I hope everyone had a good weekend. I went and saw Avengers: Infinity War. I promise no spoilers here, but it was a wild ride!
In contrast to the box office blockbusters that typically start hitting movie theaters around this time of year, it was a relatively calm week in the markets. Let’s take a look at what happened.
Existing Home Sales
Existing home sales were up 1.1% on the month to a seasonally adjusted annualized rate of 5.60 million in the month of March, still 1.2% below where prices were a year ago. The median sales price was $250,400, which is up 5.8% on the year. Meanwhile, inventory failed to keep pace with sales as supplies fell from 3.8 months to 3.6 months.
Digging deeper into the data, properties were on the market for 30 days. Single-family home sales were up 0.6%, while condo and help sales were up 5.2%.
Finally, in terms of regional data, the Northeast was up 6.3% on the month, while the Midwest followed up, rising 5.7%. In the South, sales were down 0.4% and the West saw sales drop 3.1% in the existing home category.
S&P CoreLogic Case-Shiller HPI
Home prices were up 0.8% month to month in February on a seasonally adjusted basis in this index. Without seasonal adjustment, they were up 0.8% as well. Overall on the year, they’ve risen 6.8% across the 20-city index.
Seattle led the way in terms of early gains, up 12.7%, followed by Las Vegas at 11.6% and San Francisco at 10.1%.
FHFA House Price Index
House prices according to the Federal Housing Finance Agency were up 0.6% in February on a seasonally adjusted basis. Prices are up 7.2% on the year in this index.
There were monthly gains in all nine census divisions, with a 0.1% increase in the West North Central, all the way to 1.6% in the East South Central region. On the year, prices were up 4.8% in the mid-Atlantic, all the way to 10.3% in the Pacific.
New Home Sales
New home sales can end up 4.0% to a seasonally adjusted annualized rate of 694,000. It’s 8.8% above where it was at this time a year ago.
There are 5.2 months of supply on the market as there are 301,000 new homes available as of the end of March. The median sales price was $337,200, while the average stood at $369,900.
Consumer confidence rose 1.7 points to 128.7 in March. The present situation component was up 1.5 points to 159.6. Meanwhile, the expectations component was up nearly 2 points to 108.1.
On the current conditions side, business conditions are getting better, with more people saying conditions are good and fewer saying conditions are bad. While fewer consumers think jobs are plentiful, fewer consumers think jobs are hard to get. More consumers also think the environment for business will improve in the next six months with fewer consumers seeing declines.
Consumers generally believe more jobs will open up in the future, and 23.1% expect to see incomes improve, while just 6.8% see a decrease coming.
MBA Mortgage Applications
Mortgage applications were down 0.2% on the week. This can be blamed on decreasing refinance volume, which was down 0.3%. The purchase side of the index was unchanged. The average rate on a 30-year fixed mortgage increased seven basis points to 4.73%, the highest level since September 2013.
Most of the market is purchase at this point, with refinances making up just 37.6% of activity.
Durable Goods Orders
Durable goods orders were up 2.6% overall in the month of March. Taking transportation out, new orders were flat. Core capital goods orders were down 0.1%
Transportation orders were up 7.6% on the month and drove the big increase. Shipments of durable goods were also up 0.3% on the month. Meanwhile, unfilled orders increased 0.8%, which means more orders are coming in.
International Trade in Goods
The United States trade deficit in goods was down by a sizable $7.9 billion to $68.0 billion. Exports were up 2.5%, with imports falling 2.1% in March.
Initial claims were down 24,000 to 209,000. The four-week moving average was down 2,250 to 229,250.
On the continuing claims side, these were down 29,000 to 1.837 million. Meanwhile, the four-week moving average was down 9,750 to come in at about 1.850 million.
Gross Domestic Product (GDP)
The economy grew at a rate of 2.3% in the first quarter, with consumer spending being at its lowest growth rate in five years. However, this is likely a temporary problem blamed on a labor market that’s filling up.
Economists expect lower corporate and individual tax rates will increase consumer spending starting the second quarter. Spending for business equipment was only up 4.7% after being up double digits in recent reports. Residential construction did increase 12.8%.
Government spending was up 1.2% with trade adding 0.20% to overall GDP. Broadcast rates to carry the winter Olympics helped this. Inventories were also up.
Overall consumer sentiment was down 2.6% to 98.8 in the month of April. Most of the drop was in the current conditions index, which fell 5.2% to 114.9. Consumer expectations fell 0.5% to 88.4.
Consumers are making their opinions known on tax reform and trade tariffs. In general, people see the tax changes positively as they put more money in their pocket. Trading tariffs are viewed less positively.
Consumers expect prices to increase 2.7% in the next year and 2.5% in the next five years.
Mortgage rates are at their highest levels in over four years, according to Freddie Mac. If you’re looking to buy or refinance, now is the time to lock your rate.
The average rate on a 30-year fixed mortgage is 4.58% with 0.5 points in fees, up 11 basis points on the week. Last year at this time, the average rate was 4.03%.
Rates on 15-year fixed mortgages were up eight basis points to 4.02% with 0.4 points. Last year at this time, the rate was 3.27%.
Finally, the average rate on a 5-year treasury-indexed adjustable rate mortgage (ARM) was 3.74% with 0.3 points. It’s up seven basis points on the week and has risen from 3.12% at the same time last year.
Tech was down, and it caused the markets to be pretty much flat across the board.
The Dow Jones industrial average closed down 11.15 points to 24,311.19 and was down 0.62% on the week. Meanwhile, the S&P 500 finished at 2,669.91, up 2.97 points on the day and down just 0.01% on the week. Finally, the Nasdaq was down 0.37% on the week after closing at 7,119.80, up 1.12 points on the day.
The Week Ahead
Monday, April 30
Personal Income and Outlays (8:30 AM 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.
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.
Tuesday, May 1
ISM Manufacturing Index (10:00 a.m.) – 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.
Wednesday, May 2
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, May 3
International Trade (8:30 a.m. ET) – International trade is composed of merchandise (tangible goods) and services. It’s available by export, import and trade balance for six principal end-use commodity categories and for more than 100 principal Standard International Trade Classification system commodity groupings.
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.
Thursday, May 4
Employment Situation (8:30 a.m. ET) – The employment situation report measures unemployment in the labor force as well as the sentiments of workers about the job market.
There are lots of important economic reports coming out next week, including manufacturing and jobs.
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