Market Update - Quicken Loans Zing Blog

There was very little market moving economic news out last week and what news there was came in a bit more negative than expected.

Headline News

Quicken Loans Home Price Perception Index (HPPI): The gap between homeowner and appraiser opinion narrowed in July by 0.24%. Homeowners are still overestimating the value of their homes by 1.69% nationally. The West was closest to par, overestimating value by 1.50%. Meanwhile, homeowners in the South and Midwest came in 1.65% and 1.81% above appraiser opinion. The Northeast was furthest off, overvaluing by 1.87%. In cities, Denver homes are most undervalued, coming in 3.10% below appraiser opinion. Philadelphia homes were overestimated by 3.40%. Residents in Miami underestimated value by just 0.02%.

Quicken Loans Home Value Index (HVI): Home values were up 1.43% in July and
have increased 6.24% on the year. Turning to individual regions, the Midwest was up 2.45% in July and 6.84% annually. It was followed by the South, up 1.57% and 6.26% on the year. The Northeast was next, up 1.13% in July and 3.85% yearly. The West had a slow month, gaining just 0.74% in value. However, it’s had the second-best annual gains at 6.55%.

MBA Mortgage Applications: Low rates have continued to have a positive impact on mortgage applications, as applications for purchase were up 3.0% and those for refinance were up 10.0%. This brought applications up 7.1% overall as the average rate on a 30-year fixed mortgage was down two basis points to 3.65%.

Jobless Claims: Initial claims were down 1,000 to come in at 266,000, still slightly higher than economists were expecting. The four-week average is up 3,500 to 262,750. Continuing claims were 14,000 higher at 2.155 million. The four-week average is unmoved at 2.143 million.

Producer Price Index (PPI): Inflation actually went down in July with prices losing 0.4%. They’ve fallen 0.2% on the year. It’s down 0.3% without food and energy effects. Prices excluding food and energy are still up 0.7% on the year. Negative effects in trade services also had a part to play. When trade services are excluded, prices are flat and up 0.8% on the year. Goods were down 0.4%, as were the price of finished goods at 0.5%. Prices of food, including declines in corn, were down. So were cars and light trucks.

Retail Sales: Retail sales were flat. It took a 1.1 % change in vehicle sales to even get to that point. Without cars and trucks, sales were down 0.3%. Gas prices were down 2.7%, as they were down just 0.1% after autos and gas were taken out. Supermarket sales and building materials sales were both down. Sporting goods and restaurant sales were weak. Sales at non-store retailers were up 1.3% with a gain in online sales.

Consumer Sentiment: Consumer sentiment in the first part of August was up 0.4 points to 90.4. Expectations have a 3.5 point gain to 80.3. On the other hand, current conditions were 2.9 points lower at 106.1. There’s confidence in the jobs outlook, but there’s been a downturn in consumer spending. The one-year inflation outlook is down 0.2% to 2.5%. Five-your expectations remain at 2.6%.

Mortgage News

Mortgage rates were slightly higher last week on the strength of a very high jobs report.

30-year fixed-rate mortgages (FRMs) averaged 3.45% with an average 0.5 point for the week ending August 11, 2016, up from last week when they averaged 3.43%. A year ago at this time, 30-year FRMs averaged 3.94%.

15-year FRMs this week averaged 2.76% 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 3.17%.

5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.74% this week with an average 0.5 point, up from last week when they averaged 2.73%. A year ago, the 5-year ARMs averaged 2.93%.

Stock Market

The markets closed mixed on Friday amid then less-than-stellar economic data.

The Dow Jones Industrial Average closed at 18,576.47 Friday, down 37.05 points. Despite this, it was up 0.18% on the week. The S&P 500 was down 1.74 points to finish the week at 2,184.05. It was up 0.05% on the week. The NASDAQ was up 4.50 points and 0.23% on the week after closing at 5,232.90.

The Week Ahead

Monday, August 15

Housing Market Index (10:00 a.m. ET) – The National Association of Home Builders produces a housing market index based on a survey in which 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.

Tuesday, August 16

Consumer Price Index (8:30 a.m. ET) – The consumer price index measures changes based on the price of a fixed basket of goods and services purchased by consumers.

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.

Retail Sales (8:30 a.m. ET) – Retail sales measure the total receipts at stores that sell 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.

Wednesday, August 17

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, August 18

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.

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