Are the days really blending together for you at this point? I’m right there with you. If you’re a sports fan, we finally got some excitement last week with the NFL draft. Unfortunately, it’s still the off-season, so best case scenario, all we can do is speculate from now until at least September.
There seems to be a lot of speculation right now. When might we have the treatment or a vaccine? Those matters are inextricably tied to the question of when we can restart the economy and get back to something approximating normalcy. For now, we can only guess. It’s that state of uncertainty through which economic data is being released and traders are trying to navigate.
Econoday provided assistance in the compilation of summaries for this report.1 Let’s get a look at them.
Existing Home Sales
Stay-at-home orders definitely had an impact on existing home sales in March as these fell 8.5% to 5.27 million on a seasonally-adjusted basis. These numbers could get worse in April, as these orders didn’t start until the beginning of the month in states across the country. This is going to be interesting to keep an eye on. As of March, year-to-year showed a 0.8% rise.
Still, there were signs that those selling their homes in March had a certain amount of optimism. The average price for an existing home suddenly jumped to an 8% year-over-year appreciation at $260,600. Supply was also still limited with supply for only 3.4 months of continued sales at the current pace.
Given the numbers and the fact that real shutdowns didn’t take place until the middle of the month, there’s reason to believe that the data in April will show the true impact of the current situation on existing home sales.
MBA Mortgage Applications
Mortgage applications were down 0.3% overall last week. Refinance applications fell 1% as the average rate on a 30-year conforming fixed mortgage was flat at 3.45%.
On the purchase side of the equation, applications were up 2% on the week, but they’ve fallen precipitously when compared to the same time a year ago, down 31%. The stay-at-home orders caused by the response to COVID-19 are having an undeniable effect.
FHFA House Price Index
Both the FHFA and S&P data are released 2 months after the date of the most up-to-date data points, so this report covers February, when we were dealing with a much different housing market and way of life than we are now.
Disclaimers aside, this does paint a picture of where the housing market was headed into this situation for the purposes of comparison. The market in February was booming with prices up 0.7% on the month for the year, which was the highest rate of yearly appreciation in 12 months.
Initial jobless claims were down 810,000, but they remain very high at 4.427 million as of last week. The 4-week average of continuing claims was up 280,000 at 5.787 million. There’s reason to believe that this number will continue to decrease but remain on the high side for a while. Some people have been trying to file unemployment for weeks, and are dealing with overloaded systems that weren’t designed to handle this number of claims all at once.
On the continuing claims side, these are up to 15.976 million, a rise of 4.064 million since last week. This marks a new record. Among those who qualify for unemployment insurance, overall unemployment now sits at 11%. The 4-week average was at about 9.598 million, an increase of 3.548 million from the prior week.
New Home Sales
New home sales were down about 18.2% in an environment of stay-at-home orders across much of the country beginning in mid-March. They settled at a seasonally adjusted annual rate of 627,000. The number of new homes sales from February was also revised down by 24,000 to a rate of 741,000.
Unlike existing home sales, prices were down in this report, falling about 7.6% to 321,400. However, it’s worth pointing out that prices were up more than $20,000 the month before, so this metric is a little bit volatile. However, supply seems to be going up as not many people are out buying. Relative to sales, there are 6.4 months’ worth of supply on the market. As recently as January, supply was at 5 months.
Durable Goods Orders
Durable goods orders were down 14.2% in March. The drop was mainly caused by a dip in orders of civilian aircraft. Canceled orders meant that there was actually a $16.3 billion loss for the civilian aircraft industry. Problems with the production of the Boeing 737 Max continue to be an issue, but the bigger new problem is the government discouraging all nonessential travel. For this reason, motor vehicle orders were down 18.4% to $49 billion.
When transportation was taken out, durable goods orders only fell by 0.2%, which was much better than consensus expectations for a 5% loss. Meanwhile, orders of core capital goods were actually up 0.1%. On the downside, shipments fell 4.5% and there was a 2% decrease in unfilled orders with a 0.6% increase in inventory as factories begin to deal with a sudden drop in demand.
In the final reading of April, consumer sentiment was up 0.8 points to 71.8. The bad news is, this is down 17.3 points in comparison to March’s final reading.
The main problem in April was a drop of almost 30 points in the current conditions index to 74.3, which is directly related to COVID-19. Meanwhile, expectations for the near-term future were also down 10 points to 70.1, but this drop wasn’t nearly as bad. As some states are starting to open back up cautiously, it’ll be interesting to see where this goes.
In terms of inflation expectations, these were down 0.1% to 2.1% in the upcoming year. Meanwhile, over the next 5 years, consumers seeing inflation at 2.5%, rising 0.2% from last month’s estimate.
Rates for fixed mortgages were up slightly last week, but they remain in a really good spot if you want to purchase a home or refinance right now. Obviously, it’s a tough time for many, so feel free to talk to one of our Home Loan Experts about your situation before moving forward.
The average interest rate on a 30-year fixed mortgage with 0.7 points paid in fees was 3.33% last week, up a couple of basis points from the week prior. However, this was down from 4.2% a year ago.
Looking at shorter terms, a 15-year fixed mortgage with 0.7 points paid was up 6 basis points to 2.86%. This is down from 3.64% last year.
Finally, the average rate on a 5-year treasury-indexed, hybrid adjustable rate mortgage was down 6 basis points to 3.28% with 0.3 points paid. This is a fall from 3.77% last year at this time.
Friday was pretty good for the stock market. There was a rebound on Wall Street as investors evaluated the chances for a treatment for the virus from Gilead Sciences. However, the gains weren’t quite enough to make up for a precipitous drop in oil prices, which earlier in the week had been in negative territory. The price of crude oil futures was $16.94 a barrel as of Friday, which did represent a huge uptick.
The Dow Jones Industrial Average closed at 23,775.27, up 260.01 points on the day, but down 1.93% on the week. Meanwhile, the S&P 500 was up 38.94 points Friday to close at 2,836.74, down 1.32% on the week. Finally, the Nasdaq was down 0.18% for the week after closing up 139.77 points Friday at 8,634.52.
The Week Ahead
Tuesday, April 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.
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, April 29
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.
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.
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, April 30
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 (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.
Friday, May 1
ISM Manufacturing Index (10:00 a.m. ET) – This index measures the general direction of manufacturing within the U.S. The qualitative survey of purchasing managers looks at production, new orders, order backlogs, inventories and supplier deliveries, among other factors.
There’s lots of economic data out next week. We get our first look at first-quarter GDP, which may be minimally impacted by the virus given that this all hit in the last 2 weeks of March. The manufacturing report isn’t likely to look very good. Whatever comes, we’ll have it all covered in next week’s Market Update!
Finally, we understand that economic data and mortgage rates aren’t the most important things in your world right now. We have plenty of home, money and lifestyle content to keep you going. Check out some creative activities you can do with the kids while they’re home. Have a great day and stay healthy!
1 Important 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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