from November 2010 to November 2011.

The Case-Shiller Price Indices are constructed to accurately track the price path of typical single-family homes located in each metropolitan area provided.
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