Housing Market Index: Future sales were a component of particular strength in this month’s housing market index, which rose one point to 61. Future sales are sitting at 70. Current sales came in at 66. Traffic of prospective buyers is still in contraction, but it saw a two-point gain to 45. The South and West are tied at the top of the rankings with 63. The Midwest is five points back at 58. Meanwhile, the Northeast is still in contraction at 46.
Housing Starts: The headline here is that building permits fell 16% in July to a seasonally adjusted annual rate of 1.119 million. This partially reflects a change in real estate law in New York City that caused more applications to build in June than July. Although all four regions were down, the Northeast slid further. Multi-family permits were down 32%. Meanwhile, single-family building permits had a much-less-steep 1.9% drop. On the starts side, numbers came in 0.2% higher for an annual rate of 1.206 million. Meanwhile, 987,000 houses are on pace to be completed by the end of the year, up 2.4%.
MBA Mortgage Applications: Mortgage applications were up 3.6% this week on the strength of refinances as rates dropped. Refinances were up 7.0% and purchases were down 1.0%. The 30-year fixed mortgage fell two basis points to 4.11%.
Consumer Price Index (CPI): Inflation moved up just 0.1% in July as gas prices remained low. (If you’re dealing with the refinery issues in the Midwest right now, I feel for you.) Inflation is up 0.2% for the year. The numbers without food and energy match the headline number of 0.1%. Core inflation is up 1.8%. Gas is up 0.9% this month.
Jobless Claims: Initial claims were up 4,000 this week to 277,000. This is still a very low level. The four-week moving average was up 5,500 to 271,500, which is 7,000 below this time a month ago. Continuing claims were down 24,000 to come in at 2.254 million. The four-week average is 9,000 higher at 2.265 million.
Existing Home Sales: Existing home sales were up 2.0% in July to a seasonally adjusted annual rate of 5.59 million. This is up 10.3% on the year. Supply is down to 4.8 months from 4.9 months in June. The median price of an existing home is up 5.6% for the year to $234,000. Single-family homes are up 2.7% to an annual rate of 4.960 million. Condo sales were down 3.1% to a 630,000 annual rate. Sales are up 10% across all regions of the country.
Fixed rates fell again this week, remaining below 4%.
30-year fixed-rate mortgages (FRMs) averaged 3.93% with an average 0.6 point for the week ending August 20, 2015, down from last week when they averaged 3.94%. A year ago at this time, 30-year FRMs averaged 4.10%.
15-year FRMs this week averaged 3.15% with an average 0.6 point, down from last week when they averaged 3.17%. A year ago at this time, 15-year FRMs averaged 3.23%.
5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.94% this week with an average 0.5 point, up from last week when they averaged 2.93%. A year ago, 5-year ARMs averaged 2.95%.
1-year Treasury-indexed ARMs averaged 2.62% this week with an average 0.3 point, unchanged from last week. At this time last year, 1-year ARMs averaged 2.38%.
Some stock traders probably felt as though they were in the Hundred Acre Wood and the sky was falling on Friday. While I can confirm the clouds were at their normal height, all three stock markets fell over 3% on Friday, and the Dow and NASDAQ reached market correction territory.
For those who are wondering, market correction occurs when a market index has a decline of at least 10% in value due to being sold off. Although this correction is occurring across the whole market, the process can also happen with individual stocks and bonds.
Correction occurs when investors see that a particular stock or whole market keeps going up and up. Investors know this can’t go on forever, and they take their profit by selling off before the downturn. The more people that are selling, the more stock prices fall. The issues with the Chinese market appear to have a global impact at the moment.
The Dow Jones Industrial Average finished the day down 531.14 points Friday to close at 16,459.55. This was a weekly loss of 5.82%. The S&P 500 fell 64.84 points Friday, closing at 1,970.89, losing 5.77% on the week. The NASDAQ lost 6.78% last week after dropping 171.45 points Friday to close at 4,706.04.
The prospects early Monday weren’t looking much better as stocks continued to fall in the futures market.
The Week Ahead
Tuesday, August 25
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.
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.
Consumer Confidence (10:00 a.m. ET) – The Conference Board compiles a survey of consumer attitudes on the economy. The headline 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, August 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.
Durable Goods Orders (8:30 a.m. ET) – Durable goods orders are based on the new orders placed with domestic manufacturers for factory hard goods.
Thursday, August 27
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.
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.
Friday, August 28
Personal Income and Outlays (8:30 a.m.) – This measures all possible income sources as well as expenditures of the public.
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.
Visit the Quicken Loans Zing Blog for updated information on important economic releases that affect your wallet.
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