Market Update - Quicken Loans Zing Blog

I hope everyone is having a wonderful holiday season. Gifts, desserts and merriment aside, the economic calendar kept turning last week. We got some key housing numbers and a look at the overall growth in the economy.

Headline News

MBA Mortgage Applications: Applications were up 2.5% overall. Refinance applications were up 3.0%, while purchase apps were up 2.7%. The average rate of a 30-year fixed-rate mortgage continues to climb, up 13 basis points to 4.41%.

Existing Home Sales: Existing home sales were up 0.7% in November to 5.610 million. This is up 15.4% on the year. Single-family homes were down 0.4% to 4.950 million, but condo sales made up for this, rising 10.0% to 660,000. Part of the yearly increase can be attributed to the mortgage industry’s adjustment to new regulations around this time last year that slowed sales. The median price was up 0.3% to $234,900 and is up 6.8% on the year. Total supply fell 8.0%.

Durable Goods Orders: New orders were down 4.6% in November and have fallen 1.9% on the year. They would have been lower, except government orders for defense helped a bit. Defense aircraft orders were up 103%. Taking out transportation, orders were actually up 0.5% and are up 1.8% on the year. In addition, core capital goods were up 0.9% and shipments of these goods are up 0.2%. However, orders in the category are down 3.2% annually. Areas of strength include communications, primary metals, machinery and vehicles.

Gross Domestic Product (GDP): In the final reading of the third quarter, GDP came in at 3.5%, slightly better than expectations. Consumer spending was up 3.0% in the quarter. Exports were also higher, which contributed to the gains. Nonresidential fixed investment grew 1.4% annually. Inventories also grew, but not at the rate they had in previous quarters. A slowdown in inventories is actually a good thing because it means factories will have to produce more to keep up with demand, which is good for employment.

Jobless Claims: Initial claims came in at 275,000, 21,000 higher than the prior week and much higher than expected. The four-week average was up 6,000 to 263,750. Continuing claims were also up 15,000 to 2.036 million. Meanwhile, the four-week average was down 1,750 to finish at 2.037 million.

FHFA House Price Index: The Federal Housing Finance Agency said prices increased to 0.4% in the housing market in October. They’re up 6.2% in the year. Prices in the Mountain region are up 8.3% annually and the Pacific is up 8.0%. The Middle Atlantic is up just 3.6%, bringing up the rear.

Personal Income and Outlays: Incomes and prices were all flat in November while consumer spending was up 0.2% to ramp up the holiday season. Prices are up 1.4% overall on the year and 1.6% in core categories that exclude food and energy prices. Wages and salaries actually fell 0.1%. The savings rate also dipped 0.2% to 5.5%. Of particular concern is that consumer spending is running a full percentage point lower than where it was in the third quarter at 2.0%.

New Home Sales: New home sales were up 5.2% in November to a seasonally-adjusted annualized rate of 592,000. It’s the second strongest rate at any time during the housing recovery. There’s still a lack of supply and market, with 5.1 months’ worth of sales available. Despite this, prices were up 0.9% to $305,400. This is down 3.7% on the year. Still, new home sales are up 16.5% compared to the same time a year ago.

Consumer Sentiment: Consumer sentiment was up to 98.2 in the final reading of December. Consumers seem to have a positive outlook on president-elect Donald Trump’s potential economic plans, with 18% of those surveyed specifically mentioning it. The current conditions and expectations components are both higher, moving up on increased consumer spending as well as more confidence in the job market. That being said, inflation expectations are at record lows, with the one-year outlook down 0.2% to 2.2% and the five-year prediction down 0.3% to 2.3%.

Mortgage News

Mortgage rates are now the highest they’ve been in two years and continue to climb. Whether you’re looking to buy or refinance, it’s probably a good idea to lock your rate.

Thirty-year fixed-rate mortgages (FRMs) averaged 4.30% with an average 0.5 point for the week ending December 22, 2016, up from last week when they averaged 4.16%. A year ago at this time, 30-year FRMs averaged 3.96%.

Fifteen-year FRMs this week averaged 3.52% with an average 0.5 point, up from last week when they averaged 3.37%. A year ago at this time, 15-year FRMs averaged 3.22%.

Five-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 3.32% this week with an average 0.4 point, up from last week when they averaged 3.19%. A year ago, 5-year ARMs averaged 3.06%.

Stock Market

The big talk on the market this week was whether the Dow Jones Industrial Average was going to reach 20,000. Although it didn’t quite make it, it did come as close as 13 points and there’s optimism that the market next week could hit the mark that’s important in the minds of many traders.

The Dow was up 14.93 points to 19,933.81 heading into the holiday weekend. Meanwhile, the S&P 500 edged out a 2.83-point gain to close at 2,263.79. Finally, the NASDAQ closed at 5,462.69, up 15.27 points.

The Week Ahead

Tuesday, December 27

S&P Case-Shiller HPI (9:00 a.m. ET) – The S&P Case-Shiller Home Pricing Index tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the U.S.

Consumer Confidence (10:00 a.m. ET) – The Conference Board compiles a survey of consumer attitudes on the economy. The Consumer Confidence Index is based on consumer perceptions of current business and employment conditions, as well as their expectations when considering business conditions, employment and income.

Wednesday, December 28

Pending Home Sales Index (10:00 a.m. ET) – The National Association of Realtors developed the Pending Home Sales Index as a leading indicator of housing activity. Specifically, it’s a leading indicator of existing home sales, not new home sales.

Thursday, December 29

International Trade in Goods (8:30 a.m. ET) – The Census Bureau’s Bureau of Economic Analysis has begun breaking out the goods from the remaining international trade numbers to get an idea of import and export estimates for GDP calculations.

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 a lot going on this week. I guess people are still in the glow of that holiday cheer. Market Update will once again be coming out on Tuesday next week as we observe the New Year’s Day holiday. Quicken Loans wishes you all a happy holiday and a prosperous new year.

We’ve never been all economics and mortgages here on the Zing Blog and 2017 isn’t going to change that. We are plenty of home, money and lifestyle content that we can’t wait to share with you. Subscribe below!

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