I use speech recognition here at work to do my writing. When we have to do computer upgrades, there comes a point where you just pray everything works the way it’s supposed to. Things were touch-and-go this morning, but everything is back to normal and up and running.
Traders have had their own scares recently as the impasse with China over trade has continued to escalate, but it didn’t seem to stop stock averages from pushing higher on the week. Before we get there, let’s go over what moved the markets.
Quicken Loans Home Price Perception Index (HPPI)
Homeowners and appraisers were just 0.25% apart when it came to opinions of home value. It’s the closest values have been since February 2015.
In the West, appraisals actually came in above homeowner estimates for the region as a whole, with a gap of 0.04%. Homeowners in the South overestimated by 0.30%; while homeowners in the Northeast were off by 0.33%. Homeowners in the Midwest were off by 0.42%.
At the city level, 75% of areas in the survey had appraisals come in higher than expectation. San Jose, California has appraisal values that were 3.25% higher than homeowners’ opinion. Meanwhile, on the other end of the scale, Chicago homeowners were off by 1.69% on the high side when estimating their value. Miami homeowners were closest to par, overestimating home value by just 0.05%.
Quicken Loans Home Value Index (HVI)
Home values were down 0.63% in June, but they’re still up 4.57% on the year. The occasional dip should help with affordability.
Breaking things down regionally, prices were up 1.11% in the Midwest on the month and have gone up 5.35% annually. Also rising were prices for Western homeowners, which were up 0.25% monthly and 5.76% on the year. Prices dropped 0.68% in the South, but have still risen 4.78% yearly. The Northeast had a bit of a larger dip, down 3.25% on the month, but even here, prices are still up 3.68% on the year.
MBA Mortgage Applications
Mortgage applications were up 2.5% overall on the week with a big help from home buyers out there hitting the pavement. Purchase applications were up 7.0% and this was more than enough to make up for a 4.0% drop in refinance activity. Refinances now only represent 34.8% of overall applications. This was down 2.4% on the week and is the lowest level since August 2008 for refinance apps.
The average rate on a conforming 30-year fixed-rate mortgage was down three basis points to 4.76%.
Producer Price Index (PPI)
Prices at the producer level were up 0.3% on the month of June and have risen 3.4% on the year. This monthly gain was matched when food and energy were taken out. Prices without these categories have risen 2.8% on the year. Finally, 0.3% was wild, because that was again the gain when trade services were removed. Without the gains of wholesalers and retail outlets, prices are up 2.7% on the year.
Digging deeper into the data, metal prices are on the rise, with steel and aluminum up 1.9% and 2.1%, respectively. There have been steep increases in prices because many of the current trade tariffs affect metal industries.
Energy prices were up 0.8% overall including a 0.5% price increase at the pump. In offsetting news, prices were down 1.1% for food including a 13.8% drop in vegetable prices and a 2.1% fall in the price of food exports.
Consumer Price Index (CPI)
Consumer prices were up 0.1% in June and have gone up 2.9% on the year, as inflation is starting to kick to higher levels. When food and energy were taken out, prices were up 0.2% and 2.3% annually.
Medical care costs were up 0.4% and are up 2.5% on the year. Meanwhile, automobile prices were up 0.4% for new cars and 0.7% for used vehicles. Housing prices were unchanged on the month, while energy prices were down 0.3%. At the consumer level, we saw the opposite of what was happening on the producer’s side of the chain. Food prices actually rose 0.2%, but energy prices were down 0.3% to offset this.
New unemployment claims were down 18,000 last week to come in at 214,000. This dropped the four-week average by 1,750 claims to come in at 223,000.
On the continuing claims side, these were also lower by 3,000, coming in at 1.739 million. However, the four-week average was up 10,000 to come in at 1.729 million.
In the first reading of July, consumer sentiment was down 1.1 points to come in at 97.1. The current conditions component is down 2.6 points to come in at 113.9. Meanwhile, expectations have held steady at 86.4.
Among the concerns is the ongoing trade dispute, with 38% of Americans listing it as a worry compared to 21% in June.
Although they didn’t go up much, mortgage rates were slightly higher last week for the first time since early June. If you’re in the market to buy a home or refinance your current one, we have a special deal running today only. We’re giving you our prime offer, meaning those who lock their rate today or tomorrow can receive special savings when they refi or purchase.
The average rate on a 30-year fixed mortgage was up one basis point to 4.53% with 0.4 points in fees. This is up from 4.03% at this time a year ago.
Meanwhile, looking at shorter terms, a 15-year fixed mortgage with 0.4 points averaged 4.02% last week, up three basis points. At this time last year, the rate was 3.29%.
Finally, a 5-year treasury-indexed hybrid adjustable rate mortgage (ARM) with 0.3 points averaged 3.86%. This was up 12 basis points weekly. This is up from 3.28% last year.
Tech had a big day Friday as shares of Facebook, Amazon and Microsoft were all higher. This was also the first time since February 1 that the S&P 500 has been above 2,800 points.
Did you have any of the big tech giants in your portfolio in our Fantasy Stock League? If you did, congratulations. If you’re not playing yet, it’s not too late to get in on the action. There are rolling prizes every two months for the person with the best portfolio in addition to the year-long contest.
The Dow Jones industrial average was up 2.30% on the week, closing at 25,019.41 points, up 94.52 points on the day. The S&P 500 was up 3.02 points on the day and 1.50% on the week to close at 2,801.31. Finally, the Nasdaq closed at 7,825.98, up 2.06 points on the day and 1.79% on the week.
The Week Ahead
Monday, July 16
Retail Sales (8:30 a.m. ET) – Retail sales measure total receipts from stores selling merchandise and related services to final consumers. Sales are measured by retail and food service stores. Data is collected from the Monthly Retail Trade Survey conducted by the U.S. Census Bureau.
Tuesday, July 17
Industrial Production (9:15 a.m. ET) – The Federal Reserve’s monthly index of industrial production – and the related capacity indexes and capacity utilization rates – covers manufacturing, mining, and electric and gas utilities.
Housing Market Index (10:00 a.m. ET) – The National Association of Home Builders produces a housing market index based on a survey where respondents from the organization are asked to rate the general economy and housing market conditions. The index is a weighted average of separate diffusion indexes, including present sales of new homes, sales of new homes expected in the next six months and traffic of prospective buyers in new homes.
Wednesday, July 18
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.
Housing Starts (8:30 a.m. ET) – A housing start is registered when the construction of a new residential building begins. The start of construction is defined as the beginning of excavation of the foundation for the building.
Thursday, July 19
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.
In terms of the amount of data coming out next week, it’s on the moderate side. However, industrial production is kind of a heavy hitter in terms of importance. We’ll have it all covered for you next week in Market Update.
If economics and mortgage news are really your thing, we’ve got plenty of home, money and lifestyle content to share with you if you subscribe to the Zing Blog below. After my experience with the computer this morning, I was reminded that many incoming college students will need a laptop. If you’re in the market, here’s a post on how to buy the best computer for you. Have a great week!
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