It was a pretty good weekend. My alma mater drummed our crosstown rival in basketball in front of a record-setting crowd on Saturday. They also scored enough points to trigger the free pizza promotion, so I have that to look forward to tonight. It’s the little things that get you through Monday.

There were some big economic reports out last week and people poured over the minutes from last month’s Federal Reserve Open Market Committee (FOMC) meeting. Let’s find out if the economy performed as well as my team.

Headline News

Housing Market Index

Lower mortgage rates appeared to have a definite effect on February home builder sentiment. This key index was up four points from January to come in at 62 overall.

Current sales of homes were up three points to 67. Meanwhile, sales expectations over the next six months rose five points to 68. Traffic of prospective buyers walking through homes is still behind quite a bit at 48. However, this is up four points from January.

Home builders continue to have the most confidence in the Western market, where sentiment comes in at 67. The South is close behind at 66 followed by the Midwest at 55. Fewer new homes are being built in the Northeast which comes in at 45.

MBA Mortgage Applications

Low mortgage rates continue to be kind to applications as the average rate on a 30-year conforming fixed mortgage was up just one basis point to 4.66% last week, according to the Mortgage Bankers Association.

Consumers took advantage of lower rates last week with refinance applications up 6.4% and purchase applications rising 1.7%. Overall application volume rose 3.6%.

Durable Goods Orders

After a delay caused by the government shutdown, these figures represent the durable goods orders for December. Although new orders were up 1.2% overall, it wasn’t all whipped cream and cherries.

Orders for aircraft were up 50%, and vehicle orders rose 2.1% on the month of December. This really helped the headline number, and when transportation was taken out, orders were only up 0.1% on the month.

Of particular concern was a 0.7% downturn in orders of core capital goods. Orders in machinery and computers as well as communications equipment were all down, which hurt the category. On the plus side, shipments of goods were up 0.5% on the month, which helps make up for a 0.2% drop in core capital goods shipments for December.

There’s also a decline in unfilled orders. While this sounds like a good thing, it also means there’s less demand. However, analysts note that they aren’t concerned about unwanted inventories yet.

Jobless Claims

The labor market appears to have shaken off the effects of the government shutdown. Initial claims for unemployment were down 23,000 last week to come in at 216,000. Higher numbers in previous weeks are still affecting the 4-week average of initial claims as these were up 4,000 to come in at 235,750.

Meanwhile, on the continuing claims side, these were down 55,000 to 1.725 million, while the 4-week average was up 2,750 to come in at about 1.755 million.

Existing Home Sales

Sales of existing homes underperformed last year, and the trend seemed to continue into the first month of 2019. Existing home sales were down 1.2% in January to a seasonally-adjusted annualized rate of 4.94 million. Sales are down 8.5% from the same time a year ago.

Single-family home sales were down 1.8% to 4.37 million annually while condo sales couldn’t make up the ground, despite being up 3.6% at 570,000. Moreover, sellers are starting to lower their prices in hopes of making a sale as these are down 2.8% to $247,500.

In one piece of good news, supply was up 3.9% to 1.59 million. At the current sales pace, there are 3.9 months’ worth of inventory, as opposed to 3.7 months in December.

Breaking things down on a regional basis, sales were down 2.9% in the West and have fallen 13.8% on the year. Meanwhile, the South was down 1.0% on the month and has dropped 8.4% annually.

Mortgage Rates

Nothing unexpected came out of the minutes from the Fed meeting released last week, and the bond market reacted very positively, bringing mortgage rates down again. Whether you’re in the market to buy or refinance, it’s a good time to lock your rate.

The average rate on a 30-year-fixed mortgage with 0.5 points paid in fees was down a couple of basis points to 4.35% last week. This is down from 4.4% a year ago.

Turning to shorter terms, the average rate on a 15-year fixed mortgage with 0.4 points paid fell three basis points to 3.78%. Last year at this time, the rate was 3.85%.

Finally, the average rate on a 5-year treasury-indexed, hybrid adjustable rate mortgage (ARM) with 0.3 points fell four basis points to 3.84%. This has risen from 3.65% at this time in 2018.

Stock Market

The stock market was on the upswing Friday with investors increasingly hopeful of a trade deal in the near future with China. Just this morning, the Dow Jones Industrial Average was up over 150 points in early trading as President Trump has pushed back the March 1 deadline for the further imposition of U.S. tariffs on Chinese imports.

Turning back to last week, the Dow went above 26,000 points for the first time since November. Both the Dow and Nasdaq have posted 9-week winning streaks.

The Dow was up 181.18 points on Friday to finish at 26,031.81, up 0.57% on the week. Meanwhile, the S&P 500 gained 0.62% on the week to close at 2,792.67, up 17.79 points on the day. Finally, the Nasdaq rose 67.84 points on Friday to finish at 7,527.55, up 0.74% on the week.

The Week Ahead

Tuesday, February 26

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. These numbers will cover December as they were delayed by the government shutdown.

S&P Case-Shiller HPI (9:00 a.m. ET) – The S&P Case-Shiller home price index tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the U.S.

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.

Consumer Confidence (10:00 a.m. ET) – The Conference Board surveys consumers on their feelings about current and future business and employment conditions as well as their future spending plans.

Wednesday, February 27

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 in Goods (8:30 a.m. ET) – The 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.

Pending Home Sales Index (10:00 a.m. ET) – The National Association of REALTORS® developed the Pending Home Sales Index as a leading indicator of housing activity. Specifically, it’s a leading indicator of existing home sales, not new home sales.

Thursday, February 28

GDP (8:30 a.m. ET) – This release measures the monetary value of all final goods and services produced within the U.S. This report is released on a quarterly basis.

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 4-week moving average of new claims smooths out weekly volatility.

Friday, March 1

Personal Income and Outlays (8:30 a.m. ET) – This is a measurement of how much consumers are taking in as well as their corresponding spending. This also gives insight into how much is being saved. The reports for both December and January will be released on Friday.

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.

ISM Manufacturing Index (10:00 a.m. ET) – This index measures the general direction of manufacturing within the U.S. The qualitative survey of purchasing managers looks at production, new orders, order backlogs, inventories and supplier deliveries, among other factors.

There’s quite a bit going on next week as we continue to play catch-up from the government shutdown. We’ll be sure to have it all covered in next week’s Market Update.

If the market reports are doing a terrible job of keeping you awake this afternoon, not to worry. We’ve got plenty of home, money and lifestyle content you can use as a pick me up if you subscribe to the Zing Blog below. If you’ve ever been watching home shows on TV and wondered what you can do to spruce up your own space, check out our post on how to style your home like an interior designer. Have a great week!

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