Market Update - Quicken Loans Zing Blog

The big report of the week is the jobs report and there will be particular focus on this one. The Federal Reserve has made some noise recently about raising short-term interest rates if economic data shows continued improvement. The jobs report is one big piece of this picture.

Personal Income and Outlays: Personal incomes were up 0.4% in July and June was revised higher to 0.3%. Wages and salaries were up 0.5% in the month. Some of this money was put away for later as the savings rate was up 0.2% to 5.7%. Spending did rise 0.3%. Inflation was flat, but prices in core categories were up 0.1%. Prices in these areas are up 0.8% and 1.6% on the year. Digging just a little deeper there was more spending on durable parents helped by gains in car sales and nondurable prices went down based on lower energy costs.

S&P Case-Shiller HPI: Prices were actually down 0.1% on a seasonally adjusted basis in June. They were still up 0.8% overall on the month. Year on year, prices are up 5.1% overall although this rate is down 0.2% from May. Nine of the 20 cities surveyed saw price drops. Both Chicago and New York were down on the month and up only 3.3% and 2.1% on the year, respectively. Portland and Seattle are still leading the way with 12.6% and 11.0% yearly gains.

Consumer Confidence: Consumer confidence was up 4.4 points in August to finish the month at 101.1. Both expectations and the present situation metrics went up despite a 1.3% increase in the number of Americans that think jobs are hard to get. Still, many Americans see more jobs ahead and there was a gain in this metric. Americans also see their incomes increasing in the future. Inflation expectations were up 0.1% to 4.8%. More Americans also plan to buy homes in the near future.

MBA Mortgage Applications: Mortgage applications were up 2.8% overall as refinances rose 4.0% and purchases were up 1.0%. The average rate on a 30-year-fixed mortgage was unchanged at 3.67%.

Pending Home Sales Index: The number of homes under contract for sale were up 1.3% in July and sitting at 111.3 on the year. This represents a 1.4% yearly increase. Turning briefly to regional data, sales in the West are up 6.2% on the year. The Northeast and South are up 1.1% and 0.4%, respectively. The Midwest is down 1.1% year-to-year.

Jobless Claims: Initial claims were up only 2,000 this week to 263,000, matching the four-week moving average. Meanwhile, continuing claims were up 14,000 to 2.159 million. The four-week average is up 5,000, coming in at 2.160 million.

ISM Manufacturing Index: Manufacturing was actually in a slight contraction in August coming in at 49.4 after declining 3.2 points. New orders were down almost 8 points to 49.1. Backlog orders were down 2.5 points to 45.5. Production, inventories and employment are all shrinking. All in all, not a great report.

Employment Situation: Non-farm payrolls had 151,000 jobs added last month. This came in below expectations. There was an upward revision of 20,000 in July that offset the downturn a little bit. Further breaking down the numbers, private payrolls added 126,000 jobs, while government added another 25,000. There were gains in professional and business services. There were workforce cuts in manufacturing, mining and construction last month. Average hourly earnings are up 0.1%. The average workweek decreased by six minutes to 34.3 hours. Unemployment sits at 4.9%. The labor force participation rate remains the same at 62.8%.

International Trade: Exports were up 1.9% to $186.3 billion. This helped drive the nation’s trade deficit down $5.2 billion to $39.5 billion. Exports of goods were responsible for this increase. Imports were also down 0.8%, which may not be a good sign for demand from the U.S. retail perspective. The petroleum gap decreased by $300 million.

Mortgage News

Mortgage rates were slightly higher across the board last week as the market reacted to comments from Federal Reserve Vice Chairman Stanley Fischer. It’s still a great time to lock in your rate. You can do it before the Fed’s September meeting where analysts believe they may raise short-term interest rates.

30-year fixed-rate mortgages (FRMs) averaged 3.46 % with an average 0.5 point for the week ending September 1, 2016, up from last week when they averaged 3.43%. A year ago at this time, 30-year FRMs averaged 3.89%.

15-year FRMs this week averaged 2.77% with an average 0.5 point, up from last week when they averaged 2.74%. A year ago at this time, 15-year FRMs averaged 3.09%.

5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.83% this week with an average 0.4 point, up from last week when they averaged 2.75%. A year ago, 5-year ARMs averaged 2.90%.

Stock Market

The prevailing attitude on the stock market was that bad news was good news on Friday. Many on the stock market feel that the Federal Reserve won’t raise interest rates in September given a disappointing employment report. It’ll be interesting to see what happens.

The Dow Jones Industrial Average was up 72.66 points Friday to 18,491.96. It was up 0.52% on the week. The S&P 500 was up 9.12 points last week to 2,179.98, up 0.50% on the week. Finally, the NASDAQ was up 0.59% for the week to close at 5,249.90 after gaining 22.69 points Friday.

The Week Ahead

Wednesday, September 7

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.

Thursday, September 8

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.

It’s as if all the economic analysts decided to take the last week of the summer off because there’s a whole lot of nothing going on next week. Don’t worry! Life’s not all about economics and mortgage rates. We have plenty of home, money and lifestyle content to share with you. You can subscribe to the Zing Blog below!

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