Market UpdateHeadline News

Pending Home Sales Index: Pending home sales were up 0.2% in October, bringing the index to 107.7. The index is up 3.9% year on year, but things remained relatively flat for the month. The National Association of Realtors, which sponsors the index, sees the flatness as a result of low supply in the market and also thinks prices may be going up too fast in some markets. Turning to regional data, the Northeast is up 4.5% for the month and 6.8% for the year, followed by the West at 1.7% in October and 10.4% annually. Meanwhile, the Midwest is down 1.0% for a 3.3% year on year gain. The South is actually down 0.3% on the year after being down 1.7% in October.

ISM Manufacturing Index: Manufacturing is in contraction, falling 1.5 points in November to 48.6. It’s the lowest reading since June 2009. New orders were down 4.0 points to 48.9. Backlog orders were at 43.0. Production was down almost four points to 49.2. Employment did get better, but it’s still a little weak at 51.3. Only five of 18 measured industries reported growth. Among those growing was transportation. However, machinery, fabricated metals and primary metals showed weakness.

MBA Mortgage Applications: Mortgage applications were down 0.2% last week. Purchases were up 8.0%, but refinances fell 6.0%. The average rate on a 30-year fixed mortgage was down two basis points to 4.12%.

Jobless Claims: Initial claims were up 9,000 last week to 269,000. The four-week average is down 1,750 to 269,250. Continuing claims were up 6,000, coming in at 2.161 million. The four-week average is down 2,000 to 2.167 million.

Employment Situation: In a good sign for the economy, 211,000 jobs were added to nonfarm payrolls in November. The unemployment rate held steady at 5.0%. Private employers added 197,000 jobs, while the government kicked in 14,000 new jobs. There were 46,000 construction jobs added, and trade and transportation kicked in 49,000 jobs. Gearing up for the holidays, 31,000 jobs were added in retail. The work force participation rate ticked up a tenth to 62.5% wages were up 0.2% and the average work week went down by six minutes to 34.5 hours.

International Trade: The trade deficit widened by 1.4 billion to $43.9 billion in October. Exports fell 1.4% while imports were down 0.6%. The good news is there was a 0.7% rise in exports of services. Oil prices remain very low, with crude oil prices averaging $40.12 per barrel.

Mortgage News

Rates were mostly down this week.

30-year fixed-rate mortgages (FRMs) averaged 3.93% with an average 0.6 point for the week ending December 3, 2015, down from last week when they averaged 3.95%. A year ago at this time, 30-year FRMs averaged 3.89%.

15-year FRMs this week averaged 3.16% with an average 0.5 point, down from last week when they averaged 3.18%. A year ago at this time, 15-year FRMs averaged 3.10%.

5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.99% this week with an average 0.5 point, down from last week when they averaged 3.01 %. A year ago, 5-year ARMs averaged 2.94%.

1-year Treasury-indexed ARMs averaged 2.61% this week with an average 0.3 point, up from 2.59% last week. At this time last year, 1-year ARMs averaged 2.41%.

Stock Market

  1. S. stocks gained 2% on Friday as the markets now feel more certain that the Fed will raise short-term interest rates on December 16.

The Dow Jones Industrial Average was up 369.96 points Friday to close at 17,847.63, a weekly gain of 0.28%. The S&P 500 was up 42.07 points to close the week at 2,091.69, gaining 0.08% since last Friday’s close. Meanwhile, the NASDAQ was up 104.74 points at 5,142.27. This was a week-over-week gain of 0.29%.

The Week Ahead

Tuesday, December 8

Quicken Loans HPPI/HVI (10:00 a.m. ET) – Quicken Loans, the second largest retail mortgage lender in the U.S., releases a monthly report on home values, as well as the difference between homeowner perception of value and appraiser opinion of value.

Wednesday, December 9

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, December 10

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.

Producer Price Index (PPI) (8:30 a.m. ET) – The Producer Price Index measures the average change over time in the prices received by domestic producers of goods and services.

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

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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