Interest Rates

Last week’s economic reports included readings on public and private sector jobs, the national unemployment rate and weekly readings on mortgage rates and new unemployment claims.

ADP: Private-Sector Job Growth Eases in December

Private-sector jobs increased by 202,000 jobs in December and exceeded expectations. November’s original reading of 60,000 new private-sector jobs was revised to 124,000 jobs.

Three and six-month average private-sector job growth rates were 159,000 and 151,000 jobs, but these growth rates fell short of 2018’s average monthly job growth rate of 218,000 jobs added.

Analysts said that private-sector job growth has settled into a more modest but steady pattern.

Non-Farm Payrolls: Public and Private-Sector Job Growth Slower in December

The Commerce Department reported 145,000 public and private-sector jobs added in December with 145,000 new jobs reported. Analysts expected 165,000 new jobs added, which was markedly less than 256,000 new jobs added in November.

Reduction in new jobs during December was likely due to slowing in holiday hiring and winter weather. Average hourly earnings for December rose by 0.10 percent and were lower than expectations of  0.30 percent growth. Slower wage growth contributed to predictions of slowing economic growth.

The national unemployment rate was unchanged at 3.50 percent in December.

Mortgage Rates, Weekly Jobless Claims Fall

Freddie Mac reported lower mortgage rates last week; the average rate for 30-year fixed-rate mortgages fell eight basis points to 3.64 percent. Rates for 15-year fixed-rate mortgages averaged nine basis points lower at 3.07 percent.

Rates for 5/1 adjustable rate mortgages averaged 13 basis points lower at 3.30 percent. Discount points for fixed-rate mortgages averaged 0.70 percent and 0.30 percent for 5/1 adjustable-rate mortgages.

Freddie Mac predicted that rates for 30-year fixed-rate mortgages will average 3.80 percent in 2020 as compared to 4.00 percent in 2019.

Weekly jobless claims fell to 214,000 new claims; analysts expected 219,000 new claims filed. 223,000 first-time claims were filed the prior week.

What’s Ahead

This week’s scheduled economic reports include readings from the National Association of Home Builders on housing market conditions. Commerce Department readings on housing starts and inflation will also be released. The University of Michigan will post data on consumer sentiment; weekly reports on mortgage rates and new jobless claims will be posted as scheduled.

Last week’s economic reports included readings from Case-Schiller Home Price Indices and National Association of  Realtors® data on pending home sales. The Conference Board of the U.S. Senate also released its Consumer Confidence Index. Weekly readings on mortgage rates and first-time jobless claims were also released.

Case-Shiller Reports 0.10 Percent Uptick in National  Home Price Index

The National Home Price Index issued by Case-Shiller for October reported a year-over-year increase of 3.20 percent in home prices. Case-Shiller’s 20-City Home Price Index reflected the influence of low inventories of affordable homes as pricey metro areas reported slower growth if not declines in home-price growth.

 The top three cities reporting highest year-over-year home prices were Phoenix, Arizona with5.80 percent growth; Tampa, Florida with 4.90 percent growth and Charlotte, North Carolina, which had 4.80 percent home price growth.

Analysts said that the shift in higher home-price growth rates to smaller eastern and southern metro areas was evidence of continued shortages of affordable homes in coastal and major metro areas. Home prices in San Francisco, California declined for the third consecutive month in October after posting double-digit home price growth in recent years.

Pending home sales,  which are sales for which purchase offers have been made but not completed, rose 1.20 percent in November as compared to October. Regionally, pending home sales reports were mixed. The Western region led with a 5.50 percent growth rate in pending home sales. Pending home sales were 1.00 percent higher in the Midwest and fell by -0.10 percent in the Northeast. Pending home sales fell by 0.20 percent in the  South. 

Lawrence Yun, the chief economist for the National Association of Realtors®, said that “The supply of available homes is not yet meeting healthy demand.” Real estate pros consider pending home sales a gauge of future closings.  

Mortgage Rates, New Jobless Claims Dip

Freddie Mac reported lower average mortgage rates last week; 30-year fixed-rate mortgages averaged 3.72 percent and were two basis points lower. Rates for 15-year fixed-rate mortgages fell by three basis points and averaged 3.16 percent. The average rate for 5/1 adjustable-rate mortgages was one basis point higher at 3.46 percent. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable-rate mortgages.

New jobless claims fell by 2000 claims to 222,000 claims filed last week; analysts expected a reading of 223,000 initial jobless claims filed. The U.S. Conference Board reported a lower consumer confidence reading of 126.50 in December, but this was caused by an upwardly-revised November index reading of 126.80.

Consumer confidence in current economic conditions rose 4.40 points to 170.00 points, but this momentum was offset by the reading for consumer confidence in economic conditions over the next six months from 100.30 points to 97.40 points. Analysts said that flagging consumer confidence indicated that the economy is not likely to grow significantly in the next six months.

What’s Ahead

This week’s scheduled economic news includes labor sector readings on private and public job growth and the national unemployment rate. Weekly readings on mortgage rates and initial jobless claims will also be released.

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.