This is the last blog post I’m going to end up writing before going on a little break for the holidays. Who has to go out and pick up last-second gifts over the next 24 – 48 hours? Enjoy the crowds!
Just think about how much you’re keeping the economy going. That spending is going to be reflected in next quarter’s gross domestic product numbers. Not to mention all the employment at the stores, manufacturers and shipping services. So, there’s an economic tie, just in case you needed an extra incentive to brave the chaos.
The smiles of family members are enough for many, but you can’t blame me for trying to tie this back into the post somehow. Let’s get into it before your mind drifts to pies.
Housing starts were up 3.2% to a seasonally adjusted annualized rate of 1.365 million overall. This is up 13.6% from November of last year. Single-family starts came in at 938,000, up 2.4% on the month and 16.7% over the last 12 months, while multifamily units stood at 404,000, up 2.3% on the month and 4.4% on the year.
On the permit side, these were up 1.4% to a seasonally adjusted annual rate of 1.482 million. Single-family permits were at 918,000, while there were 524,000 multifamily permits, up 0.8% and 4.4%, respectively. Overall, permits are up 11.1% on the year including a 16.4% increase in multifamily permits and an 8.9% increase in single-family permits.
Finally, in terms of housing completions, these were down 6.6% from October to November to settle at 1.188 million on a seasonally adjusted basis. The change in weather likely had something to do with this. Single-family completions were down 3.6%, while there was a 16% drop in multifamily completions as they settled at 883,000 and 295,000. With that said, completions are still at 7.3% overall, including a 13.5% increase in single-family completions, which more than makes up for a 6.9% drop on the multifamily side.
Industrial production was up 1.1% both overall and in manufacturing in November. The General Motors strike ended and there was a large increase of 12.4% for the manufacture of motor vehicles and parts. Still, when these categories were excluded, industrial production and manufacturing were up 0.5% and 0.3%, respectively.
Taking a look at some other key categories, consumer durable goods and transit equipment were up 6.4% and there was still a 1.3% increase in durable goods when the outsized auto increases were removed. Primary metals advanced at least 1%, as did computer and electronic products. Nondurable goods increased only 0.1% as industrial output was largely mixed.
Mining output was down 0.2% overall as there were declines in drilling and related activities for oil and gas. Meanwhile, utility production was up 2.9% as the weather has started to get colder. Capacity utilization and factories did increase by 0.7% to 77.3% overall. Total industrial production is down 0.8% from where it was in November of last year at an index level of 109.7.
MBA Mortgage Applications
Mortgage applications were down 5% on the week on a seasonally adjusted basis. It’s probable that fewer people were thinking about purchasing a home or refinancing their current one headed into the holidays.
On the refinance side, these were down 7% overall, but up 135% compared to the same time last year. Meanwhile, the purchase Index was down 2% following seasonal adjustment and 6% overall, but application levels are 10% higher than last year. Taking a look at the application mix, refinances made up 62.2% of overall implication volume.
The average interest rate on a conforming loan balance for a 30-year fixed mortgage with 0.33 points paid and a 20% down payment remained at 3.98%, unchanged for the week.
Initial jobless claims were down 18,000 from last week to come in at 234,000. Remember, it had recently moved higher, mostly out of nowhere. The 4-week moving average of initial claims was 225,500, an increase of 1,500.
On the continuing claims side, these were up 51,000 to 1.722 million. The 4-week average was up 6,250 to settle at about 1.684 million.
Existing Home Sales
Existing home sales were down 1.7% overall in November. Single-family home sales were down just slightly to 4.79 million, but they’ve risen 3.5% from a year ago. Meanwhile, sales of condos and co-ops were down 5.1% in November and 3.4% below where they were a year ago.
In terms of pricing, the average existing home sale was $271,300, up 5.4% from last November and marking the 93rd straight month of annual gains. On the single-family side, the average price was $274,000, while condos averaged $248,200. These figures are up 5.4% and 4.5% from a year ago.
Looking at inventory, this was 1.64 million housing units at the end of November, down 7.3% from last month and falling 5.7% from a year ago. At the current sales pace, there’s only 3.7 months’ worth of preowned housing inventory on the market, which is down from 3.9 months in October.
While the Northeast and Midwest exhibited gains in existing home sales, there were declines in the South and West which outpaced the gains. The average time on market in November did increase by 2 days to 38, but this is down from 42 days last year at this time.
In the final estimate for the third quarter of 2019, the rate of economic growth was unchanged at 2.1%. Things remained the same because while there were upward revisions in measures for personal consumption expenditures and nonresidential fixed investment (think businesses). There was a decrease in private inventory investment which offset these gains.
In addition to personal consumption expenditures, other categories contributing heavily to growth included federal and state government spending, housing and exports.
Looking at just a few other key metrics, real gross domestic income after accounting for inflation came in at 2.1%. Meanwhile, prices for personal consumption expenditures were up 1.5% overall and 2.1% after excluding food and energy.
Overall consumer sentiment index was up 2.6% in the final reading of December at 99.3 as compared to 96.8 in the month of November. This is a 1% increase over the last 12 months.
In terms of the current situation, the positive feeling was up 3.5% on the month to 115.5. Most of the gains in optimism came from those with higher incomes, although there were minimal gains for households representing the other two-thirds of the income scale. Current conditions are running 0.5% lower than they were at the same time a year ago.
In terms of future expectations, this ended more than a point higher in December at 88.9, which is up 2.2% on the year. The one point mentioned in the release in terms of expectations is that the impeachment inquiry is barely registering a blip in the minds of many Americans, being mentioned by just 2% of respondents.
Inflation expectations over the next year call for a 2.3% increase. Meanwhile, consumers expect inflation to go up just 2.2% in the next 5 years.
Personal Income And Outlays
In a welcome gift headed into the thick of the holiday season, personal incomes were up 0.5% in November. The same figure held true in terms of disposable income. Meanwhile, personal consumption expenditures were up 0.4%.
Taking a look at inflation, prices were up 0.2% overall and 0.1% when food and energy were taken out of the equation. On the year, these indexes are up 1.5% and 1.6%, respectively. This is running well below the Federal Reserve’s 2% target for annual inflation.
In terms of income, the biggest gains came from increases in employee wages, more income for farmers and an increase in interest gained on assets and savings. People were saving 7.9% of their disposable income.
There was a $37.8 billion increase in personal consumption expenditures in November, with $22.6 billion being spent on goods. New cars and trucks were the leading contributor. Meanwhile, there was $17.1 billion spent on personal services, led by healthcare. Personal outlays were up $68.6 billion as compared to October overall.
Mortgage rates remained largely unchanged for the week. If you’re in the market for a mortgage, it remains a good time to lock your rate. Whether you’re looking to purchase or refinance a home, rates are well down from where they were at this time a year ago.
The average rate for a 30-year fixed mortgage with 0.7 points paid in fees was unchanged at 3.73%. This is down from 4.62% a year ago.
Looking at shorter terms, the average rate for a 15-year fixed mortgage was also flat at 3.19% with 0.7 points paid, down from 4.07% last year.
Finally, the average rate on a 5-year treasury-indexed, hybrid adjustable rate mortgage (ARM) with 0.4 points paid was up a single basis point to 3.37%, down from 3.98% in mid-December 2018.
Although nothing has been signed yet, the markets are riding a wave of optimism surrounding the trade deal just struck with China. In a tweet posted last Friday morning, President Trump said that President Xi of China had a productive talk with him and that China had begun purchasing U.S. farm products at a large scale. Combined with consumer sentiment being strong, this was enough for the S&P 500 to notch a new record.
The Dow Jones Industrial Average saw a 5-day increase of 1.14% after rising 78.13 points Friday to close at 28,455.09. Meanwhile, the S&P 500 finished Friday at 3,221.22, up 1.65 on the week and 15.85 points on the day. Finally, the Nasdaq closed out the week up 37.74 points at 8,924.96, up 2.18% for the week.
The Week Ahead
Monday, December 23
Durable Goods Orders (8:30 a.m. ET) – These are based on new orders placed with domestic manufacturers for factory goods.
New Home Sales (10:00 a.m. ET) – This report measures the number of newly constructed homes with a committed sale during the month.
Tuesday, December 24
The stock market will close early.
Wednesday, December 25
Quicken Loans®, banks and the stock market will all be closed in observance of Christmas Day. Happy holidays!
Thursday, December 26
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.
It’s a very light holiday week in terms of economic data. We’ll have it all covered in next Monday’s Market Update.
We know it’s hard to focus on such boring topics as economics and mortgage rates when we have family coming in and possible visions of sugar plums dancing in our heads. Not to worry. We’ve got plenty of home, money and lifestyle content for your perusal if you subscribe to our email list. Let’s have some fun today. Take our quiz to determine your holiday decor style based on what you like to do to celebrate. Whether you’re celebrating Christmas, Hanukkah, Kwanzaa, Festivus or just some well-deserved time off, enjoy it! We’ll see you back here next week!
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