Quicken Loans Home Price Perception Index (HPPI): Homeowner opinions were 1.8% higher than appraiser and opinions of property value, the 10th-straight month that homeowners overvalued their homes. Despite this, opinions are getting closer together for the fourth consecutive month. Regionally, the gap is the biggest in the Northeast where homeowners overvalued their homes by 2.10%. It’s followed by the Midwest and South at 1.99%. The West has the smallest gap at 1.42% higher than appraiser opinion. Turning to metro data, San Jose homeowners had the most underestimated home values. Philadelphia was at the opposite end, while Miami was closest to total harmony between homeowner and appraiser opinion.
Quicken Loans Home Value Index (HVI): Home values were up 0.18% in December and they’re up 5.81% since the same time last year. There were declines of 0.38% in the Northeast and 0.95% and the South. These were offset by gains of 1.07% in the Midwest and 0.37% in the West.
MBA Mortgage Applications: Mortgage applications were up 21.3% from the previous week. Purchases were up 18.0% and refinances were up 24.0%. Interest rates were down eight basis points to 4.12%. Applications were also helped by a strong jobs report.
Jobless Claims: Initial claims were 7,000 higher to 284,000. This brought the four-week average up 3,000 to 278,750. Continuing claims didn’t do any better, up 29,000 to 2.263 million. This is the highest level since mid-August. The four-week average of continuing claims is up 5,000 to 2.224 million.
Producer Price Index (PPI): The price of production in December was down 0.2% month-to-month and fell 1.0% for the year. Much of this had to do with a decrease in food and energy prices. When these categories are taken out, prices were up 0.1% on the month and 0.3% for the year. If you go further and take out trade services, prices were up 0.2% and 0.3% on the month and year, respectively. Particular categories of weakness included energy, which fell 3.4% in December and is down 16.2% on the year. Food prices were also down 1.3%. The price of exports and finished goods also took a dip.
Retail Sales: In a bit of a surprise for December, retail sales were actually down 0.1% compared with November. The number was pretty much unaffected by car and gas sales. Apparel was down 0.9% in December while general merchandise fell 1.0%. In a more positive note, restaurant sales were up 0.8% and furniture and home furnishings were up 0.9%. Sales at non-store retailers were up only 0.3%. November sales were also revised higher to 0.4%. Still, sales were only up 2.1% for the year.
Industrial Production: Production was down 0.4% in December. Part of this is due to utility production being down 2.0% due to unseasonably warm weather. This might be changing soon. Given my walk into the building this morning, it’s no longer unseasonably warm. I digress. Mining was down 0.8% and manufacturing was down 0.1%. Factories are also using less of their capacity. This is down 0.4% to 76.5%.
Consumer Sentiment: Stemming this week’s tide of negative numbers, consumer sentiment was up 0.7 points to 93.3. However, current conditions were down 3.0 points to 105.1. This is being blamed on volatility in the stock market and concerns out of China. The expectations component offset this by rising 3.0 points to 85.7. Consumers see strength in the jobs market and falling oil prices are keeping inflation expectations low.
Mortgage rates fell further this week with people flooding the bond markets following volatility in the stock market. More on that in a minute.
30-year fixed-rate mortgages (FRMs) averaged 3.92% with an average 0.6 point for the week ending January 14, 2016, down from last week when they averaged 3.97%. A year ago at this time, 30-year FRMs averaged 3.66%.
15-year FRMs this week averaged 3.19% with an average 0.5 point, down from 3.26% last week. A year ago at this time, 15-year FRMs averaged 2.98%.
5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 3.01% this week with an average 0.4 point, down from last week when they averaged 3.09%. A year ago, 5-year ARMs averaged 2.90%.
Don’t look at your 401(k). I realize this is the second straight week I’ve said that, but it’s going to make you queasy if your investments are in stocks. The drop in oil prices is just dragging down the market. On the plus side, gas was just $1.44 in a suburb of Detroit as I was coming to work this morning. Small victories.
The Dow Jones Industrial Average was down 390.97 points Friday to close at 15,988.08, 2.19% lower for the week. Meanwhile, the S&P 500 was down 41.55 points to 1,880.29. The NASDAQ was down 126.59 points Friday and lost 3.34% for the week, falling to 4,488.42.
The Week Ahead
Tuesday, January 19
Housing Market Index (10:00 a.m. ET) – The National Association of Home Builders produces a housing market index based on a survey in which respondents from this organization are asked to rate the general economy and housing market conditions. The Housing Market Index is a weighted average of separate diffusion indexes, including present sales of new homes, sales of new homes expected in the next six months and traffic of prospective buyers in new homes.
Wednesday, January 20
MBA Mortgage Applications (7:00 a.m. ET) – The mortgage applications index measures applications at mortgage lenders. This is a leading indicator for single-family home sales and housing construction.
Consumer Price Index (8:30 a.m. ET) – The consumer price index measures changes based on the price of a fixed basket of goods and services purchased by consumers.
Housing Starts (8:30 a.m. ET) – A housing start is registered when the construction of a new residential building begins. The start of construction is defined as the beginning of excavation of the foundation for the building.
Thursday, January 21
Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals filing for unemployment insurance for the first time. An increasing trend suggests a deteriorating labor market. The four-week moving average of new claims smooths out weekly volatility.
Friday, January 22
Existing Home Sales (10:00 a.m. ET) – Existing Home Sales tallies the number of previously constructed homes, condominiums and co-ops in which a sale closed during the month. Existing homes (also known as home resales) account for a larger share of the market than new homes, and indicate housing market trends.
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