We have a ton of data to go over from last week in addition to a Fed announcement on interest rates to digest. Let’s dig in.
New Home Sales: Sales projections for the year came in 8,000 lower in March and the seasonally adjusted annualized rate came in at 511,000. Sales are still at 5.4% on the year and permits for new construction are up 4.6%. There was also an improvement in the number of new homes on the market, up 2.1%. Inventory relative to sales is up to 5.8 months from 5.6 months in February. More homes in the market may have driven prices down. They fell 3.2% to $288,000 in March.
Durable Goods Orders: New orders were up 0.8% in March after being down 3.1% in February. The government has a big impact on this as there was a gain in defense spending that offset a downturn for commercial planes. Another negative is a 3.0% drop in motor vehicle orders. Orders are down 2.5% on the year. Core capital goods orders were also flat for the month. These orders are down 2.4% on the year. Shipments were also down 0.5% and unfilled orders fell 0.1%.
S&P Case-Shiller HPI: Sale prices were up 0.7% in February across the 20-city index on a seasonally adjusted basis and 0.2% overall. They’re up 5.4% on the year. Both San Francisco and Denver were up 1.5% for the month. Meanwhile, San Diego and Washington, D.C. didn’t have great months, gaining 0.2 and 0.1%, respectively. In terms of annualized data, Portland and Seattle lead the way with low double-digit gains. New York and D.C. are at the bottom.
Consumer Confidence: Consumer confidence fell to 94.2. In one good sign, the metric that measures how many Americans think jobs are hard to get fell 2.5% to 22.7%. As a result, the present situation component was up 1.5 points. Unfortunately, expectations were also down 4.3 points to 79.3; 7.2% of Americans see fewer jobs in the future and only 12.2% see more jobs coming. In addition, all buying expectations are down.
MBA Mortgage Applications: Applications were down 4.1% overall as purchases fell 2.0% and refinances were down 5.0%. There was a two basis point rise in the average interest rate for a 30-year conforming mortgage to 3.85%.
International Trade in Goods: The trade deficit narrowed, but it was due to more of a decline in economic activity than any export positive. Exports were down 1.7% as imports fell 4.4%. The trade deficit is down to $56.9 billion, a $6.0 billion decrease. The good news is there was a 1.5% increase in capital goods exports. However, imports in the same category are down 3.6%. Consumer goods are also down 9.1%.
Pending Home Sales Index: Pending home sales were up 1.4% to 110.5 in March. The report is considered on the weaker side. Sales were up only 0.2% in March in the Midwest. The Northeast and South are up 3.2% and 3.0% respectively. It’s a small region, but the Northeast is up 18.4% for the year.
GDP: The economy only grew 0.5%. Meanwhile, prices were up 0.7%. Consumer spending was up 1.9%. Spending on services was up 2.7%, while there was a 1.6% drop in durable goods orders caused by weak vehicle sales. Nonresidential investment saw a 5.9% decline, while residential investment was up 14.8%.
Jobless Claims: Initial claims were up 9,000 this week to come in at 257,000. The four-week average was down 4,750 to 256,000. Continuing claims were down 5,000 to 2.130 million, the lowest level in 16 years. The four-week average is down 10,000 to 2.158 million.
Personal Income and Outlays: Incomes were up 0.4%. People are saving more as spending was up only 0.1%, which matched price increases in both core and overall category. Prices are up 0.8% on the year and 1.6% in the core. Part of the spending stagnation was a drop in vehicle spending, which was down 0.6%. Lower fuel prices also helped drag things down. Meanwhile, wages and salaries were up 0.4%.
Consumer Sentiment: Consumer sentiment was down 0.7 points in the final reading of April to come in at 89.0, the lowest levels since September. Expectations were down almost 4 points to 77.6. This mirrors the consumer confidence results where consumers are uncertain about job and income prospects. Meanwhile, current conditions are up over a full point to 106.7. Inflation expectations over the next year at 0.1% to 2.8%, while five-year expectations are headed in the opposite direction, down 0.2% to 2.5%.
Rates went up quite a bit last week. The good news is the Federal Reserve decided to leave short-term interest rates where they are for now, so it’s still a good time to lock in your rate while the market is friendly.
Thirty-year fixed-rate mortgages (FRMs) averaged 3.66% with an average 0.6 point for the week ending April 28, 2016, up from last week when they averaged 3.59%. A year ago at this time, 30-year FRMs averaged 3.68%.
Fifteen-year FRMs this week averaged 2.89% with an average 0.6 point, up from last week when they averaged 2.85%. A year ago at this time, 15-year FRMs averaged 2.94%.
Five-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.86% this week with an average 0.5 point, up from last week when they averaged 2.81%. A year ago, 5-year ARMs averaged 2.85%.
Stocks were lower on Friday, dragged down by the health care sector.
The Dow Jones Industrial Average was down 57.12 points to 17,773.648. It was up 0.5% from the month. The S&P 500 was up 0.27% on the month despite being down 10.51 points Friday to finish at 2,065.30. The NASDAQ fell 29.93 points to 4,775.36. The index was down 1.94% on the month as tech took a beating.
The Week Ahead
Monday, May 2
ISM Manufacturing Index (10:00 a.m.) – This index measures the general direction of manufacturing within the U.S. The qualitative survey of purchasing managers looks at production, new orders, order backlogs, inventories and supplier deliveries, among other factors.
Wednesday, May 4
MBA Mortgage Applications (7:00 a.m. ET) – The mortgage applications index measures applications to mortgage lenders. This is a leading indicator for single-family home sales and housing construction.
International Trade (8:30 a.m. ET) – International trade is composed of merchandise (tangible goods) and services. It’s available by export, import and trade balance for six principal end-use commodity categories and for more than 100 principal Standard International Trade Classification system commodity groupings.
Thursday, May 5
Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals who filed 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, May 6
Employment Situation (8:30 a.m. ET) – The employment situation report measures unemployment in the labor force as well as the sentiments of workers about the job market.
There’s not a lot on the calendar in terms of volume next week, but what is there is a big deal. We’ll have it all covered. There will also be a lot of great tips for your home, money and life coming your way. Subscribe in the Zing Blog below and you won’t miss an article.
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