Market Update

I hope everyone had a great Mother’s Day! We didn’t do much around here. It was nice to have some family over for dinner, but other than that, we just kind of hung out.

The early part of last week was as slow as my weekend was, at least in terms of economic data, but we did get some housing data and inflation numbers last week. Let’s jump in and see what that looked like.

Headline News

Quicken Loans Home Price Perception Index (HPPI)

Homeowner estimates of home value came in just 0.33% above appraiser opinions. This is the closest homeowners and appraisers have been in more than three years and represents a 0.03% narrowing of the gap from March.

In the West, homeowners overestimated values by just 0.08%, followed by the South at 0.38%. The Northeast and Midwest came in at 0.41% and 0.47% high in their estimates, respectively.

At the metropolitan level, homeowners in the San Jose, California area have a hot housing market, with appraisals coming in 2.75% higher than homeowner estimates. Chicago is on the other end of the scale, overestimating home values by 1.68%. Atlanta homeowners are closest to par, undervaluing properties by 0.07%. It’s also a positive sign that only five of the 27 metro areas surveyed have appraisal values that aren’t keeping up with homeowner estimates.

Quicken Loans Home Value Index (HVI)

Based on appraisals, home values were down 0.05%, but they’ve still risen 6.47% annually.

In terms of regional numbers, the Northeast is down 1.24% in April, but up 2.22% on the year. This was the only region that saw a drop in April. Values in the West rose 0.53% and are up 9.44% on the year, while the South was up 0.32% in April and 5.86% since last year. The Midwest was out front, up 0.93% monthly and 5.81% on an annual basis.

MBA Mortgage Applications

Mortgage applications were down 0.4%. Refinance applications were down 1.0%, and these are now at their lowest point since October 2008. Meanwhile, purchase applications were up 0.4%. Purchase applications made up 65.7% of overall activity.

The average rate on a conforming 30-year fixed mortgage was down two basis points to 4.78%.

Producer Price Index (PPI)

Prices for producers were up just 0.1% in the latest report for April. Costs for those making goods and services available had been rising quite a bit in the first quarter.

It’s likely that the slowdown is temporary as businesses are reporting paying more for raw materials, including oil as the Trump administration has pulled out of a nuclear agreement with Iran.

Turning back to the April data, prices were up 0.1% even when food, energy and trade services were excluded from the measurement. Core capital goods did rise 0.3% in April. Service prices were up 0.1%.

Looking at individual areas that factor into the index, hotel accommodation prices were down 3.2% and healthcare costs were down 0.2% on the producer’s side. Goods prices were unchanged while wholesale food was down 1.1%. Finally, gas prices were down 0.4%.

Consumer Price Index (CPI)

On the consumer side, prices were up 0.2%, although they rose less than the expected 0.3%. As of April, prices were up 2.1% overall on the year. Taking out food and energy, it’s been a 1.9% annual climb.

Gas prices came back up in April, going up 3.0% after being down nearly 5% in March. Further increases are expected due to the Iran nuclear deal decision.

Other gainers included food cost, which was up 0.3%, and owners’ equivalent rent on their primary residence, which was up 0.3%. Finally, the cost of apparel rose 0.3% as well.

Falling was the cost of medical care, down 0.1%. Used vehicle prices were also down 1.6%, which represents the largest drop since March 2009. Recreation costs were down 0.4%.

Jobless Claims

Initial jobless claims were unmoved for the week at 211,000. The four-week moving average was down 5,500 to come in at 216,000, the lowest level for the average since mid-December 1969. Hurricane-related claims processing issues in Puerto Rico and the Virgin Islands are still affecting the accuracy of these reports a bit.

On the continuing claims side, these rose 30,000 to come in at 1.790 million. However, the four-week moving average was down 22,000 to come in at about 1.813 million.

Consumer Sentiment

Consumer sentiment was slightly higher than expected in the preliminary May readings, up to 98.8. Fewer consumers expect the unemployment rate to continue to fall, thinking the economy is at full employment. They also expect future short-term interest rate hikes.

The number for mid-April was also revised upward one point to come in at 98.8.

Mortgage Rates

Mortgage rates have been moving within a narrow range lately and last week was no different. With the Federal Reserve looking to potentially raise short-term interest rates at their next meeting in June, this lull in movement could present an opportunity.

If you see a rate you like, it makes sense to go ahead and lock it.

The average rate on a 30-year-fixed mortgage was flat for the week at 4.55% for 0.5 points. This is up from 4.05% at the same time a year ago.

Meanwhile, the average rate on a shorter-term 15-year fixed mortgage was 4.01% with 0.4 fees in points, down two basis points in the week. Last year at this time, the rate was 3.29%.

Finally, the average rate on a 5-year treasury-indexed hybrid adjustable rate mortgage (ARM) with 0.3 points was up eight basis points on the week to 3.77%, rising from 3.14% at this time last year.

Stock Market

The Dow Jones industrial average posted its biggest weekly gain since March. Energy stocks were way up, and that really helped, along with contributions from telecommunications and health care.

The Dow was up 2.34% on the week and 91.64 points on the day to close it 24,831.17. Meanwhile, the S&P 500 rose 4.65 points on the day to close at 2,727.72. It was up 2.41% on a weekly basis. Finally, the Nasdaq was down just 2.09 points Friday to close at 7,402.88, up 2.68% week to week.

The Week Ahead

Tuesday, May 15

Retail Sales (8:30 a.m. ET) – Retail sales measure total receipts from stores selling merchandise and related services to final consumers. Sales are measured by retail and food service stores. Data is collected from the Monthly Retail Trade Survey conducted by the U.S. Census Bureau.

Housing Market Index (10:00 a.m. ET) – The National Association of Home Builders produces a housing market index based on a survey where respondents from the organization are asked to rate the general economy and housing market conditions. The 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.

Wednesday, May 16

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.

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.

Industrial Production (9:15 a.m. ET) – The Federal Reserve’s monthly index of industrial production – and the related capacity indexes and capacity utilization rates – covers manufacturing, mining, and electric and gas utilities.

Thursday, May 17

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.

All the data that comes out is concentrated toward the middle of the week. We’ll have it all covered for your next week’s Market Update!

Mortgage rates and economic data probably don’t get you too excited for Monday. The good news is we’ve got plenty more home, money and lifestyle content to share with you if you subscribe to the Zing Blog below.

This Thursday is World Baking Day. In honor of that and the weather finally feeling more spring-like, here’s an article on making cupcakes that look like flowers. Have a great week!

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