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Market Update - Quicken Loans Zing Blog

Last week, we got some housing data as well as some reports that are key indicators of how the economy is doing. On the political side of things, members of Congress reached a deal to fund the federal government through September as of last night. That should help avoid an impending government shutdown.

Headline News

FHFA House Price Index: Prices rose in February, according to the Federal Housing Finance Agency (FHFA). They were up 0.8% for the month and 6.4% on the year. This beat consensus estimates. Prices in January also showed a 0.2% uptick in revisions. Turning to regional data for a moment, prices in the Middle Atlantic were up 1.1% on the month and 4.6% on the year. Despite this, it’s still the weakest region in terms of year-over-year appreciation. Another big monthly gainer was the East South Central region, which was up 1.8%. Mountain and Pacific states are still seeing the strongest yearly gains, up 9.5% and 7.6%, respectively.

S&P Corelogic Case-Shiller HPI: Although rising slower than its FHFA counterpart, the Case-Shiller index also shows rising home prices. They’re up 0.7% across the 20-city survey area on a seasonally adjusted basis in February. They’re up 0.4% when the seasonal adjustment is taken away and have risen 5.9% on the year. The nation’s capital posted a 0.5% monthly increase. Cleveland’s housing fortunes seem to be increasing along with those of the city’s basketball team, as prices in the city were up 0.9%. Prices in Detroit were up 0.8% as well. Seattle and Portland lead annual gains, up 12.9 and 9.6%.

New Home Sales: Sales of new homes were up 5.8% in March to come in at a seasonally adjusted annualized rate of 621,000. The increase in sales didn’t come as a result of price concessions, as these were up 7.5% on the month to an average price of $315,100. This is one area where things have been a little stagnant, with prices being up 1.2% for the year. On the other hand, sales are up 15.6% annually. Supply relative to sales continues to be low, falling to 5.2 months vs. 5.4 months in January. Taking a look at regional data, sales in the West are up 16.7% and 33% on the year. Although it’s the smallest region in terms of sales, the Northeast was up 26% on the month. In the South, sales were up 1.6% on the month and 5.9% on the year.

Consumer Confidence: Consumer confidence fell back just slightly in April, down 4.6 points to 120.3. That being said, it represents the best two-month stretch in the last eight years. Just 19.1% of Americans thought jobs were hard to get. Inflation expectations were at a very low 4.7% reading. The present situation component was down 3.3 points to 140.6. Expectations for the future were down 5.6 points to 106.7. Part of the reason for this might be that fewer Americans see their incomes increasing in the future. This metric was down 3.2% to 19.3%.

MBA Mortgage Applications: Overall mortgage applications were up 2.7% last week on the strength of refinances, which were up 7.0%. The average rate on a 30-year fixed mortgage fell 2 basis points to 4.20%. Purchase applications were down 1.0% on the week.

Durable Goods Orders: New orders of durable goods were up 0.7% in March and have risen 5.8% on the year. Much of the gain comes from an 8.7% increase in orders and civilian aircraft. When transportation is taken out, orders are actually down 0.2% in March at a 4.6% monthly gain. However, orders for core capital goods were up 0.2% and have risen 3.0% on the year. Shipments of these core items was also up 0.4%. However, because orders are lower, this number will decrease in April and could lead to weakness in the manufacturing sector.

International Trade in Goods: The goods deficit rose by $900 million in March. This is still less than what economists had been expecting. The gap in February was also revised lower. Exports were down 1.7% in the month as both consumer goods and vehicles dropped quite a bit. Industrial supplies were also down, in large part due to lower oil prices. Imports were also down 0.7%. Demand for both consumer and capital goods were down. Lower oil prices played a role here as well.

Jobless Claims: Initial claims were up 14,000 last week to come in at 257,000, which was higher than expected. Still, the four-week average of initial claims was down 500 to 242,250. Continuing claims rose 10,000 to 1.988 million. Despite this, the four-week average of continuing claims was down 16,000 to 2.007 million, which represents a level not seen in nearly 17 years.

Pending Home Sales Index: The number of existing homes under contract for sale was down 0.8% in March to an index level of 111.4. However, in February, this metric was up 5.5%, so it’s expected that this is a minor bump heading into purchase season.

Gross Domestic Product (GDP): Despite the weakest levels of consumer spending since the last recession at a 0.3% increase, GDP did manage a 0.7% increase in initial readings for the first quarter. Weak vehicle sales meant that durable goods orders fell 2.5%. There was a 1.5% increase in nondurable goods orders and a minimal 0.4% rise in services. The good news is that residential investment is up 13.7% and nonresidential investment was up 9.4%. The net export gap also decreased, but this was somewhat offset by a drop in government purchases. Inventories were also lower. Prices rose 2.3% over the quarter, up 0.5%.

Consumer Sentiment: In the final reading of April, consumer sentiment came in 1 point lower at 97.0. Current conditions were down at 104.7, which nevertheless is still high. Expectations were up to 87.0%. There continues to be strong disagreement among consumers on opposite ends of the political spectrum, but those identifying themselves in the Independent camp are optimistic at this point.

Mortgage News

Mortgage rates went up last week, according to Freddie Mac data. Part of the reason for this was an increase in the 10-year treasury rate which tends to go up or down with mortgage rates. Rates remain very low, and it’s a great time to lock your rate.

This week, 30-year fixed-rate mortgages (FRMs) averaged 4.03% with an average 0.5 point for the week ending April 27, 2017, up from last week when they averaged 3.97%. A year ago at this time, 30-year FRMs averaged 3.66%.

On the shorter side, 15-year FRMs this week averaged 3.27% with an average 0.4 point, up from last week when they averaged 3.23%. A year ago at this time, 15-year FRMs averaged 2.89%.

Rounding out the data, 5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 3.12% this week with an average 0.4 point, up from last week when they averaged 3.10%. A year ago, 5-year ARMs averaged 2.86%.

Stock Market

Despite being down slightly on week GDP data, stocks were still up 1% for the month of April and had gains for the week.

The Dow Jones Industrial Average was down 40.82 points Friday to close at 20,940.51. Despite this, it was up 1.91% for the week. The S&P 500 closed at 2,384.20. This was down 4.57 points for the day, but up 1.51% for the week. Finally, the NASDAQ was up 2.32% on the week to close at 6,047.61, down 1.33 points to finish the week.

The Week Ahead

Monday, May 1

Personal Income and Outlays (8:30 a.m. ET) – This measures all possible income sources as well as public expenditures.

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.

Wednesday, May 3

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

Thursday, May 4

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.

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, May 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.

The lack of reports out next week is made up for by the fact that the ones that are coming out are heavy hitting. We get reports on wages, manufacturing and finally overall job growth next week. If all of this mortgage and economic stuff isn’t your idea of a fun Monday, we have plenty of home, money and lifestyle content to share with you if you subscribe to the Zing Blog below. If you’re looking to make your Cinco de Mayo celebration a little healthier this year, we’ve got a great turkey taco recipe for you. Whether you celebrate or not, here’s hoping your week goes well enough to be worthy of a fiesta. Have a great week!

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