S&P Case-Shiller HPI: Home prices were up 0.8% on a seasonally adjusted basis in the Case-Shiller survey for December. Prices are flat across the 20-city index when you take out the adjustment. It’s up 5.7% since the same time last year.
Consumer Confidence: Consumer confidence for the month of February is down 5.6 points to 92.2. The metric for jobs that are hard to get was up 0.6 points to 24.2%. Income expectations are also down and expectations for business conditions are lower. For some reason, fewer Americans plan to buy a house, despite the fact that rates can’t be beat right now. Buying plans are also down for cars and appliances. Inflation expectations are down to 4.7%, 0.1% lower than January.
Existing Home Sales: Existing home sales were up 0.4% to 5.47 million in January. This is up 11% over this time last year. Single-family sales were up 1.0% to 4.6 million, up 11.2% since the previous January. Meanwhile, condo sales are down 4.7% to an annualized growth rate of 8.9%. On the pricing side, the average home sold for $213,800, which is down 4.2%, but it’s still up 8.2% this year. Supply is up to 4.0 months which is slightly higher than where it was in January, but lower than this time last year.
MBA Mortgage Applications: For the first time in a while, the rate on the average 30-year fixed mortgage went up two basis points to 3.85%. It had a strong effect on refinances, which were down 8.0% for the week. A 2.0% increase in purchase applications wasn’t enough to keep overall numbers from falling 4.3%.
New Home Sales: New home sales were down 9.2% in January to a much lower-than-expected 494,000. Despite the downturn that was centered in the West – where sales were down 32% – analysts still consider this a respectable number. The South and Midwest show marginal annual sales decreases, while the Northeast is up sharply. People may be discounting their homes in order to get them off the market before winter fully rears its ugly head. The median price was down 5.7% at $278,800. This price is down 4.5% for the year. Supply is up to 5.8 months from 5.1 months after a 2.1% increase in the number of new homes on the market.
Durable Goods Orders: New orders for durable goods were up 4.9% in January, making up the 4.6% loss in December. Parts of the gain occurred because of aircraft orders, but even when transportation is excluded, orders were up 1.8%. Meanwhile, core capital goods were up 3.9% on the month. Machinery, computers and fabricated metal all had sizable gains in orders. Motor vehicles also had a good month. Another positive is that inventories were down 0.1%.
Jobless Claims: Initial jobless claims rose 10,000 this week to 272,000. However, the four-week average is down 1,250, also coming in at 272,000. Continuing claims were also down, falling 19,000 to 2.253 million. The four-week average is down 5,000 to 2.257 million.
FHFA House Price Index: Prices were up 0.4% month-to-month in the housing market in December. This is up 5.7% over the same time last year. This was a slowdown in the amount of annual price appreciation as the rate had been 5.9%.
GDP: GDP came in with a 1.0% growth rate in the latest numbers for the fourth quarter. This was 0.3% higher than the initial estimate. That said, growth and inventories of $81.7 billion was a sign that manufacturers were building up stock for things no one wanted at the moment. There was also a decline in the estimate for personal consumption expenditures. It’s now estimated that people only increase their spending by 2.0% this year from an initial 2.2%. Another big negative was that exports were down 2.7%. One plus was that residential investment was up 8.0%. People appear to be taking advantage of low rates while they have them.
International Trade in Goods: The newly reported international trade gap in goods increased 1.2% in January to $62.2 billion as exports were down 2.9%, offsetting a 1.5% decline in imports. There was a 6.8% drop in exports of industrial supplies coupled with a 2.4% downturn in foreign demand for capital goods. Industrial supply changes are somewhat related to low oil and petroleum prices. More worrisome, a decline in capital goods is being attributed by analysts to a lack of confidence in the business climate around the world.
Personal Income and Outlays: Personal incomes were up 0.5% in January, led by a 0.6% increase in wages and salaries. This corresponded perfectly with a 0.5% increase in consumer spending. Meanwhile, the savings side remained unchanged at 5.2%. Strong consumer spending on vehicles led to a 1.2% gain in durable goods spending. Meanwhile, services spending was a 0.6%. On the price side, prices are up 0.1% from the month and 1.3% for the year, but the cost in court categories is slightly higher, 0.3% in January and 1.7% annually.
Consumer Sentiment: Consumer sentiment was up a full point in the final reading for the month of February to finish at 91.7, just slightly below 92.0 where we finished January. The current conditions component was up one point to 106.8. Expectations were also up 0.9 points from the mid-month reading to finish at 81.9. Turning to inflation expectations, the one-year outlook is unchanged at 2.5%. The five-year outlook is down 0.2% to a matching 2.5%.
Mortgage rates were down across the board again last week.
30-year fixed-rate mortgages (FRMs) averaged 3.62% with an average 0.6 point for the week ending Feb. 25, 2016, down from last week when they averaged 3.65%. A year ago at this time, 30-year FRMs averaged 3.80%.
15-year FRMs this week averaged 2.93% with an average 0.5 point, down from last week when they averaged 2.95%. A year ago at this time, 15-year FRMs averaged 3.07%.
5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.79% this week with an average 0.5 point, down from last week when they averaged 2.85%. A year ago, 5-year ARMs averaged 2.99%.
It was a crazy day for stocks to end the week. Oil futures started higher and then finished the day down $0.29. Again, I’m not going to complain. Good for me at the gas pump. Add to this the fact that consumer expenditures pricing data showed a 1.7% rise in the last year and analysts think there might be a rate hike on the table in June. Stocks ended up mixed.
If this whole situation sounds confusing to you, you’re not alone. I’m convinced that anyone claiming to know what’s going to happen in the economy from one week to the next is probably crazy. If you’re in the market for any kind of financing, it’s probably a good time to lock your rate.
The Dow Jones Industrial Average was down 57.32 points to 16,639.97. Despite this, the index was up 1.51% for the week. The S&P 500 was down 3.65 points to come in at 1,948.05. It was up 1.58% for the week. The NASDAQ rose 1.91% for the week after finishing Friday up 8.27 points to 4,590.47.
The Week Ahead
Monday, February 29
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.
Tuesday, March 1
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, March 2
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.
Thursday, March 3
Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals who filed 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, March 4
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.
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.
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