

We are approaching the half-way point of 2017. We can make an observation that it has been a very strange year. And we are not just talking about the political turmoil. For example, despite the fact that the Federal Reserve Board has raised short-term interest rates for the third consecutive quarter, we still do not have a fix on how strong the economy is right now. In their statement accompanying the increase two weeks ago, the Fed expressed optimism that the economy was getting stronger. Yet, every economic report released that week was disappointing, including readings on retail sales and industrial production.
Even though just about everyone was expecting rates on home loans to rise significantly this year, this uncertainty is one reason that mortgage rates are lower than the analysts expected. One would hope that the upcoming June jobs report would lend some certainty to the equation, but thus far this year, we have even seen ambiguity within the employment sector. The unemployment rate is dropping, but the pace of jobs added has not accelerated from last year.
Despite this uncertainty, the stock market has remained strong this year as the post-election rally has continued. Does this mean that the markets are optimistic that it is only a matter of time before the economy shows signs that it is picking up? Or is this rally merely a reaction to improved corporate profits? We feel that the picture will become clearer over the next several weeks, as we see additional jobs reports and a reading on the growth of the economy for the second quarter. For now, the lower long-term rates should be helping the economy in conjunction with higher stock prices.

June 23, 2017
Daily Value | Monthly Value | |
June 22 | May | |
6-month Treasury Security | 1.10% | 1.04% |
1-year Treasury Security | 1.22% | 1.12% |
3-year Treasury Security | 1.48% | 1.48% |
5-year Treasury Security | 1.76% | 1.84% |
10-year Treasury Security | 2.15% | 2.30% |
12-month LIBOR | 1.724% (May) | |
12-month MTA | 0.776% (May) | |
11th District Cost of Funds | 0.645% (Apr) | |
Prime Rate | 4.25% (June) |


In some of the hottest housing markets in the US, renters are looking outside of the city as urban renting is becoming more expensive, according to a new report from Zillow. For the first time in four years, the monthly cost of suburban rent is rising faster than the cost of urban rent. The monthly cost of rent in the suburbs is up 2.5%, versus a 2.3% increase in urban rent. “An increase in multifamily construction has slowed rent growth across the country, with rents rising at their slowest pace in five years. The suburbs often offer larger apartments and more single-family homes for rent with more space – about 19% of all single-family homes in the US are rentals, up from 13% in 2005,” the report said. Zillow Chief Economist Svenja Gudell listed hardship in rental affordability, an inclination to newer apartments and preference for the spatial capacity of single-family homes in the suburbs as some of the reasons for this new trend. “Rents themselves are still lower in the suburbs, but if demand keeps growing for suburban rentals and supply continues to lag, that will also start to change,” Gudell said. “As more formerly urban renters move to the suburbs in coming years, we’ll likely start seeing more apartment buildings and walkable amenities popping up in those communities.” Source: Zillow
For the first time in years, home sizes are getting smaller. That’s the main finding of the U.S. Census Bureau in its annual report on characteristics of new housing. The report said the median home size fell to 2,422 square feet in 2016, down from a record high 2,467 feet in 2015. Relatively speaking, however, home prices are still 8 percent higher than the pre-crisis peak in 2007 and nearly 50 percent bigger than in 1978. The report said the share of new homes in excess of 3,000 feet declined; the share of new homes under 2,000 feet increased. Source: The MBA