Last week there were some heavy hitter economic reports with durable goods orders, international trade in goods and Gross Domestic Product (GDP) all coming out between Wednesday and Friday.
S&P Case-Shiller HPI: Despite being up 0.9% from month-to-month overall, home prices are still not where they would normally be at this time of year. The S&P numbers show that in May prices were down 0.1% on a seasonally adjusted basis. They’re up 5.2% on the year. Price growth appears to be slowing.
New Home Sales: New home sales were up 20,000 to a seasonally adjusted annual rate of 592,000 in June. Looking at regional data, the Midwest is up 44%, while the South is up 21% despite being the weakest sales region. It’s over different time periods, but the sales data still seems to contradict the Case-Shiller report a bit with the average price being up 6.2% to $306,700 in June. This was no doubt in part due to a tightening in the supply of new homes down to 4.9 months from 5.1 months in May.
Consumer Confidence: Consumer confidence is down just 0.1 points, remaining at a very solid 97.3. Fewer Americans feel jobs are hard to get. This number is down 1.4% to 22.3%. More Americans also see more jobs becoming available while fewer Americans see less jobs on the horizon. The present situation component is up 1.7 points overall. Expectations are down 1.3 points, something that can be blamed on the softer outlook for business conditions. Buying plans for homes and appliances remain steady while 2% fewer Americans plan to buy cars soon at 10.8%. There was also a drop in inflation expectations at 4.7%.
MBA Mortgage Applications: Applications are on the downside due to a four basis point rate increase to 3.69%. Purchase applications were down 3.0% and refinances were down 15.0%, falling 11.2% overall.
Durable Goods Orders: New orders were down 4.0% and have fallen 6.4% on the year as of June. Most of the weakness is transportation orders as they’re down 0.5% when excluding transportation. Core capital goods were up 0.2%, but remained 3.7% down on the year.
Pending Home Sales Index: Pending home sales were up 0.2% in June to 111.0. Sales are still only up 1.0% on the year. Regionally, there is not a lot of variance with sales being up 1.8% in the South and down 1.8% in the West.
International Trade in Goods: The trade deficit in goods increased by $2.2 billion to $63.3 billion. The import increase is somewhat driven by oil, but there was also a 1.2% gain in imports for capital goods. Consumer goods imports were up 3.3% in June.
Jobless Claims: Initial jobless claims were up 14,000 to 266,000. On the plus side, the four-week average is down 1,000 jobs at 256,500. Continuing claims were up 7,000, coming in at 2.139 million. The four-week average is down by the same amount to 2.135 million.
GDP: GDP is up 1.2% in the second quarter on a seasonally adjusted annual basis. Prices are up 2.2%. The biggest positive is that consumer spending was up 4.2%, more than doubling the first quarter. In a negative for GDP, but a positive for the economy, inventories fell 1.2% for the quarter. Lower inventories will lead to increased future production and employment. Net exports were up 1.4%. Nonresidential fixed investment remains down, falling 2.2% in the quarter as did residential investment which is down 6.1% on the year.
Consumer Sentiment: Consumer sentiment finished the month at 90.0, half a point higher than the last reading. However, this is down 3.5 points from June. The expectations was down 4.6 points from last month because of less confidence in the jobs outlook. Meanwhile, the current conditions index is down 1.8 points to 109.0. Inflation expectations are at 2.7% over the next year and 2.6% for the next five years.
Mortgage rates continued the trend of pushing slightly higher in a post-Brexit correction.
30-year fixed-rate mortgages (FRMs) averaged 3.48% with an average 0.5 point for the week ending July 28, 2016, up from last week when they averaged 3.45%. A year ago at this time, 30-year FRMs averaged 3.98%.
15-year FRMs this week averaged 2.78% with an average 0.5 point, up from last week when they averaged 2.75%. A year ago at this time, 15-year FRMs averaged 3.17%.
5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.78% this week with an average 0.5 point, unchanged from last week. A year ago, 5-year ARMs averaged 2.95%.
Strong earnings from major players in the tech space helps soften the blow of some disappointing economic data.
The Dow Jones Industrial Average was down 24.11 points Friday to finish at 18,432.24. This was down 0.75% on the week. The S&P 500 was up 3.54 points to come in at 2,173.60. It finished down 0.07% for the week. The NASDAQ was up 7.15 points to 5,162.13, up 1.22% for the week.
The Week Ahead
Monday, August 1
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.
Tuesday, August 2
Personal Income and Outlays (8:30 a.m. ET) – This measures all possible income sources as well as public expenditures.
Wednesday, August 3
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.
Thursday, August 4
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, August 5
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.
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.
It’s a bit of a light week in terms of the number of reports, but the jobs report on Friday always has the potential to move markets, so that will be something to keep an eye on. If economics and mortgages drive you crazy, we have plenty of home, money and lifestyle content to keep you happy and intrigued throughout the week. Subscribe to the Zing Blog below.
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