Market Update - Quicken Loans Zing Blog

The week started slowly in terms of market-moving data, but it really built up to a climax, with three major economic reports hitting on Friday. Let’s get going.

Headline News

Quicken Loans Home Price Perception Index (HPPI): The difference of opinion between homeowners and appraisers widened slightly in June as appraisers rated homes 1.93% lower than homeowner estimates. This is up from 1.89% in May. Homeowners in the West are closest to par, with estimates 1.70% higher than those of appraisers. The South follows, with a 1.90% difference, and the Midwest comes in at 2.02%. Homeowners in the Northeast are 2.14% above appraisers. Denver has the most underrated homes. Appraisals came in 3.23% higher than homeowner estimates. Meanwhile, Philadelphians overvalue their homes by 3.40%. Sunny San Diego is nearly in price harmony, with the appraiser opinions coming in just 0.11% higher than homeowner estimates.

Quicken Loans Home Value Index (HVI): Home values were up 0.84% in June and have risen 4.47% nationwide since June of last year. The West was up 1.45% on the month and 5.84% annually. The Midwest was up 0.87% and 3.57% annually. The South followed, increasing 0.66% in June and 4.62% year to year. The Northeast was the straggler, up a modest 0.17% and just 2.07% for the year.

MBA Mortgage Applications: Mortgage applications were up 7.2% this week. An 11.0% surge in refinances was helped by a major drop in rates as fallout continued from the Brexit. The average rate for a 30-year fixed-rate mortgage fell six basis points to 3.60%. Purchase applications were flat.

Jobless Claims: Initial claims were unchanged at 254,000 this week. The four-week average is down 5,750 jobs, coming in at 259,000. This is 10,000 below where it was a month ago. Continuing claims were higher, up 32,000 to 2.149 million. The four-week average is down slightly at 2.143 million.

Producer Price Index (PPI): Inflation on the production side was up 0.5% in June and 0.3% on the year. Food and energy had a slight impact on this, with inflation being just 0.4% with those categories taken out. This number is at 1.3% on the year. If you further exclude trade services, inflation is up just 0.3% on the month, but 0.9% on the year. Digging further into the data, finished goods were up 0.8% in June as were the rates for finished services, 0.5%, and food prices at 0.9%.

Consumer Price Index (CPI): Inflation was up 0.2% for consumers. It was up 1.0% for the year. The metric came in slightly below expectations for a 0.3% gain. The 0.2% rise remained when food and energy were taken out and sits at 2.3% annually. Services were up 0.3%, while commodity prices only rose 0.1%. Hotels and motels saw huge gains as a result of summer demand, up 0.6%. Housing overall was up just 0.2%. Energy prices rose 1.3%, as gas prices have continued to rise. Transportation costs were up 0.6%. Medical care rose 0.4%. On the declining side, there was a 0.1% drop in the cost of food and a 0.4% decrease in clothing cost.

Retail Sales: Retail sales were up 0.6% in June and up 0.7% when cars were taken out of the equation. The same 0.7% number holds true when you also remove gas. Non-store retailers were up 1.1%. Department stores are up 0.9% as well, and sporting goods and hobby stores were up. There was also a 3.9% surge in building materials and gardening equipment, which is huge.

Industrial Production: A 0.6% gain in industrial production numbers beat all expectations for June. Manufacturing was also up 0.4% in the month, and capacity utilization increased 0.5% to 75.4. Mining even posted its second straight small gain of 0.2%, despite being down 10.5% for the year. Utility production is also up 2.4%, as it’s getting hot and people are running those air conditioners more often. Business equipment production was also up 0.7% it’s still down 0.6% on the year. Consumer goods are up 1.1% for the month and 1.6% on the year.

Consumer Sentiment: The Brexit may be impacting the morale of U.S. consumers. July consumer sentiment is down four points to 89.5 in its early reading, analysts say. Expectations were down 5.3 points to 77.1. This is one of the weaker readings of the last two years. Current conditions suffered a less jarring 2.1 point drop, and they remain strong. One-year inflation expectations were up 0.2% to 2.8%, while five-year expectations remain unchanged at 2.6%.

Mortgage Rates

Fixed rates were mixed within a very small window last week, while adjustable rates popped up a bit. If you’re looking to get a mortgage, now’s the time to lock in your rate. It looks is if the market might be coming back to its senses a bit post-Brexit.

Thirty-year fixed-rate mortgages (FRMs) averaged 3.42%, with an average 0.5 point for the week ending July 14, 2016, which is up from last week, when they averaged 3.41%. A year ago at this time, 30-year FRMs averaged 4.09%.

Fifteen-year FRMs this week averaged 2.72%, with an average 0.5 point, down from last week, when they averaged 2.74%. A year ago at this time, 15-year FRMs averaged 3.25%.

Five-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.76% this week, with an average 0.4 point, which is up from last week, when they averaged 2.68%. A year ago, 5-year ARMs averaged 2.96%.

Stock Market

The stock market appears to have found its footing again. It had a very strong week, despite losing some steam on Friday.

The Dow Jones Industrial Average was up 10.14 points, coming in at 18,516.55, gaining 2% for the week. The S&P 500 was down 2.01 points Friday, closing at 2,161.74. It’s still gained 1.5% since last Friday’s close. The NASDAQ saw the same weekly gain, despite losing 4.47 points to finish at 5,029.59.

The Week Ahead

Monday, July 18

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 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.

Tuesday, July 19

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, July 20

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, July 21

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 is 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.

Expect to see a lot of housing data next week. We’ll have it all. If economics isn’t your thing, check out our home, money and lifestyle content by subscribing to the Zing blog below. We’ve got plenty of awesomeness to keep you going throughout the week.

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