Looking ahead, economic news for this week includes the Existing Home Sales report for April with an expectation of 5.00 million homes sold on a seasonally-adjusted annual basis against the March tally of 4.93 million homes sold.Also set for release on Wednesday are the Federal Open Market Committee (FOMC) Minutes for the meeting held April 30 and May 1.
The short holiday week brought a flurry of economic reports last week. Highlights included pending home sales, the S&P Case-Shiller Housing Market Indices and the FHFA home price index. No reports were released on Thursday and Friday in observance of the Thanksgiving holiday.
The NAR released its Pending Home Sales report for October. Although pending home sales dropped by -0.60 percent, the decline was less than September’s reading of -4.60 percent.
NAR cited higher home prices and mortgage rates along with concerns over the then-pending government shutdown as factors that contributed to fewer pending sales. Pending sales are determined by signed purchase contracts and are considered an indication of future completed home sales and mortgage loan closings.
Department of Commerce reported that building permits issued increased from 974,000 in September to 1.03 million for October. Permits for multi-family dwellings rose by 17 percent from September, but permits for single-family homes rose by 1.00 percent.
A lagging supply of available single-family homes has been driving home prices up as demand also increases. The multi-family reading reflected the sector’s volatile nature and was largely concentrated in the West.
Year Over Year Home Prices Increase – Case-Shiller And FHFA
The S&P Case-Shiller 20-City Housing Market Index for September reported its highest year-over-year gain in seven years, but the month-to-month reading was lower. The year-over-year reading was 13.30 percent in September and the month-to-month reading showed lackluster growth at 0.70 percent.
When seasonally adjusted, September’s reading was 1.00 percent against the seasonally-adjusted August reading of 1.90 percent.
In addition to the then-looming government shutdown, concerns over rapidly rising home prices in the West may have caused would-be buyers to sit on the sidelines as fears of another “housing bubble” gained traction.
Rising home prices also impact affordability and impact the ability of buyers depending on mortgage loans to compete with cash buyers.
The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, issued its housing market index report for September. Based on sales of homes financed with Fannie Mae or Freddie Mac-owned mortgages, FHFA’s report indicated that year-over-year home prices at an annual rate of 8.50 percent in September as compared to August’s year-over-year reading of 8.40 percent.
Economists noted that the increase of home prices is slowing due to a number of factors including higher mortgage rates and restrictive lending policies that are making it more difficult for buyers to purchase homes.
Analysts said that next year could bring a more sustainable rate of home appreciation with year-over-year readings averaging between five and eight percent.
Mortgage Rates This Week
In our first full trading day since Wednesday volatility is back in full force as safety trades placed over the long weekend are coming off and rates are getting worse. ISM Manufacturing was much stronger than expected increasing the sell off in Mortgage Backed Securities. A ton of economic data is scheduled to be released later this week with all eyes focused on 3rd Quarter GDP and Friday’s Non-Farm Payrolls. Friday’s Jobs Report is critical as it will shed light on whether last months much better than expected number was real. If the jobs report beats expectations again we could see rates jump, as many will expect the Fed to announce some form of tightening at their next meeting.
Key Economic Data
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|2-Dec||10:00 AM||ISM Index||–||55.5||56.4|
|2-Dec||10:00 AM||Construction Spending||–||0.40%||0.60%|
|2-Dec||10:00 AM||Construction Spending||–||0.30%||NA|
|3-Dec||2:00 PM||Auto Sales||–||NA||5.4M|
|3-Dec||2:00 PM||Truck Sales||–||NA||6.5M|
|4-Dec||7:00 AM||MBA Mortgage Index||–||NA||-0.30%|
|4-Dec||7:00 AM||MBA Mortgage Purchase Index||–||NA||-0.30%|
|4-Dec||8:15 AM||ADP Employment Change||–||160K||130K|
|4-Dec||8:30 AM||Trade Balance||–||-$40.5B||-$41.8B|
|4-Dec||10:00 AM||New Home Sales||–||432K||421K|
|4-Dec||10:00 AM||New Home Sales||–||420K||NA|
|4-Dec||10:00 AM||ISM Services||–||55||55.4|
|4-Dec||10:30 AM||Crude Inventories||–||NA||2.953M|
|4-Dec||2:00 PM||Fed’s Beige Book||–||NA||NA|
|5-Dec||7:30 AM||Challenger Job Cuts||–||NA||-4.20%|
|5-Dec||8:30 AM||Initial Claims||–||330K||316K|
|5-Dec||8:30 AM||Continuing Claims||–||2850K||2776K|
|5-Dec||8:30 AM||GDP – Second Estimate||–||3.00%||2.80%|
|5-Dec||8:30 AM||GDP Deflator – Second Estimate||–||1.90%||1.90%|
|5-Dec||10:00 AM||Factory Orders||–||-1.00%||1.70%|
|5-Dec||10:30 AM||Natural Gas Inventories||–||NA||-13 bcf|
|6-Dec||8:30 AM||Nonfarm Payrolls||–||188K||204K|
|6-Dec||8:30 AM||Nonfarm Private Payrolls||–||200K||212K|
|6-Dec||8:30 AM||Unemployment Rate||–||7.20%||7.30%|
|6-Dec||8:30 AM||Hourly Earnings||–||0.20%||0.10%|
|6-Dec||8:30 AM||Average Workweek||–||34.5||34.4|
|6-Dec||8:30 AM||Personal Income||–||0.30%||0.50%|
|6-Dec||8:30 AM||Personal Spending||–||0.30%||0.20%|
|6-Dec||8:30 AM||PCE Prices – Core||–||0.10%||0.10%|
|6-Dec||9:55 AM||Mich Sentiment||–||75.1||75.1|
|6-Dec||3:00 PM||Consumer Credit||–||$15.8B||$13.7B|