It’s a bit of a lighter week in terms of data, but we do get some key home numbers and durable goods. The data doesn’t really matter. All anyone was talking about last week was Brexit. The British voted to leave the European Union. The initial reaction of the world markets wasn’t good.
MBA Mortgage Applications: Mortgage applications were up 2.9%. This has a lot to do with the fact that rates were again down three basis points to 3.76%. Despite the fact that purchases were down 2.0%, refinances were up 7.0%.
Existing Home Sales: Sales of existing homes were up 1.8% in May to 5.530 million on a seasonally-adjusted annual basis. This is up 4.5% on the year, which is considered a little slow in terms of growth. The average price is up 3.8% to $239,700. This is up 4.7% annually. Supply of existing homes is up 1.4% in May to 2.150 million. It’s down 5.7% on the year. Supply in the market is down to 4.7 months.
Jobless Claims: Initial claims are down 18,000 this week to 259,000. Meanwhile, the four-week average is down 2,250. Continuing claims fell 20,000 to come in at 2.142 million. The four-week average on this side is down 5,000 to 2.147 million.
New Home Sales: Sales of new homes were down 6.0% in May to come in at a seasonally-adjusted annual rate of 551,000. It’s still the second best sales mark of the year. Prices fell 9.3% to $290,400 as builders were offering concessions on sales prices. Supply of new homes in the market is up to 5.3 months from 4.9 months after 3,000 new homes were added to the market.
Durable Goods Orders: New orders of durable goods were down 2.2% in May. They’re still up 3.2% on the year. A lot of the weakness had to do with a decrease in transportation orders. When aircraft and automobiles are taken out, the month-to-month change is only down 0.3%. Transportation has been a key contributor to annual growth levels as orders are down 0.4% year-to-year when excluding transportation. Finally, core capital goods are down 0.7% and 3.6% on the year. Digging a little deeper into numbers, shipments were also down 0.2% with inventories falling is more orders get filled. Vehicle orders were down 2.8%, but they been solid overall. Commercial aircraft orders were also up 1.0%. In more of a negative, machinery orders were down as were primary and fabricated metals.
Consumer Sentiment: Consumer sentiment was down 0.8 points today to 93.5 in the final reading for June. Despite this, it’s still one of the best readings of the year. The current conditions index came in at 110.8. Meanwhile, the expectations component was down 2.5 points in the month to a level of 82.4. Still, it’s the second best rating in this category since January. Inflation expectations were also up, perhaps because consumers have finally reacted to an uptick in gasoline prices. One-year inflation expectations were up 0.2% to 2.6%. Five-year expectations were up 0.1% to match levels.
Fixed rates were up very slightly, while adjustable rates were unchanged. These numbers were released before the results of the referendum signaling Britain’s departure from the European Union came out on Friday morning. Since then, rates have plummeted as investors flee for the relative safety of the U.S. bond market. There’s really not going to be a better time to get a mortgage.
Thirty-year fixed-rate mortgages (FRMs) averaged 3.56% with an average 0.6 point for the week ending June 23, 2016, up from last week when they averaged 3.54%. A year ago at this time, 30-year FRMs averaged 4.02%.
Fifteen-year FRMs this week averaged 2.83% with an average 0.5 point, up from last week when they averaged 2.81%. A year ago at this time, 15-year FRMs averaged 3.21%.
Five-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.74% this week with an average 0.5 point, unchanged from last week. A year ago, 5-year ARMs averaged 2.98%.
Brexit really threw the stock market for a loop. Uncertainty drove people to sell off equities in a big way as the market posted its worst day since 2011.
The Dow Jones Industrial Average fell 1.58% for the week after losing 610.32 points Friday to close at 17,400.75. The S&P 500 was down 76.02 points to finish at 2,037.30, falling 1.66% on the week. Finally, the NASDAQ was down 1.96% from last Friday’s close after dropping 202.06 points to end the week at 4,707.98.
The Week Ahead
Monday, June 27
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 rest of international trade numbers to get an idea of import and export estimates for GDP calculations.
Tuesday, June 28
GDP (8:30 a.m. ET) – This measures the monetary value of all final goods and services produced within the U.S. This report is released on a quarterly basis.
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 headline 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, June 29
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.
Personal Income and Outlays (8:30 a.m. ET) – This measures all possible income sources as well as expenditures of the public.
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 30
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, July 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.
A lot of heavy hitting data is packed into a short week and we’ll have it all for you. Don’t worry. If economics and mortgage aren’t your cup of tea, we have plenty of home, money and lifestyle content to keep you going.
The markets are closed Monday in observance of Independence Day and so are we. Market Update will be back on Tuesday. From all of us here at the Quicken Loans Zing Blog, have a happy and safe Fourth of July!
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