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I’ve got 3 days off this week and a ton to do before then, so I’m going to keep this intro short and sweet. It’s kind of like the opposite of trade negotiations with China.

Clearly some life events tie-in better with economics than others and I don’t have it today, so let’s just get into the headlines!

Headline News

Housing Market Index

Home builder sentiment was down a single point to 70 in numbers for November. However, this is still really good growth and the second best showing on the year.

Sales over the next 6 months are a key reason for optimism with confidence in this area at 77. Sales in the present are just behind at 76. Meanwhile, traffic of prospective buyers in homes is finally growing after being held down for quite a while as it came in above the breakeven point at 53. This report is considered a positive for the economy when it comes to residential investment.

Housing Starts

That builder confidence is translating into more houses being built, as starts were up almost 3.8% in October to 1.314 million on a seasonally-adjusted annual basis. This is the second best showing since May of last year, just behind August.

Digging deeper into the numbers, the 3-month average of single-family starts, which make up the majority of American housing, was at 923,000. This is the highest that this number has been in 12 years. Meanwhile, on the multifamily side, these starts were up 8.6% for the month, which helped contribute to the gains.

When looking at permits, these were up better than 5% to 1.461 million. The 3-month average of single-family permits is at 888,000, which is a number that again hasn’t been seen in a dozen years. Additionally, multifamily permits are up 8.2% for October. Even better, more homes are being completed, with this number up 10.3% to an annual rate of 1.256 million.

There are some strong tailwinds for the housing market at this point as strong employment numbers and low mortgage rates are giving builders confidence that they’re acting on. This is good because supply has been lacking in the market.

MBA Mortgage Applications

Mortgage applications were down 2.2% last week, but this may be a function of just how good things have been recently more than anything else. Purchase applications were up 7% on the week, which is still 7% better than it was this time a year ago. Applications to refinance, which are more sensitive to any change in rates, were down 8% from the prior week.

Mortgage rates have been up and down a little bit lately, and it definitely depends on whose index you look at, but according to the Mortgage Bankers Association, the average rate on a 30-year conventional fixed mortgage was down four basis points to 3.99% last week.

Jobless Claims

There are signs that jobless claims may be starting to pivot higher. Initial claims were flat last week at 227,000 after unexpectedly rising quite a bit last week. The 4-week moving average was up 3,500 to 221,000.

Meanwhile, continuing claims also rose up 3,000 to 1.695 million. The 4-week average of continuing claims rose by the same amount to settle at 1.693 million.

Existing Home Sales

The good news in the housing sector just kept flowing last week. Existing home sales were up 1.9% in October to come in at a seasonally-adjusted annualized rate of 5.46 million. This led to a strong annual rise of 4.6%, up from 3.5% in September.

Sales of existing single-family homes were up 5.4% at 4.87 million. They’ve gone up 5.4% on the year. Condo sales came in at 590,000, but are down 1.7% on the year.

Meanwhile, a lack of inventory has been driving prices up and October was no different. Inventory was at 3.9 months based on the current pace of sales in October as compared to 4.3 months in September. Meanwhile, prices are up 6.2% overall on the year with the median sales price coming in at $270,900. The time that existing homes were on the market did increase slightly at 36 days in October compared to 32 days in the last report.

Consumer Sentiment

The U.S. consumer was feeling more confident in the final reading of November’s overall public sentiment the expectations, up 1.1 points to settle at 96.8. Expectations for the future were up better than three points at 87.3 as people expect their future incomes to rise. Meanwhile, current conditions were seen less positively as this number was down 1.6 points to 111.6, which is a bit of a negative headed into the holidays.

People aren’t concerned about the ongoing impeachment proceedings, but it’s worth noting that about half the sample see a recession coming, while the other sees continued expansion ahead.

Both measures of inflation are at 2.5%, with the outlook over the next year remaining flat and an increase of 0.2% in expectations for price increases over the next 5 years.

Mortgage Rates

It’s as if the markets have been listening to House of Pain quite a bit lately because mortgage rates have been jumping around. They go up, go up and get down. Strained musical references aside, it’s a great time to lock your rate while they’re low, because they been kind of all over the place.

The average interest rate on a 30-year fixed mortgage last week was 3.66% with 0.6 points paid in fees, according to Freddie Mac. This was down nine basis points on the week and had fallen from 4.81% a year ago.

Turning to shorter terms, the average rate on a 15-year fixed mortgage fell five basis points to 3.15% with 0.5 points paid. This has fallen from 4.24% last year.

Finally, the rate on a 5-year treasury-indexed, hybrid adjustable rate mortgage averaged 3.39% with 0.4 points paid last week, down five basis points. This has dropped from 4.09% at the same time last year.

Stock Market

To follow the trade talks is a bit like being a spectator at a live tennis match. The back and forth is getting a bit dizzying. President Trump said that the two sides were very close to a deal in talks and that there was a very good chance of it happening. Meanwhile, his Chinese counterpart, President Xi Jinping, said that China is remaining positive, but would not be afraid to fight back, presumably a caution against the imposition of further U.S. tariffs on Chinese goods.

It’s clear that investors are hedging their bets as the stock market sold off a little bit last week, which snapped quite a string of weekly gains across all the major indexes.

The Dow Jones Industrial Average was down 0.46% last week despite rising 109.33 points Friday to close at 27,875.62. Meanwhile, the S&P 500 closed at 3,110.29, down 0.33% for the week, but up 6.75 points for the day. Finally, the Nasdaq was up 13.67 points Friday to finish at 8,519.89, still down 0.25% compared to the previous Friday.

The Week Ahead

Tuesday, November 26

International Trade in Goods (8:30 a.m. ET) – The 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.

FHFA House Price Index (9:00 a.m. ET) – The Federal Housing Finance Agency (FHFA) House Price Index (HPI) covers single-family housing using data provided by Fannie Mae and Freddie Mac. The HPI is derived from transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac.

S&P CoreLogic Case-Shiller HPI (9:00 a.m. ET) – The S&P CoreLogic Case-Shiller home price 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 surveys consumers on their feelings about current and future business and employment conditions as well as their future spending plans.

New Home Sales (10:00 a.m. ET) – This report measures the number of newly constructed homes with a committed sale during the month.

Wednesday, November 27

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.

Durable Goods Orders (8:30 a.m. ET) – These are based on new orders placed with domestic manufacturers for factory goods.

Gross Domestic Product (GDP) (8:30 a.m. ET) – This release measures the monetary value of all final goods and services produced within the U.S. This report is released on a monthly basis with estimates on the growth in the previous quarter.

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 4-week moving average of new claims smooths out weekly volatility.

Personal Income and Outlays (10:00 a.m. ET) – This is a measurement of how much consumers are taking in as well as their corresponding spending. This also gives insight into how much is being saved.

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, November 28

Quicken Loans®is closed as are all banks and the stock and bond markets. Happy Thanksgiving! Enjoy the tryptophan coma!

Everything is crammed in at the beginning of the week before your big feast on Thursday. If you can tear yourself away from Cyber Monday shopping next week, we’ll have all the developments covered in next week’s Market Update!

It’s the beginning of a busy season and your mind is probably focused on anything but economics and mortgage rates. I get it and we’ve got plenty of home, money and lifestyle content to share with you if you subscribe to our email list below! Before you get the turkey on the table this week, let’s get the table ready with some festive Thanksgiving decor ideas! Have a great week!

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