Economic News

Last week’s economic reporting included readings from S&P Case Shiller Home Price Indices, the National Association of Realtors®’ report on pending home sales, and the University of Michigan’s final consumer sentiment index for September. Weekly readings on mortgage rates and jobless claims were also released.

S&P Case-Shiller Reports 4^th Consecutive Month of Record Home Price Growth

July Home Prices grew at a year-over-year pace of 19.70 percent as compared to June’s home price growth rate of 18.70 percent according to S&P Case-Shiller’s National Home Price Index.

The S&P Case-Shiller 20-City Home Price Index reported that July home prices grew by 19.90 percent year-over-year; 17 of 20 cities posted higher home price growth rates in September than in August. The top three home price growth rates in the 20-City Home Price Index were held by Phoenix, Arizona at 32.40 percent; San Diego, California home prices grew by 27.80 percent, and Seattle, Washington home prices grew by 25.50 percent year-over-year in September.

Craig Lazzara, managing director and global head of investment strategy for S&P Dow Jones Indices, said “The last several months have been extraordinary not only in the level of price gains but in the consistency of gains across the country.” This differed from the traditional pattern of rapid home price growth in high-demand coastal metro areas as the covid pandemic drove homebuyers to seek out less congested and less expensive metro areas.

Pending home sales rose by 8.10 percent in August according to the National Association of Realtors® and far exceeded analyst expectations of 1.20 percent growth and July’s reading of -1.80 percent growth in pending home sales. Pending home sales are sales for which purchase contracts are signed, but the transactions are not completed. Real estate pros and mortgage lenders use pending home sales to predict future home sales and loan closings.

Mortgage Rates, Initial Jobless Claims Rise

Freddie Mac reported higher mortgage rates last week as the yield on 10-Year Treasuries rose. The average rate for 30-year fixed-rate mortgages rose by 13 basis points to 3.01 percent; rates for 15-year fixed-rate mortgages also rose by 13 basis points and averaged 2.28 percent. Rates for 5/1 adjustable rate mortgages averaged 2.48 percent and five basis points higher. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages; 0.60 percent for 15-year fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

Initial jobless claims increased to 362,000 first-time claims filed from the previous week’s reading of 351,000 new claims filed. Ongoing jobless claims decreased to 2.80 million continuing claims filed as compared to the prior week’s reading of 2.82 million continuing jobless claims filed.

The University of Michigan’s Consumer Sentiment Index rose to an index reading of  72.8 in September from August’s reading of 71.0. Analysts expected no change from August’s reading. 

What’s Ahead

This week’s scheduled economic reporting includes readings on public and private sector jobs, the national unemployment rate, and weekly readings on mortgage rates and jobless claims.

Last week’s economic news included readings from the National Association of Home Builders on housing market conditions and Commerce Department readings on housing starts and building permits issued. Weekly readings on mortgage rates and jobless claims were also released.

NAHB: August Builder Confidence Fell to Lowest Level in 13 Months

Homebuilder confidence fell to its lowest level since July 2020 according to the National Association of Home Builder’s Housing Market Index for August. The HMI reading for August was 75; analysts expected a reading of 80 based on July’s index reading of 80. Readings over 50 represent positive sentiment among homebuilders surveyed. Ongoing obstacles to builder confidence included high materials costs, supply chain issues, and lack of skilled labor. Shortages of available homes and rapidly rising home prices sidelined buyers and dampened builder confidence.

Component readings of the Housing Market Index were lower in two categories as builder confidence slipped five points to an index reading of 81 for builder confidence in current market conditions and also fell five points to 60 for builder confidence in buyer traffic in new housing developments. Builder confidence in housing market conditions over the next six months was unchanged at an index reading of 81. Regional readings for builder confidence were also lower. The Midwestern region reported an index reading of 68 and was two points lower than in July. Builders in the Northeastern region reported their confidence reading slipped one point to 74. Homebuilder confidence in the South fell three points to 82; builder confidence in the West fell two points to an index reading of 85.

New home starts reflected builder hesitancy as they slipped from a seasonally-adjusted annual rate of 1.64 million starts in June to 1.53 million starts in July. Building permits rose to a seasonally-adjusted annual pace of 1.64 million permits issued in July as compared to June’s reading of 1.59 million building permits issued.

Mortgage Rates and Jobless Claims

Freddie Mac reported little change in average mortgage rates last week. Rates for 30-year fixed-rate mortgages averaged 2.86 percent and were one basis point lower than for the previous week. Rates for 15-year fixed-rate mortgages averaged 2.16 percent and were one basis point higher. Rates for 5/1 adjustable rate mortgages averaged one basis point lower at 2.43 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages and 0.60 percent for 15-year fixed-rate mortgages. Points for 5/1 adjustable rate mortgages averaged 0.30 percent.

Fewer jobless claims were filed last week; 348,000 new claims were filed as compared to the previous week’s reading of 377,000 initial jobless claims filed. Continuing jobless claims also dropped last week with 2.82 million ongoing claims filed as compared to the prior week’s reading of 2.90 million continuing jobless claims filed.

What’s Ahead

This week’s scheduled economic reports include reports on new and existing home sales, consumer spending, and consumer sentiment. Weekly readings on mortgage rates and jobless claims will also be released.

Last week’s scheduled economic news included readings on construction spending and labor sector reports on public and private sector jobs. The national unemployment rate was published along with weekly readings on mortgage rates and jobless claims. Federal Reserve Chair Jerome Powell also spoke at a jobs summit.

Construction Spending Rises in January

U.S construction spending rose at a seasonally-adjusted annual pace of 1.70 percent in January as compared to 1.10 percent growth reported in December. Year-over-year construction spending was 5.80 percent higher in January 2021.  Residential construction spending reported in January rose to $713 billion on a seasonally-adjusted annual basis as compared to December 2020’s construction spending pace of $695.70 billion.

Non-residential construction spending in the private sector rose to a seasonally-adjusted annual rate of $447 billion in January as compared to December 2020’s pace of $445.2 billion.

High demand for single-family homes persists as inventories of available homes fall. This scenario contributes to affordability issues that are also influenced by rising building materials costs.

Mortgage Rates, Jobless Claims Mixed

Freddie Mac reported higher rates for 30-year fixed-rate mortgages, which rose by five basis points and averaged 3.02 percent. Rates for 15-year fixed-rate mortgages were unchanged from the prior week and averaged 2.34 percent. Mortgage rates for 5/1 adjustable rate mortgages dropped by 26 basis points and averaged 2.73 percent. Discount points averaged 0.60 percent for 30-year fixed-rate mortgages and 0.70 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.30 percent.

First-time jobless claims rose to 745,000 new claims filed as compared to the prior week’s reading of 736,000 new claims filed. Ongoing jobless claims fell last week with 4.30 million continuing claims filed; 4.42 million ongoing claims were filed during the prior week.

Private- Sector Jobs Fall as Public-Sector Jobs Increase

ADP reported 117,000 private-sector jobs added in February as compared to January’s reading of 195,000 private-sector jobs added. The government’s Non-Farm Payrolls report for February showed 379,000 public and private sector jobs added in February; 166,000 public and private-sector jobs were added in January. The national unemployment rate fell to 6.20 percent as compared to January’s reading of 6.30 percent.

Fed Chair Promised to Hold Steady on Monetary Policy

Fed Chair Jerome Powell promised to maintain accommodative monetary policies for the foreseeable future as the Federal Reserve continues striving toward its dual mandate of achieving maximum employment and annual inflation of two percent. When asked about rising long-term rates, Mr. Powell said that he could not commit to reducing the Fed’s asset purchases as he thought that the Fed’s goal of achieving maximum employment was “highly unlikely.”

What’s Ahead

This week’s economic reporting includes readings on inflation and consumer sentiment. Weekly readings on mortgage rates and jobless claims will also be released.