Quicken Loans HPPI: For the eighth consecutive month, homeowners overvalued their homes, with their views coming in 2.00% higher than appraiser opinion in September. However, things may be trending in the right direction as this is down from 2.65% in August. Regionally, the gap is biggest in the Midwest, where homeowners overestimated their home value by 2.25%. The Northeast came in at 2.13% and the South was at 2.03%. The West was closest, coming in just 1.62% on the high side. Homeowners in San Jose, CA, continued to undervalue their properties quite a bit, coming in at 5.74% below appraiser opinion. On the other side of the spectrum, Philadelphia homeowner opinions came in 3.58% higher than those of appraisers. The San Diego market is in complete harmony, with owners and appraisers in total agreement.
Quicken Loans HVI: Home values are up 0.05% in September, reversing the losses of August. Values are up 3.11% since this time last year. The West and South saw gains of 0.72% and 0.29%, respectively. Meanwhile, values were down 0.46% in the Northeast and 0.14% in the Midwest.
MBA Mortgage Applications: Applications fell 27.6% after last week’s spike as bankers were trying to get ahead of the new regulations in the mortgage industry. Purchases were down 34.0% and refinances were down 23.0% despite rates staying at an extremely low 3.99%.
Retail Sales: Retail sales in September were up a very slight 0.1%. Low gas prices contributed to the pull down of those numbers as sales fell 3.2% in that sector. Automotive sales were up 1.7% and spending at restaurants was up 0.9%. Because restaurants are a strong indicator of discretionary spending, this is a good sign for the economy. Meanwhile, clothing sales were up 0.9% despite import prices being lower due to the strong dollar. Sales at grocery stores were down 0.3%. Meanwhile general merchandise was down 0.1% and health and personal care items were unchanged. Peak homebuilding season is starting to wind down, and sales of building materials and appliances were down 0.3% and 0.2%, respectively. Year on year, retail sales are up 4.9%.
Producer Price Index (PPI): It got cheaper to make things in September, with producer prices down 0.5%. These supply prices are now down 1.1% on the year, excluding energy and food, which were down 0.3% for the month. There was a 0.4% drop in the cost of services. Exports are also down 0.8%. Energy prices were down 5.9%, led by gasoline, which fell 16.6% in September for a year-on-year decline of 42.8%.
Consumer Price Index (CPI): Prices were down 0.2% in the month of September and are now flat on the year. Energy was down 4.7% and is down 18.4% on the year because of declines in gasoline prices. Without taking food and energy into account, prices are up 0.2% on the month and 1.9% on the year. Housing prices in this index are only up 2.1%. Meanwhile, clothing prices were down 0.3% because of lower import prices. Medical care was up 0.2%. Education and communication were up 0.3% on the month.
Jobless Claims: Initial claims fell 7,000 to 255,000, tying a 42-year low initially posted in July. The four-week average is down 2,250 to 265,000. Meanwhile, continuing claims are down 50,000, coming in at 2.216 million. The four-week average is down 22,000 to 2.201 million.
Industrial Production: Industrial production was down 0.2% in September. Manufacturing was down 0.1%, declining for the second straight month. On the plus side, industrial production was revised for the better in August: It was down 0.1%, when previously it had been estimated to be down 0.4%. Utilities and mining were the cause of the change. Motor vehicles also gained 0.2%. Utilities were up 1.3% as there was more need for air conditioning. Factories were utilizing 77.5% of their capacity.
Consumer Sentiment: Consumer sentiment was up 4.9 points to 92.1 in its first reading for October. It represents the best reading since mid-August. Current conditions is up more than 5.5 points to 106.7. This signals strength in the labor market and consumer spending. Expectations are up 4.5 points to 82.7. Inflation is being dragged lower by falling gas prices. The one year outlook is at 2.7%, while five-year expectations are at 2.6%.
Fixed rates were up this week, but they still remain extremely low.
30-year fixed-rate mortgages (FRMs) averaged 3.82% with an average 0.6 of a point for the week ending October 15, 2015, up from last week when they averaged 3.76%. A year ago at this time, 30-year FRMs averaged 3.97%.
15-year FRMs this week averaged 3.03% with an average 0.6 of a point, up from last week when they averaged 2.99%. A year ago at this time, 15-year FRMs averaged 3.18%.
5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.88% this week with an average 0.4 of a point, unchanged from last week. A year ago, 5-year ARMs averaged 2.92%.
1-year Treasury-indexed ARMs averaged 2.54% this week with an average 0.2 of a point, down from 2.55% last week. At this time last year, 1-year ARMs averaged 2.38%.
Mixed data amped up speculation that the Fed may push their rate hike later than their original timing for the end of this year. The markets reacted positively.
The Dow Jones industrial average was up 74.22 points on Friday to close at 17,215.97. It was a weekly gain of 0.77%. Meanwhile, the S&P 500 was up 9.25 points to finish at 2,033.11, a 0.90% weekly gain. The NASDAQ was up 16.59 points to close at 4,886.69. This index had the best performance of the week, gaining 1.16% from last Friday.
The Week Ahead
Monday, October 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 this organization are asked to rate the general economy and housing market conditions. The Housing Market 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, October 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, October 21
MBA Mortgage Applications (7:00 a.m. ET) – The mortgage applications index measures applications at mortgage lenders. This is a leading indicator for single-family home sales and housing construction.
Thursday, October 22
Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals who filed 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.
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 was 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.
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