There were a few economic reports that came out last week, but none seem to have had as much of an effect as developments in politics and the comments of a Federal Reserve member.
The stock market rebounded a bit Friday, but it had a rough week. More money poured into bonds as there continues to be some concern that the search for a new FBI director will put President Donald Trump’s plans for health care legislation and tax reform on the back burner.
On the flip side of the coin, in the bond market, some gains from earlier in the week were given back on Thursday when Loretta Mester, Cleveland Federal Reserve president, said that recent weaker economic data – including GDP numbers – shouldn’t deter the Fed from gradually raising interest rates.
Housing Market Index: Gains in new home sales have helped lift home builder sentiment, which is up two points for May to come in at 70. Current sales are up two points to 76. Meanwhile, future expectations for sales over the next six months are up four points to 79. Traffic in new homes continues to increase, coming in at 51. The West remains the strongest housing region with an overall score of 80 over the last three months. The Northeast region is just breaking even in terms of home builder sentiment at 50.
Housing Starts: The increased home builder confidence didn’t actually lead to increased housing starts, at least not in April. Starts were down 2.6% to 1.172 million. The good news is single-family starts were up 0.4% to 835,000. The decline comes from multifamily starts, which were down 9.2% to 337,000. There were also downward revisions totaling 27,000 in the previous two months. Permits for single-family homes were down 4.5% to 789,000. On the multifamily side, permits were up 1.4% to 440,000.
Industrial Production: Both manufacturing and overall industrial production were up 1.0% in April. Companies also utilized more factory capacity as this was up 0.6% to 76.7%. Motor vehicle production was up 5.0% for the month. Business equipment manufacturing was also up 1.2%. Consumer goods were up 1.5%. The mining industry also saw a 1.2% uptick and utilities were up 0.7% as the weather started to get warmer. Production in high-tech industries fell, as did construction supplies.
MBA Mortgage Applications: Mortgage applications were down 3.0%. Refinances were down 6.0%. Overall applications were down 4.1%, while the average rate on a 30-year fixed mortgage was unchanged at 4.23%.
Jobless Claims: Initial claims fell by 4,000 last week to 232,000, beating expectations for a slight rise. The four-week average was down 2,750 to 240,750. On the continuing claims side, these are down 22,000 to 1.898 million. It’s the lowest this number has been in 29 years. The four-week average is at a 43-year low after falling 20,000 to 1.946 million.
Mortgage rates fell last week. It remains a great time to take advantage of low rates and lock one you like.
This week, 30-year fixed-rate mortgages (FRMs) averaged 4.02% with an average 0.5 point for the week ending May 18, 2017, down from last week when they averaged 4.05%. A year ago at this time, 30-year FRMs averaged 3.58%.
On the shorter side, 15-year FRMs this week averaged 3.27% with an average 0.5 point, down from last week when they averaged 3.29%. A year ago at this time, 15-year FRMs averaged 2.81%.
Finally, 5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 3.13% this week with an average 0.5 point, down from last week when they averaged 3.14%. A year ago at this time, 5-year ARMs averaged 2.80%.
News out of Washington D.C. calmed a little Friday and the markets took the opportunity to claw back some of the losses from earlier in the week.
The Dow Jones Industrial Average was up 141.82 points Friday to finish at 20,804.84. This was down 0.44% for the week. The S&P 500 was down 0.38% for the week, finishing at 2,381.73, up 16.01 points for the day. Finally, the Nasdaq closed at 6,083.70, up 28.57 points on the day but down 0.61% for the week.
The Week Ahead
Tuesday, May 23
New Home Sales (10:00 a.m. ET) – This measures the number of newly constructed homes with a committed sale during the month.
Wednesday, May 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, May 25
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.
Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to report 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.
Friday, May 26
Durable Goods Orders (8:30 a.m. ET) – These are based on new orders placed with domestic manufacturers for factory hard goods.
Gross Domestic Product (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.
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.
There’s a lot crammed into this week. I think economists are trying to make up for the fact that they get a three-day weekend. If all of this economics and mortgage excitement doesn’t get the blood pumping on a Monday afternoon, check out our other home, money and lifestyle content by subscribing to the Zing Blog below. If you’re looking for a quick Memorial Day getaway, check out our article on hot spots for all sorts of interests.
On that note, Quicken Loans and the stock indexes will be closed Monday, May 27, in observance of Memorial Day. We hope everyone enjoys their barbecues and takes a moment to think of those who gave their lives while serving the United States. We’ll be recharged and ready to go when Market Update comes back on Tuesday. Have a good week everyone!
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