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Market Update - Quicken Loans Zing Blog

As a lifelong Michigan football fan, it did my heart good to see Tom Brady come through in Super Bowl LI. As tempting as it is to spend the day thinking about chicken wings, other events did occur last week, including the always important employment situation report and the Federal Reserve announcement on short-term interest rates.

Headline News

Personal Incomes and Outlays: Personal incomes were up 0.3% for December. Americans didn’t save much more money, though, as spending increased 0.5%. Inflation was up 0.2% for the month and 0.1% in core categories. Those metrics are at 1.6% and 1.7% annually for the year. The big spending categories included a 1.4% gain in durable goods orders, which was helped by car sales. Services and nondurable goods also saw increases.

Pending Home Sales Index: Pending home sales, based on the number of homes that have a purchase agreement in place, were up 1.6% to an index level of 109.0 in December. Sales in the West are up 5.0% on the year. The Midwest is in the back, with sales down 3.4%.

S&P Corelogic Case-Shiller HPI: Home prices were up 0.9% in November, according to the S&P index. They were up 0.2% when seasonal adjustments are taken out. New York is up only 2.4%, but appreciation in the West still seems to be going very strong at 10.4%.

Consumer Confidence: Consumer confidence in January was down 1.5 points to 111.8. However, the number in December was a 15-year high. There was also a decline in the number of people who said jobs are hard to get, down 1.2% to 21.5%. Combine this with an increase in the number of people who feel jobs are plentiful, up to 1.4% to 27.4%, and there are a lot of positive details. However, future predictions are a little less rosy with people saying there will be fewer jobs and lower income six months from now. Plans to buy cars were also down 2%. The good news is inflation expectations are up 0.4% to 4.9%. This helps because it encourages people to buy more now at lower prices.

MBA Mortgage Applications: Purchase applications were down 6.0% and refinance applications were down 1.0% last week. The average rate on a 30-year fixed-rate mortgage was up four basis points to 4.39%.

ISM Manufacturing Index: Manufacturing saw a 1.5 point gain in January to an indexed level of 56.0. New orders came in at 60.4, which is the highest they’ve been since November 2014. Employment is also up 3.3 points to 56.1. This is its highest level since August of that year. Input costs are also higher.

Jobless Claims: Initial claims were down 14,000 last week to 246,000. The four-week moving average was up 2,250. Continuing claims were down 39,000 to 2.064 million. The four-week average is down 13,000 to 2.080 million.

Employment Situation: There were 227,000 new nonfarm payroll jobs. There was a 10,000 job decrease in government payrolls. The unemployment rate also ticked up to 4.8%. Private payrolls were up 237,000 jobs. Labor force participation was at 62.9%. Average hourly earnings increased 0.1% and the average work week stayed flat at 34 hours, 24 minutes.

Mortgage News

Last week, the Federal Reserve chose to leave short-term interest rates where they were, which should help mortgage rates stay low. However, the stock market is pretty high and when the stock market is up, people move money out of bonds. A retreat from bonds typically means bad news for mortgage rates, so it’s a great time to lock yours while they’re low.

Rates for 30-year fixed-rate mortgages (FRMs) averaged 4.19% with an average 0.5 point for the week ending Feb. 2, 2017, unchanged from last week. A year ago at this time, 30-year FRMs averaged 3.72%.

Interest rates for 15-year FRMs this week averaged 3.41% with an average 0.5 point, up from last week when they averaged 3.40%. A year ago at this time, 15-year FRMs averaged 3.01%.

For 5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs), this week’s average was 3.23% with an average 0.4 point, up from last week when they were 3.20%. A year ago, 5-year ARMs averaged 2.85%.

Stock Market

A strong jobs report helped stocks to come in with their best single day of 2017.

The Dow Jones Industrial Average was up 186.55 points Friday to close at 20,071.46. It’s down 0.11% on the week. The S&P 500 was up 16.57 points to finish at 2,297.42, up 0.12% week to week. Finally, the NASDAQ was up 0.11% on the week after closing at 5,666.77, up 30.57 points on the day.

The Week Ahead

Tuesday, February 7

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.

Wednesday, February 8

MBA Mortgage Applications (7:00 a.m. ET) – The mortgage applications index measures mortgage lenders applications. This is a leading indicator for single-family home sales and housing construction.

Thursday, February 9

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, February 10

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.

Outside of international trade, there’s a whole lot of nothing going on this week. We’ll have it all in next Monday’s market update. If this mortgage and economic data hasn’t been enough to give you a boost after those parties for the big game, we have plenty of home, money and lifestyle content to keep you revved up throughout the week.

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