So I was at a wedding this weekend. It was quite a party. My sister actually got on the dance floor, and if you knew her, you would understand that’s an event not likely to be seen again for several years.
It was a pretty good week for jobs and in the markets as well. Let’s jump into the reports that moved markets.
S&P Corelogic Case-Shiller HPI
Across the nation, home prices were up 6.5% annually in the top 10 metropolitan markets in March, up from 6.4% the month prior. However, in the nation’s 20 largest cities, prices increased a little more, up 6.8% on the year, unchanged from February.
Home prices in Seattle are 13% higher than a year ago, while Las Vegas remains another top gainer. Even Chicago, which had the lowest annual gains, is up 2.8% annually, well above the inflation rate.
Consumers were more confident in May, with the index going up from 125.6 to 128.0 last month. The present situation component and the index was up just over four points to 161.7, while expectations were up a little over a point to 105.6.
More people think business conditions are good, with this number rising 3.6% to 38.4%, while the number of people who think business conditions are bad was down 0.3% to 12.0%. Additionally, 4.2% more people think jobs are plentiful, at 42.4%. However, 15.8% of people also think jobs are hard to get, up from 15.5% last month.
In terms of short-term expectations, those anticipating that business conditions would improve was down from 23.6% to 23.1% in May, but the proportion of people who believed business conditions would get worse decreased 1.5 points to 8.3%. The percentage of people who thought there would be more jobs in the next six months increased, along with the percentage of people who felt there would be fewer jobs. Fewer people also expect to see an increase in their incomes, while more people see their income decreasing, although both changes represent small percentage swings.
MBA Mortgage Applications
Mortgage applications were down 2.9% last week, as the average rate on a 30-year-fixed mortgage was down two basis points to 4.84%.
Refinance applications were down 5% last week and are now at the lowest level since December 2000. Refinance implications now represent just 35.3% of total activity. Meanwhile, purchase applications were down 2% from one week ago.
Gross Domestic Product (GDP)
In the second revision of estimates for the first quarter of this year, GDP growth was down to 2.2% from an expected 2.3%.
There were a couple of reasons for the slowdown. The housing market is just a little bit cooler than it has been. Investment in home building was down 2.0%. Additionally, consumer spending was only up 1.0%, which is the slowest pace since the second quarter of 2013. In the fourth quarter, spending was up 4.0%.
The amount of inventory being stacked increased at a rate of $20.2 billion, but that’s slower than the $33.1 billion pace that economists expected and also slowed GDP growth.
In better news, business spending was revised up to a 5.5% increase from 4.7% in the last estimate, although it’s still down from the 10%-plus growth in the last six months of 2017.
International Trade in Goods
The U.S. trade deficit decreased $400 million to $68.2 billion in April. However, the news wasn’t all good, as both exports and imports fell 0.5%. There will be more data in the international trade report itself, which will be released this week.
Initial jobless claims were down 13,000 last week to come in at 221,000. The four-week moving average was 222,250, which was up 2,500. The government still notes that claims in Puerto Rico and the Virgin Islands may be inaccurate because claims taking procedures are still feeling the aftereffects of last year’s hurricane season.
Continuing claims were down 16,000 to come in at 1.726 million. The four-week moving average was down 8,500 to come in at about 1.744 million.
Personal Income and Outlays
Consumer spending was up 0.6% in April, according to the Commerce Department. Nondurable goods purchases were up 0.9%, and demand for household utilities was up. Services spending also rose 0.5%. Increased gas prices also drove spending.
Taking out food and energy, inflation was up 0.2%. Personal incomes were up 0.3% as wages rose 0.4%. The savings rate fell to 2.8% from 3.0% in March.
Pending Home Sales Index
Pending home sales were down 1.3% last month to an index level of 106.4. This index of existing homes under contract is down 2.1% on the year. No regions saw an increase in sales activity.
The dip is once again being blamed on supply shortages in the market.
The unemployment rate fell 0.1% to 3.8% in May after employers added 223,000 jobs to nonfarm payrolls. Average hourly earnings were also up slightly, raising 2.7% from last year.
The retail sector added 31,000 jobs in May with healthcare adding 29,000 jobs. Construction was up 25,000 jobs, and 23,000 jobs were added in professional and technical services. Transportation added 19,000 jobs, while 6,000 jobs were added in mining and 18,000 new jobs came from manufacturing.
It wasn’t all good news. Part of the reason the unemployment rate decreased was that the labor force participation rate was down 0.1% to 62.7%. The average number of hours worked per week was still 34.5.
ISM Manufacturing Index
Manufacturing numbers increased 1.4 points to 58.7 in May, indicating that manufacturing is growing at a faster pace. Among the reasons for this was that construction spending was up 1.8%.
There was a 2.8% increase in construction projects in April.
Mortgage rates fell last week across the board. It’s still a great time to lock your rate if you see one you like.
On a 30-year fixed mortgage, the average rate last week was 4.56%, down 10 basis points from the week prior, with 0.4 points in fees. The average rate at this time last year was 3.96%.
In shorter terms, a 15-year mortgage was down nine basis points this week to 4.06%, with 0.4 points. At the same time a year ago, the rate was 3.19%.
Finally, looking at 5-year treasury-indexed hybrid adjustable rate mortgages, the average rate was 3.80% with 0.3 points, down seven basis points on the week and up from 3.11% last year.
Whether you have a real portfolio or you’re in our fantasy stocks competition, you probably had a decent week.
Among other reasons, the market reacted positively to a strong jobs report. Even the Dow Jones industrial average was up more than 200 points Friday after having a down week.
The Dow was up 219.37 points to 24,635.21, which was down 0.48% on the week. Meanwhile, the S&P 500 finished the week up 0.49% and 29.35 points on the day to close at 2,734.62. The Nasdaq closed at 7,554.33, up 112.22 points on the day and 1.62% on the week.
The Week Ahead
Wednesday, June 6
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.
International Trade (8:30 a.m. ET) – International trade is composed of merchandise (tangible goods) and services. It’s available by export, import and trade balance for six principal end-use commodity categories and for more than 100 principal Standard International Trade Classification system commodity groupings.
Thursday, June 7
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.
After all of last week’s releases, this week is pretty chill, and the stock market will drive most of the movement. We’ll have it all covered next week.
If mortgage rates and market data aren’t your thing, we’ve got more for you to check out by subscribing to the Zing Blog below. This week, I want to spotlight our new writer Molly Grace and her guide to “adulting.” Have a great week!
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