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Market Update

Headline News

Consumer Price Index (CPI): Prices were unchanged in November. Excluding food and energy, prices were up 0.2%. Among categories showing declines were transportation and recreation. Apparel was also down. The strong U.S. dollar is keeping import prices below. Oil prices were also down 2.4%. Medical care was up for the second consecutive month and the cost of housing is also rising 0.2%. Year on year, prices up only 0.5%. However, taking out food and energy, prices have risen 2.0%.

Housing Market Index: Confidence among home builders is down a point to 61 in its December reading. Present sales sit at 66, which is down a bit. The same is true for six-month sales expectations at 67. Traffic of prospective buyers in new homes is down two points to 46. There are a lack of first-time home buyers in the new home market. Regionally, the West is strong at 78. The South follows at 62. The Midwest and North are at 55 and 49, respectively.

MBA Mortgage Applications: Applications were down 1.1% as purchases fell 3.0% and refinances were up 1.0%. The average 30-year-fixed mortgage rate remained unchanged at 4.14%.

Housing Starts: Permits were up 11.0% to a seasonally adjusted annualized rate of 1.289 million in November. There was a 27% jump in permits for multi-family units. Single-family permits were also up 1.1%. Meanwhile, on the starts side, they were up 10.5% to 1.173 million. Multi-family units were up 16.4%; single-family units were 7.6% higher.

Industrial Production: Industrial production was down 0.6%. Manufacturing was flat for the month and utilities were down 4.3% in November because temperatures are unusually warm right now. We’re saving on those heating bills, people. Enjoy! Capacity utilization was down a full half point to 77.0%. Orders for construction supplies were down, but it was offset by an uptick in orders for business equipment.

Jobless Claims: Initial claims were down 11,000 to 271,000 last week in a steep drop. The four-week average was down 250 jobs to 270,500. Continuing claims declined 7,000 to 2.238 million. However, the four-week average is up 16,000 to 2.200 million.

Mortgage News

Mortgage rates were mostly up last week on the heels of the Federal Reserve’s decision to raise short-term interest rates by 25 basis points at the December meeting of its Federal Open Market Committee.

30-year fixed-rate mortgages (FRMs) averaged 3.97% with an average 0.6 point for the week ending December 17, 2015, up from last week when they averaged 3.95%. A year ago at this time, 30-year FRMs averaged 3.80%.

15-year FRMs this week averaged 3.22% with an average 0.5 point, up from last week when they averaged 3.19%. A year ago at this time, 15-year FRMs averaged 3.09%.

5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 3.03% this week with an average 0.4 point, unchanged from last week. A year ago, 5-year ARMs averaged 2.95%.

1-year Treasury-indexed ARMs averaged 2.67% this week with an average 0.2 point, up from 2.64% last week. At this time last year, 1-year ARMs averaged 2.38%.

Stock Market

The dual concerns of low oil prices and skittishness following the Fed move drove stocks quite a bit lower Friday and they were down for the week.

The Dow was down 367.29 points Friday to close at 17,128.25. This left the index down 0.79% for the week. The S&P 500 was down 36.34 points to finish Friday at 2,005.55, down 0.34% for the week. The NASDAQ was down 79.47 points, finishing the week at 4,923.08. It finished 0.21% lower over the last five days.

The Week Ahead

Tuesday, December 22

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.

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.

Existing Home Sales (10:00 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.

Wednesday, December 23

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) – Durable goods orders are based on new orders placed with domestic manufacturers for factory hard goods.

Personal Income and Outlays (8:30 a.m. ET) – This measures all possible income sources as well as expenditures of the public.

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

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.

Thursday, December 24

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.

The New York Stock Exchange is closing early at 1 p.m.

Friday, December 25

The markets are closed in observance of the Christmas holiday. Quicken Loans and the Zing Blog team would like to wish you and yours a safe and wonderful holiday season.

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