I hope everyone enjoyed their Memorial Day weekend. I certainly got some good barbecue. It’s nothing like ribs, but economic analysts certainly got a lot of data to chew on heading into the long weekend. Let’s get right into it.
New Home Sales: There’s quite a bit of volatility in the market for new homes right now. Sales were down 11.4% in April, missing expectations and coming in at a seasonally adjusted annualized rate of 569,000. Slower sales also forced builders to cut prices 3.0% to $309,200. Prices are down 3.8% for the year. The good news is that supply is starting to pick up. There are now 5.7 months’ worth of supply in the market as opposed to 4.9 months in April.
MBA Mortgage Applications: Mortgage applications were up 4.4% last week, helped by a sharp 11.0% increase in refinance applications. This increase was no doubt helped by a six basis point drop in rates to 4.17% on a 30-year fixed conforming mortgage, the lowest rates have been since November. Purchase applications were down 1.0%.
FHFA House Price Index: Home prices were up 0.6% in March, according to the Federal Housing Finance Agency (FHFA). Prices are now up 6.2% on the year. The Pacific led monthly gains with a 1.4% uptick, rising 7.9% on the year. The Mountain region is up 0.6% and 7.4% on the year. The Middle Atlantic continues to show the slowest growth, up only 3.8% yearly and down 0.6% in March.
Existing Home Sales: Although not quite as bad as in the new home sales category, existing sales fell 2.3% in April to a seasonally adjusted annualized rate of 5.570 million. This caused the yearly pace to slow significantly, only growing at a rate of 1.6% vs. 5.8% in March. Single-family home sales were down 2.4% to 4.950 million. Condo sales were down 1.6% to 620,000. The good news is that prices were up. The median price rose 3.5% to $244,800. Supply was also up to 4.2 months from 3.8 months in March and February. Admittedly, this is probably helped by slowing sales.
International Trade in Goods: The U.S. goods gap increased by $2.5 billion to $67.6 billion in April. Taking a look at exports, these were down 0.9% to $125.9 billion. There were steep declines for both vehicle and consumer goods exports. Meanwhile, imports rose 0.7% to $193.4 billion. There were increases in both the consumer goods and agriculture categories.
Jobless Claims: Initial unemployment claims rose slightly, up 1,000 to 234,000. The four-week moving average continues to fall, down 5,750 to come in at 235,250. Continuing claims are a similarly mixed bag. They were up 24,000 this week to 1.923 million. However, the four-week average is down here as well, falling 16,000 to 1.930 million.
Durable Goods Orders: New orders for durable goods fell 0.7% in the month of April. They’re on pace for a 0.9% annual gain. Orders were also down 0.4% when excluding transportation. This category is up 4.9% annually. Orders of core capital goods were flat for the month and have risen 2.9% since last April. Manufacturing output was also down 0.3%. Shipments were down 0.1%. The good news is unfilled orders moved slightly higher, pointing to a possible increase in future manufacturing needs.
Gross Domestic Product (GDP): Economic growth saw a small uptick in the second estimate of first-quarter GDP growth. New estimates show the economy grew at 1.2% in the first quarter vs. initial estimates of 0.7%. There were upgrades for both residential and nonresidential fixed investment. Government purchases also decreased by less than initially estimated, down only 1.1%. The GDP inflation metric shows prices up 2.2% since last quarter and consumer spending is up 0.6%.
Consumer Sentiment: Despite being down 0.6 points from initial May estimates, consumers are still optimistic with this index coming in at 97.1. Expectations are up 0.7 points to 87.7. This points to good things for the jobs outlook. Current conditions were down one point to 111.7. Analysts don’t think this means great things for upcoming consumer spending numbers. Consumers expect prices to rise 2.6% over the coming year and 2.4% in the next five years.
Following a drop in treasury yields, mortgage rates fell quite a bit last week. It’s an excellent time to lock your rate if you’re in the market for a mortgage.
This week, 30-year fixed-rate mortgages (FRMs) averaged 3.95% with an average 0.5 point for the week ending May 25, 2017, down from last week when they averaged 4.02%. A year ago at this time, 30-year FRMs averaged 3.64%.
Looking at shorter terms, 15-year FRMs this week averaged 3.19% with an average 0.5 point, down from last week when they averaged 3.27%. A year ago at this time, 15-year FRMs averaged 2.89%.
Finally, 5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 3.07% this week with an average 0.4 point, down from last week when they averaged 3.13%. A year ago at this time, 5-year ARMs averaged 2.87%.
The market was mixed on Friday. The Dow Jones Industrial Average was down just slightly, breaking six consecutive days of gains. Meanwhile, the S&P 500 and Nasdaq had record closes.
The Dow closed at 21,080.28 despite dropping 2.67 points Friday. This was a weekly gain of 0.89%. Meanwhile, the S&P 500 rose 0.75 points to close the week at 2,415.82, up 0.91% compared to last Friday. Finally, the Nasdaq was up 1.25% on the week after gaining 4.94 points Friday to close at 6,210.19.
The Week Ahead
Tuesday, May 30
Personal Income and Outlays (8:30 a.m. ET) – This measures all possible income sources as well as public expenditures.
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, May 31
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.
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, June 1
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.
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.
Friday, June 2
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.
There’s a lot of important reports packed into the short week. We’ll be keeping a special eye on the manufacturing numbers as well as the monthly jobs report at the end of the week. If all of this economics and mortgage stuff has you wishing it was already Friday, we have plenty of home, money and lifestyle content to keep you going throughout the week if you subscribe to the Zing Blog below.
Tomorrow is Senior Health and Fitness Day. If you’re looking to start a workout program to commemorate this, check out our tips for exercises for all ages. Or you could relax on the couch. I won’t judge. Either way, have a great week!
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