I hope everyone enjoyed the long weekend and was able to take some time to pause and reflect. I saw a lot of family, so that was nice. Another plus is that it’s Tuesday, so one day closer to the weekend.
I usually try to have some economic tie-in to that first paragraph, but I’ve got nothing. Let’s just jump into the headlines and get this week started right.
Existing Home Sales
Existing home sales came in down 0.4% on the month of April and have fallen 4.4% on the year after coming in at 5.19 million on a seasonally-adjusted annualized basis. The small piece of good news here is that the sales decline is slower than the 5.4% drop shown in March. Three-month averages also point in a positive direction for this particular measurement.
Single-family home sales were down 1.1% on the month to a rate of 4.620 million, but the three-month average is 4.733 million, which is considerably better. Condo sales were up 5.6% to 570,000.
Supply in the existing home market was up 9.6% in April to 1.83 million as sales season picked up at the start of spring. On the current sales pace, there’s enough supply in the market to feed sales for the next 4.2 months, up from 3.8 months in March. Prices were up 2.9% in April and have now risen 3.6% on the year.
Regionally, sales of existing homes were up 1.8% to a rate of 1.11 million in the West, but they’re still down 5.9% yearly. On a less positive note, sales in the South were down 0.4% to an annual rate of 2.27 million, down 1.7% on the year.
MBA Mortgage Applications
Mortgage applications were up 2.4% overall, helped by a decrease of seven basis points in the average mortgage rate on a 30-year conventional fixed loan to 4.33%. An 8% increase in refinance applications offset a 2% downturn in weekly purchase applications.
Initial jobless claims were down ever so slightly, falling 1,000 to 211,000 last week. The four-week average was down 4,750 to come in at 220,250.
Continuing claims did see an increase of 12,000 to settle at 1.676 million. This pushed the four-week average up 5,500 to come in at about 1.674 million.
New Home Sales
New home sales were down 6.9% in April to come in at 673,000. However, this was offset by the fact that there were 39,000 sales added in recalculations for February and March. When looking at the three-month average, the numbers were up 2.4% from March.
Prices of new homes saw quite a jump, up 11.9% in April to 342,200. The spike helped push the median price up 8.8% on the year. Supply was down 0.9% in April to come in at 332,000 units. However, given the current sales pace, supply actually rose to 5.9 months versus 5.6 months in March. Sales are up 7% on the year.
Durable Goods Orders
New orders of durable goods were down 2.1% in April. A lot of the loss could be blamed on fewer transportation orders. When this category was taken out, orders were flat for the month. However, orders of core capital goods were down 0.9%. While numbers in the first two categories actually came in better than expectations, analysts had been projecting a 0.1% increase in the number of core capital goods orders.
Unfortunately, core capital goods orders were also revised down to a 0.3% increase from March, compared to an initial reading of a 1.3%. Orders of primary metals were down 1.9% and new vehicle orders were down 3.4%. This is always volatile, but civilian aircraft orders fell 39%. This is something we’ll continue to keep an eye on given the cancellations of Boeing 737 Max orders in the wake of those aircraft crashes.
Fabrications were up 0.4% and orders for machinery rose 0.1%. However, both follow significant declines for February and March, so analysts had hoped for a bit more of a bounce back.
Mortgage rates continue to be in a really good spot whether you’re looking to purchase or refinance. If you’re interested, it’s a great time to lock your rate.
The average rate on a 30-year fixed with 0.5 points paid in fees was down a single basis point to 4.06%. This has fallen from 4.66% a year ago.
Looking at shorter-term loans, the average rate on a 15-year fixed mortgage with 0.4 points was down a couple of basis points to 3.51%. This is down from 4.15% last year.
Finally, the average rate on a 5-year treasury-indexed, hybrid adjustable rate mortgage (ARM) with 0.4 points paid rose 2 basis points to 3.68%, down from 3.87% at this time last year.
A fifth straight weekly decline for the Dow Jones industrial average means the index has posted the longest run of weekly losses since 2017. Traders continue to have concerns over the trade war with China. President Trump did say on Thursday that he anticipates the trade war could be over in short order, which pushed the indexes up on Friday.
The Dow closed at 25,585.69, up 95.22 points on the day, but down 0.37% on the week. Meanwhile, the S&P 500 was up 3.82 points on the day to close at 2,826.06, down 0.5% on the week. Finally, the Nasdaq was down 0.85% for the week after finishing at 7,637.01, up 8.73 points Friday.
The Week Ahead
Tuesday, May 28
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.
S&P Case-Shiller HPI (9:00 a.m. ET) – The S&P Case-Shiller home price 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 surveys consumers on their feelings about current and future business and employment conditions as well as their future spending plans.
Wednesday, May 29
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, May 30
Gross Domestic Product (GDP) (8:30 a.m. ET) – This release measures the monetary value of all final goods and services produced within the U.S. This report is released on a quarterly basis.
International Trade in Goods (8:30 a.m. ET) – The Bureau of Economic Analysis has begun breaking out the goods from the remaining international trade numbers to get an idea of import and export estimates for GDP calculations.
Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals filing for unemployment insurance for the first time. An increasing trend suggests a deteriorating labor market. The 4-week moving average of new claims smooths out weekly volatility.
Friday, May 31
Personal Income and Outlays (8:30 a.m. ET) – This is a measurement of how much consumers are taking in as well as their corresponding spending. This also gives insight into how much is being saved.
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.
It’s a busy upcoming week with reports on the overall economy and consumer spending. We’ll have it all covered in next Monday’s Market Update.
We know that this post can lead to a rather sleepy start to the week. However, if you subscribe to the Zing Blog, we’ve got plenty of home, money and lifestyle content to share with you. If you’re thinking about getting a new vehicle for upcoming summer cruises, check out this post on costs to look out for when leasing a car. Have a great week!
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