I like coming to work. What I don’t always appreciate is getting up early to do so. Luckily, with Labor Day coming, we’ve got a 3-day weekend next week.
It’s getting to the point where stock traders probably wish they could just not get out of bed and take a sabbatical to Europe or something. The market has taken a pounding. But before we get there, let’s take a look at the economic data that came out last week.
MBA Mortgage Applications
Overall mortgage applications were down 0.9% last week despite refinance applications climbing 0.4%. The reason for this was a 4% drop in purchase applications. Applications to purchase are still up 5% on the year.
Meanwhile, mortgage rates continue to be really attractive. The average rate on a 30-year fixed mortgage was down three basis points to 3.9% last week.
Existing Home Sales
Sales of existing homes easily topped expectations in July, going up 2.5% to a seasonally-adjusted annualized rate of 5.42 million sales. This is up 0.6% on the year. This is the first time the year-on-year rate has been positive in a while.
Digging into the numbers a bit, single-family home sales were up 1% on the year after coming in at 4.84 million. Meanwhile, sales of condos didn’t move much at 580,000 annually after seasonal adjustment. Taking a look at things regionally, there were sales gains in the high single digits in the West coupled with low-single digit gains in the South and Midwest. In the Northeast, there was a sales decline in the low single digits.
On the downside, an increase in sales no doubt contributed to a drop in supply in the market for existing homes as overall supply was down 1.6% to 1.89 million units. People are staying in their homes longer, which limits options for those looking to buy. The median price for an existing home in July was $280,000, which is up 4.3% from last year.
Initial jobless claims fell by 12,000 last week to come in at 290,000 overall. The 4-week average was actually up by 500 to come in at 214,500.
On the continuing claims side, these were down a sizable 54,000 claims to come in at 1.674 million. Meanwhile, the 4-week average was down 750 to come in at 1.697 million.
New Homes Sales
If existing home sales were encouraging, sales of new homes in July were a dud. They fell 14% to come in at a seasonally-adjusted annualized rate of 635,000. However, the good news is June numbers were revised sharply higher at a rate of 728,000. Still, this wasn’t enough to keep the 3-month average of new homes sales from declining by 8,000 to come in at 655,000.
Still, there were some reasons for optimism. Supply in the market is up 1.2%, settling at 337,000 units. At the current sales pace, there are 6.4 months’ worth of supply on the market. There was also a 2.2% increase in the median price for a new home to come in at $312,800. However, this is still down 4.5% on the year. Finally, sales of new homes are up 4.3% on the year.
Uncertainty in the broader markets globally has created conditions where mortgage rates just keep dropping. Both the 30-year and 15-year fixed mortgage rates are down nearly a full percentage point on the year. That means, even if you’ve bought or refinanced recently, it could make sense for many of you to take a look at refinancing again. If you happen to be in the market, it’s a great time to lock your rate.
The average rate on a 30-year fixed mortgage with 0.5 points paid in fees was down five basis points on the week to come in at 3.55%. This is down from 4.51% at the same time a year ago.
Meanwhile, in shorter terms, the average rate on a 15-year fixed mortgage with 0.5 points was 3.03%, down four basis points on the week and having fallen from 3.98% last year at this time.
Finally, the average rate on a 5-year treasury-indexed, hybrid adjustable rate mortgage fell 3 basis points to 3.32% with 0.3 points. This has fallen from 3.82% in the last year.
The U.S. trade war with China continues to be the major market moving event. Markets didn’t react well on Friday after President Trump said it was within the authority to force U.S. manufacturers to abandon operations in China. The markets spent the day trying to digest what that might mean for business as well as whether the president had any authority based on existing law to make such an order stick.
In a separate story that broke Sunday during a group during a G-7 meeting of global leaders in France, the president also floated the idea of declaring a national emergency to heat up the trade war further. Where this goes next is anyone’s guess.
The Dow Jones Industrial Average was down 623.34 points to close the week at 25,628.9. This was a fall of 0.99% week-to-week. Meanwhile, the S&P 500 closed at 2,847.11, falling 1.44% on the week after dropping 75.84 points on the day. Finally, the Nasdaq finished the week down 1.83%, down 239.62 points on the day. It closed at 7,751.77.
The Week Ahead
Monday, August 26
Durable Goods Orders (8:30 a.m. ET) – These are based on new orders placed with domestic manufacturers for factory goods.
Tuesday, August 27
FHFA House Price Index (9:00 a.m. ET) – The Federal Housing Finance Agency (FHFA) House Price Index (HPI) covers single-family housing using data provided by Fannie Mae and Freddie Mac. The HPI is derived from transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac.
S&P Case-Shiller HPI (9:00 a.m. ET) – The S&P Case-Shiller home price index tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the U.S.
Consumer Confidence (10:00 a.m. ET) – The Conference Board surveys consumers on their feelings about current and future business and employment conditions as well as their future spending plans.
Wednesday, August 28
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.
Gross Domestic Product (GDP) (8:30 a.m. ET) – This release measures the monetary value of all final goods and services produced within the U.S. This report is released on a monthly basis with estimates on the growth in the previous quarter.
International Trade in Goods (8:30 a.m. ET) – The Bureau of Economic Analysis has begun breaking out the goods from the remaining international trade numbers to get an idea of import and export estimates for GDP calculations.
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 4-week moving average of new claims smooths out weekly volatility.
Pending Home Sales Index (10:00 a.m. ET) – The National Association of REALTORS® developed the Pending Home Sales Index as a leading indicator of housing activity. Specifically, it’s a leading indicator of existing home sales – not new home sales.
Friday, August 30
Personal Income and Outlays (8:30 a.m. ET) – This is a measurement of how much consumers are taking in as well as their corresponding spending. This also gives insight into how much is being saved.
Consumer Sentiment (10:00 a.m. ET) – The University of Michigan’s Consumer Survey Center questions 500 households each month on their financial conditions and attitudes about the economy. Consumer sentiment is directly related to the strength of consumer spending.
This week is jampacked with a ton of important data points being released ahead of Labor Day next week. While Quicken Loans®will be closed for the holiday, we’ll have it all covered for you in next week’s Market Update which will be released on Tuesday.
If you had a case of the Mondays before reading this post, the amount of numbers and economic data in this one probably didn’t help, but the good news is we’ve got plenty of home, money and lifestyle content to share with you if you subscribe to the Zing Blog below. With Labor Day being next week, I’m sure something will be on the grill for many of you. Here’s a breakdown of the best barbecue by region. Have a great week!
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