Market Update - Quicken Loans Zing Blog

This week we have a couple of key housing reports, an inflation report and a report on industrial production. Let’s jump right in.

Headline News

Housing Market Index: Home builder optimism was up one point this month to come in at 60. There were gains in both present sales and expectations for future sales. Traffic coming through new homes is still weak. This is being blamed on a lack of first-time home buyers passing through. Turning to regional data, the Northeast is in contraction in terms of new housing developments. The West leads the way in gains, followed by the South. The Midwest is showing more moderate increases.

Consumer Price Index (CPI): Prices were flat in July and are at 0.8% on the year. There was very little movement in the key metrics. Prices were still up only 0.1% when food and energy were removed. Inflation is up 2.2% on the year when these categories are taken out of the equation. Some areas did show an uptick, with the cost of medical care up 0.5% and 4.0% on the year. Housing costs were up 0.3% and 2.4% annually.

Housing Starts: Starts were up 2.1% to come in at 1.211 million on a seasonally adjusted annual basis. Single-family home starts were up 0.5% in July while multifamily starts saw a 5.0% leap. The report was mixed, however, as permits were down 1,000 to 1.152 million. Single-family permits were down 3.7%. Multifamily permits were up 6.3%.

Industrial Production: It was a particularly strong month for industrial production in July as it was up 0.7%. Manufacturing was up 0.5% as part of this and the capacity utilization of factories was up 0.5% to 75.9%. Strong vehicle production numbers helped. There was a 0.6% gain in both consumer goods and business goods despite weakness in business investment. High-tech manufacturing also had a good month. Utility production was also up 2.1%, and mining was actually up 0.7%. Despite the jump, mining is still down 10.2% on the year.

MBA Mortgage Applications: Despite the average rate and a 30-year fixed-rate mortgage being down one basis point to 3.64%, both purchase and refinance applications fell 4.0%. This led to a matching decline in overall applications last week.

Jobless Claims: Initial claims fell 4,000 last week to 262,000. This was a little mixed as the four-week average was up 2,500 to 265,250. Continuing claims were up 15,000 to 2.175 million, pushing the four-week average up 11,000 to 2.155 million.

Mortgage News

Fixed mortgage rates were a little lower last week. For the last month or so, there hasn’t been much market movement. Rates remain extremely low, but markets move fast and that could change quickly. If you’re in the market, it’s a good time to lock your rate.

30-year fixed-rate mortgages (FRMs) averaged 3.43% with an average 0.5 point for the week ending Aug.18, 2016, down from last week when they averaged 3.45%. A year ago at this time, 30-year FRMs averaged 3.93%.

15-year FRMs this week averaged 2.74% with an average 0.5 point, down from last week when they averaged 2.76%. A year ago at this time, 15-year FRMs averaged 3.15%.

5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.76% this week with an average 0.4 point, up from last week when they averaged 2.74%. A year ago, 5-year ARMs averaged 2.94%.

Stock Market

Utilities were down more than 1% on Friday and pulled the stock market down slightly with them as the Federal Reserve is starting to talk more seriously about the economy being strong enough to handle an increase in interest rates.

The Dow Jones Industrial Average closed at 18,552.57, down 45.13 points to finish the week. This was a weekly decline of 0.13%. The S&P 500 was down 3.15 points to 2,183.87, falling just 0.01% for the week. The NASDAQ posted its eighth straight week of gains for the first time since 2010. It was up 0.10% for the week after being down just 1.77 points on Friday to close out the week at 5,238.38.

The Week Ahead

Tuesday, Aug. 23

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.

Wednesday, Aug. 24

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.

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.

Thursday, Aug. 25

Durable Goods Orders (8:30 a.m. ET) – Durable Goods Orders are based on new orders placed with domestic manufacturers for factory hard goods.

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.

Friday, Aug. 26

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.

International Trade in Goods (8:30 a.m. ET) – The Census Bureau’s 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.

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.

It’s going to be a fairly busy week with a lot of important numbers coming out. That GDP number has the potential to move markets and rates. If economics and mortgages aren’t your thing, we have plenty of home, money and lifestyle content for you to feast your eyes on throughout the week. Subscribe to the Zing Blog below.

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