Market Update - Quicken Loans Zing Blog

This week we have some housing numbers, a production number, and a consumer inflation number.

Headline News

Industrial Production: Production was up 0.1%. This was slightly below September expectations. However, the manufacturing rate beat expectations, up 0.2%. Meanwhile, capacity utilization in the factories picked up slightly to 75.4%. August numbers were also revised slightly lower with both production and manufacturing coming in down 0.5%. Digging into the monthly numbers, motor vehicle production was up just 0.1%, but high-tech production rose 0.6%. Business equipment was down 0.2% after being down 0.5% in August. Mining was actually up 0.4% in a rarity. Offsetting this a bit is the fact that utility production is down 1.0% in this report.

Consumer Price Index (CPI): Inflation in the consumer sector came in as expected, up 0.3% in September. It’s up 1.5% on the year. Much of this change came from increased food and energy prices. When these are taken out, inflation rose 0.1% on the month and 2.2% annually. Energy was up 2.9%. The amount someone who owns a house would have to pay to rent a house of equal value – an important housing inflation metric known as owners’ equivalent rent – was up 0.4% in September. Areas that were on the downside included apparel, down 0.7% and communications, down 0.8%. Both new and used vehicles were also on the slide.

Housing Market Index: Builder confidence was down slightly in October, coming in at 63. However, this represents only a slight falling back from September’s six-point surge. Future sales anticipation is up one point at 72. Current sales have slowed a bit, down two points to a still strong 69. Traffic of buyers taking tours of new homes is still down a bit, falling 1.246. The West and South are still showing a lot of homebuilding strength, while the Northeast is fairly developed already and comes in at 43.

MBA Mortgage Applications: Applications were up 0.6% last week led by a 3.0% gain in purchase applications. Refinances were down 1.0% as the average rate on a 30-year fixed-rate mortgage was up five basis points to 3.73%.

Housing Starts: Starts were down 9.0% to 1.047 million annually in September. However, this is a bit deceptive as multifamily starts were down 38% to 264,000. The big single-family portion of this is actually up 8.1% to 783,000. Permits were up 0.4% higher in single-family to 739,000. Multifamily permits were also up 17% coming in at 486,000. In total, permits were up 6.3% to 1.225 million on a seasonally adjusted annual basis.

Jobless Claims: Initial claims were up 13,000 last week to 260,000. The four-week average is up 2,250 to 251,750. Continuing claims were up 7,000 to 2.057 million. One positive was that the four-week average was down 12,750 at 2.058 million.

Existing Home Sales: Existing home sales were up 3.2% at 5.470 million. This seasonally adjusted, annualized rate was up 0.6% on the year. Single-family sales were up 4.1% to 4.860 million while multifamily condo sales fell 3.2% to 610,000. Supply in the market went down a bit to 4.5 months from 4.6 months. Despite this, prices were down 2.4% to an average of $234,200. Sales were strongest in the West and Midwest where the market saw gains of 5.0% and 3.9% month-to-month.

Mortgage News

Mortgage rates hit a four-month high, but that’s deceptive because they’ve been extremely low. It’s still a great time to lock in your rate before the Federal Reserve makes a decision that could push them up.

30-year fixed-rate mortgages (FRMs) averaged 3.52% with an average 0.5 point for the week ending October 20, 2016, up from last week when they averaged 3.47%. A year ago at this time, 30-year FRMs averaged 3.79%.

15-year FRMs this week averaged 2.79% 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 2.98%.

5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.85% this week with an average 0.4 point, up from last week when they averaged 2.82%. A year ago, 5-year ARMs averaged 2.89%.

Stock Market

Earnings drove the market Friday as stocks were mostly flat while the dollar strengthened. Microsoft shares hit an all-time high while Time Warner stock was up 7.82% on talks of a buyout courtesy of AT&T.

The Dow Jones Industrial Average finished the week about where it was last Friday, down 16.64 points to 18,145.71, up just 0.04% for the five-day period. The S&P 500 didn’t move much, down just 0.18 points to 2,141.16. It’s also up 0.38% since last Friday’s market close. The NASDAQ was the lone index to finish the day in positive territory. It was up 15.57 points to end the week at 5,257.40. It was up 0.83% on the week.

The Week Ahead

Tuesday, October 25

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.

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

Consumer Confidence (10:00 a.m. ET) – The Conference Board compiles a survey of consumer attitudes on the economy. The Consumer Confidence Index is based on consumer perceptions of current business and employment conditions, as well as their expectations when considering business conditions, employment and income.

Wednesday, October 26

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 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.

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.

Thursday, October 27

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 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.

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.

Friday, October 28

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.

It’s a big week of economic news as we head into November. If that’s not enough to get you pumped up on a sleepy Monday afternoon, we have plenty of home, money and lifestyle content to keep you going throughout the week. Subscribe to the Zing Blog below.

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