Market Update - Quicken Loans Zing Blog

Last week, we saw some inflation and retail sales data released along with consumer sentiment. Some of our own home value data led the way Tuesday. Let’s dive right in.

Headline News

Quicken Loans Home Price Perception Index (HPPI): Homeowners overvalued their homes by 1.56% in August compared to appraiser opinions. Still, this is 0.13% closer than it was in August. Despite this trend, appraisals were higher than homeowner expectations in more than half of the cities surveyed.

Quicken Loans Home Value Index (HVI): Home values were up 1.73% in August, a sizable jump. They’re up 8.13% on the year. The West had the largest monthly increase at 1.88%, while the South was up just 0.03%.

MBA Mortgage Applications: Purchases were up 9.0% and refinance applications rose 2.0% last week, pulling overall applications up 4.2%. The average mortgage rate for a 30-year mortgage was down one basis point to 3.67%.

Jobless Claims: Initial unemployment claims were up 1,000 to come in at 216,000 last week. The four-week moving average was at 260,750. Continuing claims were also up 1,000, coming in at 2.143 million. The four-week moving average was up 8,000 to 2.147 million.

Producer Price Index (PPI): Inflation was flat in August and it’s flat on the year. Lower food and energy prices are pulling this down just slightly. When these categories are removed, inflation is up 0.1% on the month and 1.0% on the year. When you further take out trade services, inflation is at 0.3% on the month and 1.2% on the year. Final prices for services were up 0.1%, trade services were down 0.6% and final goods were also down 0.4%.

Retail Sales: Retail sales were down 0.3% in August. This was a fairly big miss given that expectations were that numbers would be flat. Much of the weakness had to do with a dip in car sales of 0.9%. When these were taken out, sales were only down 0.1%. Further taking out gas also matched the 0.1% drop. There was a 1.4% drop in sales of building materials and garden equipment. Non-store retailers also saw sales fall 0.3%.

Industrial Production: Production was down 0.4% in August as manufactured motor vehicle production continues to be strong despite a dip in sales, as it was up 0.5%. This was balanced by an equal drop in high-tech production. One encouraging sign was that mining was up 1.0% in this report despite a 1.4% drop in utility production. Capacity utilization did fall 0.4% to 75.5% in August.

Consumer Price Index (CPI): The CPI beat expectations, posting a slight 0.2% increase in August. It’s up 1.1% on the year. Taking out food and energy, prices are up 0.3% and 2.3% on the year, respectively. Prices for food and energy were unchanged on the month. There were increases in natural gas and electricity prices that were offset by drops in gas and fuel oil. The cost for shelter, medical care, auto insurance, clothing, communication and tobacco were all up. There were decreases in the prices of used vehicles, household operations, recreation and airfare.

Consumer Sentiment: The mid-September reading for consumer sentiment was 89.8, unchanged from the end of August. A decline in current conditions from 107.0 to 103.5 was offset by an increase in expectations ranging from 78.7 – 81.1.

Mortgage News

Mortgage rates were up across the board last week. It still remains an excellent time to lock in your rate, as no one ever knows for sure what’s going to happen when the Federal Reserve meets this week and makes a decision on short-term interest rates.

30-year fixed-rate mortgages (FRMs) averaged 3.50% with an average 0.5 point for the week ending September 15, 2016, up from last week when they averaged 3.44%. A year ago at this time, 30-year FRMs averaged 3.91%.

15-year FRMs this week averaged 2.77% with an average 0.5 point, up from last week when they averaged 2.76%. A year ago at this time, 15-year FRMs averaged 3.11%.

5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.82% this week with an average 0.4 point, up from last week when they averaged 2.81%. A year ago, 5-year ARMs averaged 2.92%.

Stock Market

The Federal Reserve meeting is this coming week and the stock market didn’t appear to know how to read the tea leaves. It’s a wait-and-see game at this point. The major indexes posted losses on Friday, but were up for the week.

The Dow Jones Industrial Average was up 0.21% on the week following a loss of 88.68 points Friday to close at 18,123.80. The S&P 500 was down 8.10 points to finish the day at 2,139.16. This amounted to a weekly gain of 0.53%. Finally, the NASDAQ finished at 5,244.57, down 5.12 points, but with a big weekly gain of 2.31%.

The Week Ahead

Monday, September 19

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, September 20

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.

Wednesday, September 21

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 22

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.

Housing rules the day this week. We’ll also be keeping an eye on mortgage rates and the stock market following the Federal Reserve decision on short-term interest rates this Wednesday. If economics isn’t enough to break out of your morning doldrums, we’ve got plenty of home, money and lifestyle content to get you rocking. Just subscribe to the Zing Blog below.

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