In this week’s economic review, mortgage rates softened for the second week in a row, pending home sales painted a pick-up for the beginning of the spring homebuying season and consumer confidence levels hit 17-year highs.
Pending Home Sales
Though existing home sales were soft in February, major improvements are forecasted for the March report. February’s pending home sales report, which measures listings under contract, saw a 5.5 percent jump, which extended far beyond estimates and consensus levels. Year-over-year the index is still only up 2.6 percent, which reflects the struggle of limited inventory.
While last week’s Federal Housing Finance Agency’s House Price Index came in unchanged for January, the S&P Corelogic Case-Shiller Home Price Index posted a 0.9 percent monthly gain for January. This is the strongest run for the index in nearly four years with year-over-year home price appreciation up 2 tenths to 5.7 percent.
March’s Consumer Confidence level came in at a 17-year high with a reading of 125.6. The expectations component stood at 113.8, a level not seen since September 2000. The present situation component came in at 143.1 for the best reading since August of 2001.
Fewer respondents of the report said jobs were hard to get in March and more respondents said jobs were plentiful. More are also reporting that they expect their income to increase over the next six months.
Thanks to an uptick in consumer spending, the third estimate for fourth quarter GDP of 2016 stands at 2.1 percent annualized growth versus the second estimate of 1.9 percent. Consumer spending increased by 3.5 percent in the quarter with an upward revision from 3.0 percent.
This week in the economy:
- The 30-year fixed-rate fell back as of March 30th with the average standing at 4.14 percent with 0.5 points, according to Freddie Mac.
- Purchase applications rose a seasonally adjusted 1 percent the week of March 24, but refinance applications decreased 3 percent despite softening mortgage rates, according to MBA Mortgage Applications.
- Initial jobless claims fell back by 3,000 in the March 25th week after jumping to a 7-week high of 258,00 the week of March 18th, according to Bloomberg. Despite the weekly drop, the level of 258,000 is higher than expected. The 4-week average of 254,250 is almost 15,000 higher than the average in late February.
- After a month of incremental gains, the Bloomberg Consumer Comfort Index dropped 1.6 points in the week of March 26 to a level of 49.7.
The economic calendar for the week of April 2nd, 2017:
- Wednesday – MBA Mortgage Applications, ADP Employment Report, Gallup U.S. Job Creation Index, FOMC Minutes
- Thursday – Jobless Claims, Bloomberg Consumer Comfort Index
- Friday – Employment Situation, Consumer Credit
To receive updates on mortgage rates and other economic news, sign up for our weekly economic updates.