I hope everyone had a good weekend. They’re always too short, but mine was good – I had a lot of family in town.
There wasn’t much going on in the markets last week. We got a couple of inflation numbers, but other than that, the stock market and global events took center stage. Let’s get into it.
MBA Mortgage Applications
Mortgage applications were down 3% overall for the week. Purchase applications were down 2% overall and refinance applications fell 5%.
The average rate on a 30-year-fixed mortgage was flat at 4.84%. Refinance applications were down 0.5% and represent just 36.6% of the overall mortgage application market.
Initial jobless claims were down 6,000 to 213,000 last week. Meanwhile, the four-week moving average is down 250 claims to come in at 214,250.
Continuing claims were up 29,000 to come in at 1.755 million. The four-week average, however, was down 4,000 to come in at 1.742 million.
Producer Price Index (PPI)
The price producers paid for goods and services was flat for the month. It has risen 3.3% since July of last year. When food and energy are taken out of the equation, prices did increase 0.1% and have gone up 2.7% this year. Finally, when trade services are removed, prices were up 0.3% and 2.8% on an annual basis.
Digging deeper into the data, there was a 0.1% rise in the price for goods production, but this was offset by a corresponding decrease in services. There was a 0.5% drop in energy prices after they were up 0.8% in June. Prices for electricity were down 1.6%, while gas was down 0.1%. Prices were down in the trade services category by 0.8% as wholesalers and retailers were able to get better margins.
Finally, the price of food fell by 0.1% for the second straight monthly decrease after dropping 1.1% in June.
Consumer Price Index (CPI)
On the consumer side, inflation was up 0.2% in July and has gone up 2.9% this year. There was a matching increase when food and energy was taken out and the index was pared down to its core categories. The core inflation metric was up 2.4% annually. This is the biggest annual inflation gain in the category since September 2008.
The cost of shelter rose 0.3% with housing prices increasing 0.2%. Meanwhile, the amount it would cost for homeowners to rent an equivalent space was up 0.3%.
Food and beverage prices were up 0.1%, while energy prices fell 0.5% overall on the month. Gas prices were down 0.6%, while electricity prices fell 0.4% and gas utility prices fell 0.5%.
Transportation prices were up 0.3% and have gone up 7.3% for the year. New vehicle costs were up 0.3% while used cars and trucks were up 1.3%. However, the annual rates of increase in both these areas are below 1%.
Medical care prices were down 0.2% and have only risen 1.9% for the year. Meanwhile, the price of apparel was down 0.3% in July for the second straight monthly decrease and prices for clothing are only up 0.3% for the year.
Across the board, mortgage rates fell back slightly last week. This breaks a string that’s been going on for most of the month where they’ve been going up. If you’re in the market to buy or refinance, it could be a good time to go ahead and take the opportunity to lock your rate.
The average rate on a 30-year fixed mortgage was down a single basis point to 4.59% with 0.5 points in fees. This is up from 3.9% at the same time last year.
In shorter terms, the rate on a 15-year fixed mortgage was down three basis points to 4.05% with 0.5 points paid. Last year at this time, the rate was 3.18%.
Finally, the average rate on a 5-year Treasury-indexed hybrid adjustable-rate mortgage with 0.3 points came in at 3.9%, down three basis points on the week. It’s risen from 3.14% a year ago.
President Trump signed off on the doubling of metals tariffs applied to Turkey. The move caused the Turkish lira to drop more than 15% when compared to the U.S. dollar, spooking global markets.
While all three markets saw a down day on Friday as a result, if you had stocks in the Nasdaq in our Fantasy Stock League, you probably did OK as the index was up overall for the week. If you haven’t gotten in yet, it’s a good time to check it out. As a reminder, the contest is free and there are prizes given for the best portfolio at the end of the year as well as one given for the portfolio with the biggest gains in the prior two months.
The Dow Jones industrial average was down 196.09 points on the day to close at 25,313.14 points. This was a weekly drop of 0.59%. Meanwhile, on the S&P 500, stocks closed at 2,833.28, falling 20.3 points for the day and down 0.25% weekly. Finally, the Nasdaq finished up 0.35% on the week, despite falling 52.67 points on the day to close at 7,839.11.
The Week Ahead
Tuesday, August 14
Quicken Loans Home Price Perception Index (HPPI) (10:00 a.m. ET) – Quicken Loans, the nation’s largest mortgage lender, releases data every month comparing what people think their homes are worth to appraisals. Similar opinions of value often make for smoother purchase and refinance transactions.
Quicken Loans Home Value Index (HVI) (10:00 a.m. ET) – Quicken Loans also releases data on home values at both the national and regional levels. Homeowners can gain a perception of whether values are increasing or decreasing and get a better idea of where they stand in terms of equity.
Wednesday, August 15
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.
Retail Sales (8:30 a.m. ET) – Retail sales measure total receipts from stores selling merchandise and related services to final consumers. Sales are measured by retail and food service stores. Data is collected from the Monthly Retail Trade Survey conducted by the U.S. Census Bureau.
Industrial Production (9:15 a.m. ET) – The Federal Reserve’s monthly index of industrial production – and the related capacity indexes and capacity utilization rates – covers manufacturing, mining, and electric and gas utilities.
Housing Market Index (10:00 a.m. ET) – The National Association of Home Builders produces a housing market index based on a survey where 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.
Thursday, August 16
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.
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 four-week moving average of new claims smooths out weekly volatility.
Friday, August 17
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.
There’s quite a bit on tap this week. We get retail sales and industrial production data as well as a plethora of housing numbers. We’ll have it all for you in next week’s Market Update.
If economic data and mortgage rates are making your eyelids droop this morning, I sympathize. Fortunately for you, we’ve got plenty of home, money and lifestyle content to help perk you up if you subscribe to the Zing Blog below. Of course, we all work a little better if we’ve had time to properly chill. Here’s an article with five ways to create a more relaxing atmosphere in your home. Have a tranquil week!
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