Housing Market Index: This index measuring homebuilder confidence was up three points this month to come in at 64. Current sales, the most important component of the index, was up three points to 70. Expectations for future sales are up even higher, gaining seven points to come in at 75. Homebuilders are still disappointed by the lack of prospective buyers coming into new homes. The traffic component remains unchanged at 47. Turning briefly to regional data, the West is up 11 points to 76. The South, where the most new homes are being built, is up one point to 67. The Midwest is at 59, while builders still don’t have much confidence in the Northeast, which sits at 47.
Housing Starts: The number of new houses started in September jumped 6.5% compared to August, coming in at a seasonally adjusted annual rate of 1.206 million. The real strength here comes from the multi-family starts component, which is up 18.3% to 466,000. Single-family starts were up only 0.3% to 740,000. The strength in starts is offset by a downturn in permits in September. Permits are down 5.0% to 1.103 million, well below estimates. Although multi-family starts were especially strong, multi-family permits are fairly low, down 12.1% to 406,000 in the lowest level since March. Single-family permits are pretty flat, down 0.3% to come in at 697,000. Regionally, starts were up 25.4% in the West for a 27.5% annual gain. Starts are also strong in the South.
MBA Mortgage Applications: Purchases were up 16.0% and the refinance index was up 9.0%. Applications were up 11.8% overall as the average rate on a 30-year fixed mortgage was down four basis points to 3.95%.
Jobless Claims: Initial claims are up 3,000 this week to 259,000. The good news is the four-week average fell 2,000 to 263,250. This is 9,250 below this time a month ago. Continuing claims rose 6,000 to 2.170 million. In a big positive, the four-week average is down 18,000, coming in at 2.185 million. Overall, jobless claims are at very low levels.
FHFA House Price Index: Home prices were up 0.3% in August and have gained 5.5% on the year. Gains are slowing down a bit. That being said, all regions are showing higher home prices year on year. On a monthly basis, the low reading was a 0.4% decline in the East North Central region while the East South Central region came in at the high end, gaining 0.8% from July.
Existing Home Sales: Sales in September were up 4.7% to an annualized rate of 5.55 million. Year on year, sales are up 8.8%. Much of the growth was in the single-family component. The growth rate in condos and multi-family units was unchanged at 620,000. The downside for homeowners is that prices are down 2.9% this month for a median price of $221,900. Supply tightened up, down to 4.8 months from 5.1 months in August. Regionally, the Northeast shared a big gain with sales growing 8.6% for the month.
Things were mixed this week, with fixed rates lower and adjustable rates higher.
30-year fixed-rate mortgages (FRMs) averaged 3.79% with an average 0.6 point for the week ending October 22, 2015, down from last week when they averaged 3.82%. A year ago at this time, 30-year FRMs averaged 3.92%.
15-year FRMs this week averaged 2.98% with an average 0.5 point, down from last week when they averaged 3.03%. A year ago at this time, 15-year FRMs averaged 3.08%.
5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.89% this week with an average 0.4 point, up from last week when they averaged 2.88%. A year ago, the 5-year ARMs averaged 2.91%.
1-year Treasury-indexed ARMs averaged 2.62% this week with an average 0.2 point, up from 2.54% last week. At this time last year, 1-year ARMs averaged 2.41%.
Amazon, Microsoft and Google (in its first earnings report under the parent company Alphabet) all reported better-than-expected earnings. That and a rate cut by the Chinese Central Bank to stimulate the world’s biggest economy sent stocks soaring on Friday. I guess the price of tea in China does affect stocks in the U.S.
The Dow Jones Industrial Average was up 157.54 points on Friday to close at 17,646.70, up 2.50% for the week. The S&P 500 was up 2.07% after finishing Friday at 2,075.15, up 22.64 points. The NASDAQ was up 111.81 points on Friday, crossing the 5,000 barrier to finish 2.27% better than last Friday at 5,031.86.
The Week Ahead
Monday, October 26
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.
Tuesday, October 27
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.
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 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, October 28
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.
Thursday, October 29
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, October 30
Personal Income and Outlays (8:30 a.m. ET) – 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.
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