Consumer Sentiment edged lower in early January down from the decade high hit back in October. The index fell to 94.4 after the 95.9 recorded in December. However, consumers reported persistent strength in personal finances and buying plans. The report also revealed that 34% of consumers talked of tax reform with 70% of those saying the new tax reform bill would be positive while 18% said negative.

Leading cloud-based platform provider for the mortgage industry, Ellie Mae, reported this week that refinance applications made up 40% of all closed loans in December. The surge in refinancing was due in part to purchases being down in the winter months and would-be borrowers wanting to close before the new tax laws took effect. “As we closed out 2017 we saw an increase in the percentage of refinances due to seasonality as fewer purchases take place in the fourth quarter, and likely homebuyers were taking advantage of the mortgage deductibility limit before it decreased to $750,000 on December 15th,” said Jonathan Corr, president and CEO of Ellie Mae.

The new Tax Cut and Jobs Act bill should see Americans money taxed at lower rates starting February 1. Corporations are steadily increasing wages, giving bonuses, upping 401K contributions and hiring anyone they can. This is all powerful for housing. With consumer confidence already the highest in this century, that number should grow as tax reform actually starts to hit the wallets of America.

Wholesale inflation declined for the first time in nearly 1 1/2 years in December from November amidst decreasing costs for services. The Bureau of Labor Statistics reports that the Producer Price Index (PPI) declined 0.1% in December, well below the 0.4% recorded in November. On an annual basis, the PPI rose 2.6%, after the 3.1% rise seen in November. The more closely watched inflation reading Consumer Price Index will be released Friday morning.

Mortgage rates edged higher this week as Bond prices declined and yields increased. U.S. Stocks continue to push higher pressuring Bond prices lower. When Bond prices decline, mortgage and interest rates tend to rise. Freddie Mac reports that the 30-year fixed-rate mortgage rose 4 basis points to 3.99% with an average 0.5 in points and fees. Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage.

Retailing giant Walmart announced on Thursday that it will be raising its starting wage rate for hourly employees to $11 an hour after the Tax Cut and Jobs Act was passed in December. In addition, workers that are employed 20-years will receive a one-time cash bonus of $1000, $750 for those employed 15 to 19 years of service, 10 to 14 years $400, five to nine years $300, two to four $250 and workers with less than two years will receive $200. The wage increases are expected to cost Walmart $300 million.

Fannie Mae released its Home Purchase Sentiment Index which fell 2 points in December to 85.8, reversing last month’s rise. The net share of respondents who said now is a good time to buy a home declined while the net share who reported that now is a good time to sell a home remained flat. “Entering 2018, housing affordability remains a persistent challenge, particularly in rental markets, where consumer expectations for price increases over the next 12 months reached a new survey high,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.

The holiday shopping season paid off well for retailer Kohl’s as comparable sales grew by nearly 7% during November and December. That is well above the 4.9% gain on overall sales estimated by MasterCard for the holiday shopping season. The uptick in sales was accomplished by handling returns for Amazon, shrinking hundreds of stores instead of closing them while bringing in new brands, such as Under Armour.

The New Year has ushered in the highest gas prices at the pumps since 2014 due in part to higher travel volumes over the holidays coupled with rising oil prices. The national average price for a regular gallon of gasoline is at $2.49, with motorists in the Northeast, South and upper Midwest seeing pump prices rise as much as $0.13 from more than a week or two ago. However, now that holiday traveling season is over, motorists can expect gas prices to trend cheaper this month as gasoline demand eases.

Friday – January 5

The Labor Department reports that 148,000 new jobs were created in December, below the 188,000 expected, while November was revised higher to 252,000 from the 228,000 originally reported. It was the 87th month in a row for job growth, the longest stretch of growth on record. The Unemployment Rate remained at 4.1%, a 17-year low.

Within the report it showed that average hourly earnings rose 0.3% from November’s 0.2% and increased 2.5% year over year, above the 2.4% annually in November. The U6 number, which measures total unemployment, fell to 8.1% in December, down from 9.1% in December 2016. So, overall, it was a good report.

The service sector of the economy edged lower in December signaling continued growth though at a slightly slower pace. The ISM Service Index fell 1.5 points to 55.9 in December and below the 57.6 expected. Despite the small decline, December was the 96th consecutive month of economic growth in the service sector. A reading above 50 for the index indicates expansion in the service sector, and a reading below 50 signals contraction. Within the report it revealed that the employment component edged higher.

CoreLogic reports that home prices nationwide, including distressed sales, jumped 7% from November 2016 to November 2017 and increased 1% month over month from October to November. Looking ahead, price gains are expected to cool a bit as CoreLogic sees a 4.2% increase from November 2017 to November 2018. CoreLogic’s chief economist, Frank Nothaft, said, “Growing numbers of first-time homebuyers find limited for-sale inventory for lower-priced homes, leading to both higher rates of price growth for starter homes and further erosion of affordability.”

Online real estate database company Zillow reports that the total value of all U.S. homes in 2017 was $31.8 trillion. The top cities for value were Los Angeles at number one worth $2.7 trillion followed by New York at $2.6 trillion. The $31.8 trillion is more than 1.5 times the Gross Domestic Product (GDP) of the U.S. and approaching three times the size of China’s GDP. In 2017, renters spent a record $485.6 billion with renters in New York and Los Angeles spending the most.

The last week of 2017 saw mortgage rates hit a five-month high though still below the rates seen at the end of 2016 and early 2017. Freddie Mac reported last Thursday that the 30-year fixed-rate mortgage hit 3.99% with an average 0.5 in points and fees. Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage.

Economic growth remained solid in the third quarter of 2017, spurred on by robust business spending that was well above the weak levels experienced at the beginning of the year. The final read on third quarter Gross Domestic Product rose 3.2%, just above the 3.1% from second quarter. However, within the report it showed that consumer spending, which accounts for two-thirds of economic activity, rose 2.2%, down from 3.3% in the second quarter. Gross Domestic Product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period. It is considered the broadest measure of economic activity.

Home price gains continue to make the headlines as low mortgage rates, a strong U.S. economy and low inventories of homes for sale continue to drive prices higher. The Federal Housing Finance Agency (FHFA) reports that its October Home Price Index (HPI) rose 0.5% from September. On an annual basis, prices jumped 6.6%. The FHFA monthly HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac.

With the Christmas holiday on Monday, many Americans will travel to their destinations between now and January 1. Motor club AAA says that more than 107.3 million Americans are predicted to travel between December 23 and January 1, which would be a new record and the ninth consecutive year of increased year-end travel. In addition, AAA says about 97.4 million people are expected to travel by car, 6.4 million people will take plane rides and 3.6 million others will travel by train, bus, rails and cruise ships. Just remember, if you travel via automobile, be sure to have an emergency kit that consists of a flashlight with extra batteries, jumper cables, first aid kits, water, nonperishable food items, matches, blankets and warning devices. Your car should also have an ice scraper and a small shovel in case you get stuck in snow.

Monday – December 18

The housing market continues to improve as home builders report strong optimism as the year comes to a close. The National Association of Home Builders Housing Market Index jumped to its highest level in 18 years, up 5 points to 74 and above the 70 expected. Builder confidence has improved in 2017 on hopes of an improved regulatory environment for firms in the residential construction sector. The NAHB said that home buyer traffic and current sales conditions both increased in December. The NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months.

Thursday – December 14

The Commerce Department reported on Wednesday that retailers saw consumer spending jump in November to kick off the holiday shopping season. November Retail Sales rose 0.8%, well above the 0.3% expected, while October was revised higher to 0.5% from 0.2%. Since November 2016, Retail Sales grew by 5.8%. A strong labor market coupled with an improving economy were the catalysts behind the gains.

The Federal Reserve raised the benchmark short term Fed Funds Rate by 0.25% yesterday bringing that rate to 1.50%. The hike in rates now leaves the Prime Rate at 4.5%, which is calculated by taking the Fed Funds Rate and adding three points. On the inflation front, the Fed said that “both overall inflation and inflation for items other than food and energy have declined this year and are running below 2%.

The two-day Fed meeting kicks off on Tuesday and ends Wednesday with the 2:00 p.m.ET release of the Fed statement. Fed Chair Yellen will hold a press conference immediately following the release at 2:30 p.m. ET in what will be her last as Fed Chair. The Fed Funds Rate is expected to rise by 0.25% to 1.50%. The statement could reveal more rhetoric on the Fed’s balance sheet and will reveal the current state of the economy. The Fed statement always carries a big headline risk.

Rising home prices across the U.S. lifted many underwater mortgages into positive equity between the second and third quarters of 2017. Analytics firm CoreLogic reports that 260,000 mortgaged properties regained equity between the second and third quarters of 2017. CoreLogic Chief Economist Frank Nothaft said, “Homeowner equity increased by almost $871 billion over the last 12 months, the largest increase in more than three years. This increase is primarily a reflection of rising home prices, which drives up home values, leading to an increase in home equity positions and supporting consumer spending.” Negative equity means your home’s current fair market value is less than your outstanding loan balance (i.e you owe more on your home than it’s worth).

Job growth remained solid in November after the brief hiccup in September due to Hurricanes Harvey and Irma. The Bureau of Labor Statistics reports that 228,000 workers were hired last month, above the 190,000 expected. Within the report it showed that the Unemployment Rate remained at 4.1 %, which is considered full employment. However, average hourly earnings disappointed, growing by 0.2% from October to November, below the 0.3% expected. Year-over-year, earnings rose 2.5%, again below the 2.7% expected. In 2017, average monthly job growth eased to 174,000 new jobs per month from 187,000 in 2016.

Mortgage credit availability loosened a bit in November driven in part by a net increase in investor offerings. The Mortgage Bankers Association reports that mortgage credit availability index increased to 182.4 last month, an uptick of 0.8%. An increase in the index indicates that credit availability is loosening, while a decrease signals that lending standards are tightening. The index was bench marked to 100 in March 2012.

The House and Senate approved a measure Thursday to avert a partial government shutdown ahead of the midnight deadline tonight. The bill, also known as a continuing resolution, would keep federal agencies functioning for an additional two weeks through Dec. 22.