Retail Sales: Retail sales were down 0.3% in June, coming in well below expectations for a 0.3% gain. Motor vehicle sales were a key anchor weighing down June’s results. Excluding automobiles, sales were down only 0.1%. Gas sales were up 0.8%, helped by a surge in prices. Sales of clothing dropped 1.5%, while home and furniture retail fell 1.6%. Restaurant revenues also fell 0.2%.
Quicken Loans HPPI/HVI: Homeowners overvalued their homes by 1.4% in June, a gap that’s growing wider. It marks the fifth straight month where appraiser opinions were below those of homeowners. On the plus side, home values were up 0.74% for the month.
MBA Mortgage Applications: The volume of mortgage applications dropped 1.9% this week as applications for purchase fell 8.0%. Refinances were up 4.0% as the average rate for a 30-year fixed mortgage remained unchanged from last week at 4.23%
Producer Price Index (PPI): Prices for suppliers went up 0.4% in June. They’re still down 0.7% for the year. Excluding food and energy, prices were up 0.3%. Gasoline and especially eggs contributed to the increase in producer prices. Electrical, pharmaceuticals and cigarettes were also pressured upward.
Industrial Production: Production showed some life in June with a 0.3% rise. The good news was tempered by the fact that this merely represents a slight bounce back after two months of losses. Much of the gain was in utilities and mining. Manufacturing was unchanged for the second consecutive month at 1.8% higher than this time last year. Vehicle production was down 3.7% after the gain in May. There was a 0.7% increase in chemical production and a 1.4% bump for furniture. Factories were utilizing 78.4% of their capacity, up two tenths of a point from last month.
Jobless Claims: Initial claims were down 15,000 this week to 281,000. The four-week average rose 3,250 to 282,500 as a result of the jump last week that’s thought to be caused by auto factory shutdowns for retooling. Meanwhile, in an extremely positive sign, the bottom has fallen out of continuing claims, as they were down 112,000 to 2.215 million. The four-week average was only down 3,000, coming in at 2.264 million.
Housing Market Index: Builder confidence in the market for new homes has reached a high in July that has not been seen since November 2005, and matching June’s upwardly revised mark of 60. Confidence in future sales was at 71. Meanwhile, present sales were at 66. First-time home buyer traffic was still well behind and down a point to 43. Regionally, the West was at 63 with the South trailing by just a point. The Midwest was in at 59 and the Northeast posted a 52 after being under 50 for some time.
Consumer Price Index (CPI): Inflation was up 0.3% month to month. Inflation has crossed into the positive on an annual basis, raising 0.1% for the year. Energy prices rose 1.7% after gasoline went up 3.4%. Food prices were up 0.3% as the cost of eggs has risen 18.3% this month. There was a 0.2% decline in medical costs driven by a drop in the cost of hospital services. The cost of clothing was down 0.1%.
Housing Starts: Housing starts were up 9.8% in June to a seasonally adjusted annual rate of 1.174 million. The strength comes from multi-family units, which rose 29.4%. The single-family component was actually down 0.9% for the month. Permits were up 7.4% to 1.343 million. Again, multi-family permits were up 15.3% while single-family permits rose just 0.9%. The South led regional gains with starts rising 13.5% and permits 10.4% higher. In the West, permits were also at 9.5%, although starts fell 6.0%. There was a huge gain in the Northeast as the weather finally started to turn. Starts were up 35.5%.
Consumer Sentiment: Consumer sentiment was down 2.8 points for the mid-July reading. Current conditions fell almost 3 points to 106.0, which is likely to mean weakness in consumer spending. Expectations were down to 85.2, but there’s still confidence in the outlook for jobs. One-year inflation expectations were at 2.8%, while five-year expectations are at 2.7%, both up 0.1%.
Most mortgage rates pushed higher this week.
30-year fixed-rate mortgages (FRMs) averaged 4.09% with an average 0.6 point for the week ending July 16, 2015, up from last week when they averaged 4.04%. A year ago at this time, 30-year FRMs averaged 4.13%.
15-year FRMs this week averaged 3.25% with an average 0.6 point, up from last week when they averaged 3.20%. A year ago at this time, 15-year FRMs averaged 3.23%.
5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.96% this week with an average 0.5 point, up from last week when they averaged 2.93%. A year ago, 5-year ARMs averaged 2.97%.
1-year Treasury-indexed ARMs averaged 2.50% this week with an average 0.3 point, unchanged from last week. At this time last year, 1-year ARMs averaged 2.39%.
Google shares led the NASDAQ to a record high as the market focus finally shifted away from Greece.
Despite losing 33.80 points Friday, the Dow Jones Industrial Average closed at 18,086.45, a gain of 1.84% for the week. The S&P 500 was up 2.35 points to finish at 2,126.64, a weekly gain of 2.41%. The NASDAQ was up 46.96 points, closing at 5,210.14, a sizable 4.25% week-over-week gain.
The Week Ahead
Wednesday, July 22
MBA Mortgage Applications (7 a.m. ET) – The mortgage applications index measures applications to mortgage lenders. This was a leading indicator for single-family home sales and housing construction.
FHFA House Price Index (9 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 House Price Index was derived from transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac.
Existing Home Sales (10 a.m. ET) – Existing Home Sales tallies the number of previously constructed homes, condominiums and co-ops in which a sale closed during the month. Existing homes (also known as home resales) account for a larger share of the market than new homes and indicate housing market trends.
Thursday, July 23
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 24
New Home Sales (10 a.m. ET) – New home sales measure the number of newly constructed homes with a committed sale during the month.
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