Weekly Economic Review: Existing Home Sales Surge, First-Time Homebuyers on the Rise

Posted by Laine Smith on 10/21/16 8:42 AM

Topics: Economy

In this week's economic news, mortgage rates increased to a 4-month high while September existing home sales data came in surprisingly positive.

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Image courtesy of ddpavumba at FreeDigitalPhotos.net

Existing home sales astounded in September, up 3.2 percent to an annualized rate of 5.47 million. Another positive note from September’s report was the amount of first-time homebuyers entering the market, who represented a strong 34 percent of the month’s sales. The median price fell 2.4 percent to $234,200, while the year-over-year appreciation rate remained at a respectable plus 5.6 percent.

While the amount of homeowners who put their homes on the market in September did rise, homebuyers are still battling low monthly inventory, which fell to a 4.5-month supply.

September housing starts dropped a steep 9.0 percent to an annualized rate of 1.047 million. The decline, though, is entirely attributed to the multi-family sector, which is volatile on a monthly basis. Single-family starts and permits were up a respectable 8.1 and 0.4 percent.

September’s Consumer Price Index increased a strong 0.3 percent, as energy prices (+2.9 percent) and rent (+0.4 percent) surged. Year-over-year, CPI is up 4 tenths to 1.5 percent, which is the highest it’s been since October 2014. Core CPI, which excludes food and energy, was up 0.1 percent in the month leading to a year-over-year rate drop to 2.2 percent.

This week in the economy:

  • The 30-year fixed-rate average increased to 3.52 percent, according to Freddie Mac.
  • Housing starts and permits fell in August. Starts fell a steep 5.4 percent while permits dropped 0.4 percent.
  • The October 10 week of MBA Mortgage Applications showed purchase applications were up 3 percent in the week, erasing the prior week’s decline. Refinance applications continue to slow, down 1 percent following the prior week’s 8 percent drop.
  • Initial Jobless Claims inched higher in the October 15 week, up 13,000 to 260,000. The 4-week average, though, is 6,500 lower at 251,750.
  • October’s Housing Market Index dipped 2 points after a 6-point surge in September. Homebuilders’ optimism about future sales and current sales continues to hold strength, while traffic continues to lag behind.
  • The Bloomberg Consumer Comfort Index fell 0.8 points in the October 16 week, dropping below the 42-point mark where it spent much of the last four weeks.

What’s on economic calendar for the week of October 24, 2016:

  • Tuesday – FHFA House Price Index, Consumer Confidence
  • Wednesday – MBA Mortgage Applications, New Home Sales
  • Thursday – Jobless Claims, Bloomberg Consumer Comfort Index, Pending Home Sales
  • Friday – GDP, Consumer Sentiment

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