Weekly Economic Review: Existing Home Sales Reach Highest Level Since 2007

Posted by Laine Smith on 11/26/16 9:58 AM

Topics: Economy

Major economic reports released this week included new and existing home sales, as well as home pricing. Mortgage rates continued to climb causing volatility in mortgage applications.

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Image courtesy of hywards at FreeDigitalPhotos.net

October existing home sales reached their highest level since February 2007. Sales jumped by 2 percent to an annualized rate of 5.6 million following an upwardly revised September.

Sales of existing homes are up 5.9 percent year-over-year even though supply remains low. Existing home supply fell 0.5 percent to a 4.3-month supply. October homes were on the market for an average of 41 days in comparison to 57 days a year ago and sold for an average of $232,000, which is up 6 percent from a year ago.

New home sales declined well below estimates last month, falling 1.9 percent. Year-over-year, though, sales are strong at plus 17.8 percent. September sales were revised down by nearly 20,000. New home supply, though, is at its highest since September 2009 with a 5.2-month supply.

The FHFA House Price Index eased in September, dropping to plus 0.6 percent from August’s plus 0.7 percent. Year-over-year the index has increased by 6.1 percent.

This week in the economy:

  • The 30-year fixed-rate average shot up again this week to 4.03 percent, according to Freddie Mac. This is the highest mortgage rates have been since July 2015.
  • Rising interest rates continue to cause volatility in mortgage applications. According to MBA Mortgage Applications, purchase applications jumped by 19 percent in the November 18 week. Refinance applications continued their descent, falling 3 percent after an 11 percent drop the week prior.
  • Initial jobless claims in the week of November 19 increased 18,000 to 251,000. Though initial claims increased, the week’s results mark the 90th consecutive week of initial claims below 300,000. According to Bloomberg, this is the longest streak since 1970.
  • Consumer Sentiment climbed to 93.8 in November, with notable strength in the current conditions index.

What’s on economic calendar for the week of November 28, 2016:

  • Tuesday – GDP, Consumer Confidence
  • Wednesday – MBA Mortgage Applications, Pending Home Sales Index, ADP Employment Report
  • Thursday – Jobless Claims, Bloomberg Consumer Comfort Index, Construction Spending
  • Friday – Employment Situation

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