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Market Update - Quicken Loans Zing Blog

As I write this, I feel like I’m not quite fully awake. It’s been a slow start to the morning. It was a slow start last week in terms of economic data as well, but it picked up big time, particularly by Friday.

Headline News

Quicken Loans Home Price Perception Index (HPPI): For the first time in seven months, appraisers and homeowners came closer together in their valuations in June. Homeowners overestimated value by 1.7%, but they were 0.23% closer than they were in May. Regionally, Western homeowners remain closest to actual appraisal values at 1.39%. Homeowners in the South were off by 1.74%. In the Northeast and Midwest, the estimates are off by 1.83 and 1.86%, respectively. Homeowners in Denver continue to have the most undervalued homes, with their estimates coming in 2.54% below those of appraisers. Philadelphia homeowners overvalued their homes by 3.26%. Kansas City, Missouri homeowners were in lockstep with appraisers, with estimates and appraisals matching exactly.

Quicken Loans Home Value Index (HVI): Home values nationwide were up 1.25% in June and 5.35% on the year. The Midwest was up 1.65% in June and has risen 5.93% on the year. The South had the second-fastest monthly growth, up 0.7% and 5.28% annually. The West was up 0.76% and 6.12% on the year. The Northeast was the only region that saw values drop 1.18%. The annual growth is only 2.17%.

MBA Mortgage Applications: Rates were up last week and it definitely had an effect on applications. Refinance applications were down 13.0% and purchases were down 3.0% as applications fell 7.4% overall. The average rate on a 30-year fixed, conforming mortgage was up two basis points to 4.22%.

Jobless Claims: Initial jobless claims were down 3,000 to come in at 247,000 after the previous week was revised slightly higher. Part of the reason for this revision was that seven states were estimated due to the Fourth of July holiday. The four-week average rose 2,250 to 245,750. Continuing claims were down 20,000 to 1.945 million. The four-week average was also up 2,250 on the side to come in at 1.949 million.

Producer Price Index (PPI): Inflation on the producer’s side was a little soft in June, up only 0.1%. That said, this metric at least is in line with the Federal Reserve’s 2.0% inflation target for the year. When food and energy are taken out, it matched the 0.1% gain and is up 1.9% on the year. When trade services were further removed, that number is up 0.2% on the month and 2.0% on the year. Services were up 0.2% and trade services were actually down 0.2%. Trade services track retail and wholesale prices. Finished services were up 0.1%. Food prices were up 0.6%. Energy prices were down 0.5% to offset this.

Consumer Price Index (CPI): Inflation is especially weak on the consumer side. It was flat for June. It’s up only 1.6% on the year. Even when food and energy were taken out, prices were only up 0.1% and 1.7% yearly. Housing prices were up only 0.1%. Apparel and transportation were also down, the latter due to falling vehicle prices. Medical services were up 0.4% and prescription drugs in particular were up 1.0%. Prices for cell phone services were down 0.8%, with price wars happening.

Retail Sales: Retail sales were also down in June, falling 0.2%. They were down by the same amount even when cars were taken out of the equation. Gas prices were down 1.3% and prices were down only 0.1% when this category was taken out. A separate control group was also down 0.1%. Food and beverage sales were down 0.4%. Department store sales were down 0.7% and restaurants were also down 0.6% in terms of sales. Nonstore retailers including e-commerce were up 0.4% and building materials were up 0.5%.

Industrial Production: Industrial production was up 0.4% in June and manufacturing rose 0.2%. Factories utilized 0.2% more capacity to come in at 76.6%. Much of the strength was in mining and manufacturing. Mining was up 1.6% for the third-straight big gain. Vehicle production was up 0.7% and high-tech production was up 0.8%. Consumer goods and business equipment were both flat, while construction supplies saw a production decrease.

Consumer Sentiment: Consumer sentiment fell 2 points and came in lower-than-expected in the first reading of July and 93.1. Expectations are down almost 4 points to 80.2, the lowest this portion of the reading has been at any point since October. Republican sentiment is down seven points from 108.9 on the expectation side. The expectations of Democrats were actually up a bit, but are very low at 63.2. The one piece of good news is that the current conditions portion was slightly higher at 113.2. Inflation expectations were a little higher, but still low at 2.7% over the next year and 2.6% over the next five years.

Mortgage News

Mortgage rates continue to climb. They’re still very low, but you should lock your rate if you see one you like.

First, 30-year fixed-rate mortgages (FRMs) averaged 4.03% with an average 0.5 point for the week ending July 13, 2017, up from last week when they averaged 3.96%. A year ago at this time, 30-year FRMs averaged 3.42%.

On the short-term side, 15-year FRMs this week averaged 3.29% with an average 0.5 point, up from last week when they averaged 3.22%. A year ago at this time, 15-year FRMs averaged 2.72%.

Finally, 5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 3.28% this week with an average 0.5 point, up from last week when they averaged 3.21%. A year ago at this time, 5-year ARMs averaged 2.76%.

Stock Market

The S&P 500 closed at a record Friday. It also didn’t hurt that several banks posted better than expected earnings.

The Dow Jones industrial average was up 84.65 points on Friday to close at 21,637.74. This was up 1.04% for the week. The S&P 500 finished the week at 2,459.27, up 11.44% on the day and 1.41% on the week. The NASDAQ finished up 2.59% week over week and up 38.03 points on the day to close at 6,312.47.

The Week Ahead

Tuesday, July 18

Housing Market Index (10:00 a.m. ET) – The National Association of Home Builders produces a housing market index based on a survey where respondents from the organization are asked to rate the general economy and housing market conditions. The 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, July 19

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.

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, July 20

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.

There’s not too much going on this week. The break will be boring enough, but if economic data doesn’t get you going in the first place, we’ve got plenty of home, money and lifestyle content to keep you from falling asleep at your desk if you subscribe to the Zing Blog below. Part of the key to staying awake is a better night’s sleep. In order to avoid everyone else dealing with the heavy-lidded eyes I’m dealing with this morning, check out our best tips for a more restful night. And now, I’m going to go eat a power bar. Have a good day!

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