It’s spring training, and let’s just say that my hometown baseball team is expected to have a less-than-stellar season. But the beautiful thing is every team starts with a clean slate. The games may not count yet, but we also haven’t lost, either.
If the stock market were a baseball game, it took a loss in the ninth inning last week. The coronavirus outbreak continued to cause worries even among some of the hottest stock investments of the past several years.
As usual, summary assistance was provided by Econoday.1 Let’s jump right into it.
Housing Market Index
Home builder sentiment was down a single point, settling at 74 in February. Despite the drop, it’s running just below December’s 20-year high of 76.
In terms of the current sales situation, that comes in at 80. Meanwhile, sales over the next 6 months finished at 79, with traffic coming in at 57. The traffic number is especially key because the number of buyers going through the homes was dropping, and it’s finally shown some growth, no doubt helped by a hot economy and low mortgage rates.
Taking a look at the regional data, the West is out front, with market sentiment of builders coming in at 82. The South, which is the U.S.’s biggest region for new housing, comes in at 79. The Northeast followed at 67, with the Midwest bringing up the rear at 62, which still indicates somewhat healthy market growth in the region.
MBA Mortgage Applications
Overall mortgage applications were down 6.4% last week. This included an 8% decrease in refinance applications. Nevertheless, applications to refinance were up 165% from the same time last year. Meanwhile, on the purchase side, these applications were down 3% on the week, but were 10% higher than a year ago.
The average 30-year fixed mortgage rate, at least according to this writing, was up five basis points to 3.77% with a 20% down payment.
Housing starts were down about 3.8% at 1.567 million annually in January, but that doesn’t tell the whole story. The downturn is following an upward revision of December numbers to 1.626 million. Additionally, this exceeded all expectations of economic analysts. With the 3-month average at 1.008 million on the single-family side of things, there’s strong momentum out there right now.
On the permit side, these exceeded the highest estimates by about 80,000, coming in at a total of 1.551 million permits. This is up more than 9.2% on the month.
Producer Price Index
On the production side, expectations for inflation in January were easily beaten, coming in up 0.5% overall. On the year, prices are up 2.1%. The strength is also broad-based as the same monthly gain was seen when food and energy were taken out. Excluding these two categories, prices are up 1.7% on the year. Finally, when trade services were further removed, prices were up 0.4% and have risen 1.5% since last January.
Energy prices were down a bit, which led to only slight gains in the price of goods, but the real uptick was in services pricing. With that being the beginning of the year, this could very well be tied to price adjustments.
There were 5,000 more initial jobless claims last week to come in at a total of 210,000. Meanwhile, the 4-week average was down 3,250 to settle at 209,000.
Continuing claims were up 25,000 last week to come in at 1.726 million. The 4-week average was down 5,250 end up at just over 1.722 million.
Existing Home Sales
Existing home sales were down 1.3% on the month, but they’ve gone up 9.6% on the year after settling at 5.46 million on an annual basis in January.
Low inventory seems to be holding sales down as people just can’t find the home they want. At 1.42 million units, the amount of available housing is down 10.7% from a year ago. Perhaps even more tellingly, there’s only 3.1 months’ worth of supply on the market at the current pace of sales.
Sales of single-family homes were down 1.2% for the month to a seasonally adjusted annual rate of 4.85 million, with an additional 610,000 condo sales added to get to the overall number. Condo resales were down 1.6% in January. Compared to the same time a year ago, existing home sales on the single-family side were up 9.7%, while condos saw 8.9% gains over the same timeframe.
In terms of regional breakdowns, the West was the only region where it was shown that fewer homes were sold in January compared to December, but the numbers are still up in the region by 8.2% in comparison to last January.
Fixed mortgage rates didn’t move very much, despite a slight push upward. There’s lots of uncertainty being caused by the coronavirus at the moment. When that happens, money tends to be pushed into the bond market and mortgage rates get a little bit better for those looking to purchase a home or refinance their current one. If you’re in the market, it’s a good time to consider locking your mortgage rate.
The average interest rate with 0.7 points paid for a 30-year fixed mortgage was up two basis points at 3.49%. This is down from 4.35% a year ago.
Looking at shorter terms, a 15-year fixed mortgage with 0.8 points paid in fees was up a couple of basis points to 2.99%. This is down from 3.78% a year ago.
Finally, the average mortgage rate for a 5-year treasury-indexed, hybrid adjustable rate mortgage with 0.2 points paid was down three basis points to 3.25%. This has dropped from 3.84% last February at this time.
The stock market had a bad Friday and indeed a bad week. The coronavirus continues to be all anyone is talking about in relation to stocks. Essentially, the more people who are sick, the less production gets done. This is particularly troublesome given that the epicenter of this is China, where so much global manufacturing takes place. However, the number of cases hitting other parts of the world has also escalated.
The Dow Jones Industrial Average was down 1.38% last week after falling 227.57 points Friday and finishing at 28,992.41. Meanwhile, the S&P 500 finished the week at 3,337.75, down 35.4 points and falling 1.25% on the day. Finally, the Nasdaq was down 174.37 points to close the week at 9,567.59, falling 1.59% on the week.
The Week Ahead
Tuesday, February 25
FHFA House Price Index (9:00 a.m. ET) – The Federal Housing Finance Agency House Price Index 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.
Wednesday, February 26
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
New Home Sales (10:00 a.m. ET) – This report measures the number of newly constructed homes with a committed sale during the month.
Thursday, February 27
Durable Goods Orders (8:30 a.m. ET) – These are based on new orders placed with domestic manufacturers for factory goods.
Gross Domestic Product (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.
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.
Friday, February 28
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.
Personal Income and Outlays (8:30 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.
Consumer Sentiment (10:00 a.m. ET) – The University of Michigan’s Consumer Survey Center questions 500 households each month on their financial conditions and attitudes about the economy. Consumer sentiment is directly related to the strength of consumer spending.
It’s a short month in terms of business days, so there’s a lot crammed into this week. We’ll have it all covered in next week’s Market Update!
In the meantime, we get it if this isn’t the most fun post to read on a Monday afternoon. We’ve got plenty of home, money and lifestyle content to share with you if you subscribe to our mailing list below. I do my best, but if this post has been enough to make you want to get comfortable and curl up on the couch, here’s a post on ways to make a big home feel more cozy. Have a great week!
1Important Legal Notice: Econoday has attempted to verify the information contained in this calendar. However, any aspect of such information may change without notice. Econoday does not provide investment advice, and does not represent or warrant that any of the information is accurate or complete at any time. Copyright 2020 Econoday, Inc. All rights reserved.
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