Financial Reports

Last week’s economic reports were limited due to the Christmas holiday. New home sales data was released along with a weekly reading on mortgage rates.

Census Bureau: New Home Sales Hit Highest Level Since 1999

Mortgage rates below 4.00 percent propelled the highest number of new homes sold since 1999. 719,000 new homes were sold on a seasonally-adjusted annual basis in November.

Analysts expected November sales of new homes to reach 740,000 sales based on October’s original reading of 733,000 sales, but this reading was later revised to 710,000 sales.

New home sales reported are based on a narrow range of data and subject to major revisions. Slim inventories of previously-owned homes for sale also boosted new home sales.

The national median sale price for new homes was $330,800 in November and there was a 5.40 month supply of new homes available, which fell below the peak of a seven-month supply of available new homes reported in December 2018.

The Northeast region reported a 52.40 percent increase in new home sales; Sales of new homes in the South decreased by 4.10 percent and were unchanged in the Midwest. New home sales in the West rose by 7.50 percent.

Mortgage Rates Little Changed

Freddie Mac reported incremental changes in average mortgage rates; 30-year fixed-rate mortgage rates averaged 3.74 percent and were one basis point higher than for the prior week. Rates for 15-year fixed-rate mortgages averaged 3.19 percent and were unchanged.

The average rate for 5/1 adjustable rate mortgages was eight basis points higher at 3.45 percent. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

Freddie Mac cautioned that the ongoing shortage of affordable homes is causing home prices to rise throughout the U.S; in recent years significant home price gains primarily occurred in coastal regions. Analysts said that as fewer affordable homes become available, housing markets and the general economy could be negatively affected.

Weekly reporting on first-time jobless claims was not released last week.

What’s Ahead

This week’s scheduled economic reports include readings from Case-Shiller on home prices, pending home sales, construction spending and weekly reports on mortgage rates and new jobless claims.

Last week’s economic reports included readings on inflation and retail sales; the Federal Reserve released its post-meeting statement from its Federal Open Market Committee. Weekly readings on mortgage rates and new jobless claims were also released.

Inflation, Retail Sales Rate Dip in November

The Commerce Department’s Consumer Price Index dipped in November to a growth rate of 0.20 percent as compared to October’s growth rate of 0.40 percent. Analysts expected inflation to slow to 0.20 percent growth.

Year-over-year inflation rose to 2.10 percent, which was its highest reading in a year. Analysts said rising rents, energy and healthcare costs caused the higher consumer inflation reading. November’s Core Consumer Price Index was unchanged at 0.20 percent growth. The Core CPI reading excludes volatile food and energy sectors.

Retails sales growth slowed to 0.20 percent in November as compared to October’s growth rate of 0.40 percent and expected growth of 0.50 percent. Retail sales exclusive of autos were also lower in November with a reading of 0.10 percent growth.

Analysts expected a reading of 0.40 percent growth; October’s reading for Retail Sales Excluding Autos showed 0.30 percent growth. Lower retail sales at the start of the winter holiday shopping season could signify cooling consumer confidence in the economy.

Fed Holds Steady on Key Interest Rate Range

The Federal Open Market Committee of the Federal Reserve announced no change to the target federal funds rate range at its meeting on Wednesday. The target range for the federal funds rate remained at 1.50 to 1.75 percent.

The Committee’s post-meeting statement suggested that FOMC members did not plan to change the federal funds rate in 2020 if economic conditions remain stable, but said that monetary policy decisions were flexible and could change as global and domestic economic conditions require.

Mortgage Rates, New Jobless Claims Rise

Freddie Mac reported higher average rates for fixed-rate mortgages last week. The average rate for a 30-year fixed-rate mortgage was five basis points higher at 3.73 percent; rates for 15-year fixed-rate mortgages averaged five basis points higher at 3.19  percent.

The average rate for a 5/1 adjustable-rate mortgage was three basis points lower at 3.36 percent. Discount points rose across the board last week and averaged 0.70 percent for fixed-rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

New jobless claims jumped to 252,000 last week, which surpassed expectations of 220,000 new claims and the prior week’s reading of 203,000 first-time claims filed.

What’s Ahead

This week’s scheduled economic releases include the National Association of Home Builders’Housing Market Index and Commerce Department readings on housing starts and building permits issued. The National Association of Realtors® will release data on sales of pre-owned homes and weekly readings on mortgage rates and new jobless claims will also be released.

Last week’s economic reports included readings on construction spending and multiple labor sector reports including private and public sector jobs and the national unemployment rate. Weekly reports on average mortgage rates and first-time jobless claims were also released.

Construction Spending Falls 0.80 Percent in October

Commerce Department reports on construction spending said that spending fell by 0.80 percent to a seasonally-adjusted annual rate of $1.29 million. Analysts expected construction spending to increase by 0.40 percent based on September’s original reading of 0.50 percent growth, which was later revised to -0.30 percent.

Less construction of multifamily homes and apartments caused a decrease in October construction spending. Private construction spending fell by -1.00 percent in October; residential construction fell 0.90 percent as multi-family construction spending fell 1.60 percent after a 2.10 percent dip in September. Construction spending on single-family homes increased by 1.60 percent.

Low mortgage rates, a strong job market, and rising wages contributed to a strong demand for homes. Short inventories of available homes continued to pressure home builders to build more homes; construction of homes jumped 3.80 percent in October.

Mortgage Rates, Mixed, New Jobless Claims Fall

Freddie Mac reported no change in the average rate of 3.68 percent for 30-year fixed-rate mortgages; rates for 15-year fixed-rate mortgages averaged 3.14 percent and were one basis point lower than for the prior week.

Rates for 5/1 adjustable-rate mortgages fell four basis points on average to 3.39 percent. Discount points averaged 0.50 percent for 30-year fixed-rate mortgages and 0.40 percent for 15-year fixed-rate mortgages and 5/1 adjustable-rate mortgages.

First-time jobless claims fell from the prior week’s reading of 213,000 claims to 203,000 claims filed last week. ADP reported 67,000 private-sector jobs added in November.

The federal government’s Non-Farm Payrolls report offset the dismal reading for private-sector job growth. 266,000 public and private sector jobs were added in November and surpassed expectations of 180,000 public and private sector jobs added.

Approximately 55,000 were accounted for as auto workers returned after a strike. 156,0000 public and private sector jobs were added in October. The national unemployment rate dropped to 3.50 percent in November and matched the reading for unemployment posted at the end of 1969.

What’s Ahead

This week’s scheduled economic reports include readings on inflation, retail sales and the post-meeting statement from the Federal Reserve’s Federal Open Market Committee. Fed Chair Jerome Powell is scheduled to give a press conference after the FOMC statement. Weekly readings on mortgage rates and new jobless claims will also be released.

Last week’s economic news included readings from Case-Shiller Home Price Indices, readings on new and pending home sales and weekly readings on mortgage rates and new jobless claims. The holiday break on Thursday and Friday curtailed some economic reports.

Case-Shiller Reports Uptick in September Home Prices

Home prices rose 0.10 percent to a year-over-year growth rate of 3.20 percent in September. Rates of home price growth showed a new geographic trend with smaller cities showing higher home price growth than the coastal cities that dominated rapid home price growth in recent years. Homebuyers seeking affordable options turned inland and southward where home prices are less expensive.

Home prices in Phoenix, Arizona rose 6.00 percent year-over-year in September and claimed the top spot for home price growth in Case-Shiller’s 20-City Home Price Index. Charlotte, North Carolina held second place in home price growth with a reading of 4.60 percent year-over-year.

Tampa, Florida rounded out the top three cities with home price growth of 4.50 percent year-over-year. September’s readings indicate slowing home price growth as compared to double-digit growth rates that dominated Case-Shiller Home Price Indices in the past.

Analysts said that while low mortgage rates are helpful to home buyers, strict mortgage requirements and home price growth rates continued to outstrip inflation and wage growth.

New and Pending Home Sales Dip in October

The Commerce Department reported 733,000 sales of new homes in October; this was lower than 738,000 new homes sold in September but exceeded analysts’ forecasts for 705,000 sales. Fewer homes are sold in the fall as peak home-buying season winds down and winter holidays approach; September’s reading for new homes sold was upwardly revised from the original reading of 701,000 new homes sold.

The National Association of Realtors® reported fewer pending home sales in October with a negative reading of -1.70 percent as compared to September’s reading of +1.50 percent. Factors contributing to fewer purchase contracts signed included shortages of available homes and higher mortgage rates in October.

Pending sales are home sales for which purchase offers have been made and the sale is awaiting completion. Pending home sales are a gauge of future mortgage loan volume and completed home sales.

Mortgage Rates, New Jobless Claims

Freddie Mac reported mixed movement on average mortgage rates last week. Rates for 30-year fixed-rate mortgages averaged 3.68 percent and were two basis points higher. The average rate for 15-year fixed-rate mortgages was unchanged at 3.15 percent. The average rate for 5/1 adjustable rate mortgages rose four basis points to 3.43 percent.

New jobless claims fell sharply last week from 228,0000 claims filed the prior week to 213,000 first-time claims filed last week. The dip in new jobless claims brought last week’s reading near to a post-recession low.

What’s Ahead

This week’s scheduled economic news includes readings on construction spending, public and private-sector jobs and the national unemployment rate. The monthly reading on consumer sentiment will be released along with weekly reports on mortgage rates and first-time jobless claims.