In this week’s economic review, home builders are optimistic heading into the end of the year, retail sales and consumer prices disappointed, and a jump in housing completions are adding much-needed inventory to the market.
Consumer Price Index
CPI managed just a 0.1 percent increase in October with the year-over-year rate falling 0.2 percent to 2.0 percent. The core rate, which excludes food and energy, rose only 0.2 percent while the yearly was up a respectable 1.8 percent.
October retail sales were also weaker, though they did hit expectation levels. The monthly gain slowed to 0.2 percent after booming by 1.8 percent in September. Though October marked a rougher month, total year-over-year sales are up 4.6 percent and expectations for a solid November and December are strong.
Housing Market Index
Home builders reported accelerating optimism nearing the year’s end with an overall index level of 70 for November. This reading is the best since March 2017 with both current and future sales coming in at a very strong level of 77. Traffic is also improving, up 2 points to 50 – the best reading since May 2017.
Builder confidence transferred nicely into the October housing starts and permits report, which posted unexpectedly strong gains. Starts were up 13.7 percent and permits were up 5.9 percent. Home completions were especially strong, up 12.6 percent.
This week in the economy:
- Mortgage rates increased as of November 16th. The 30-year average fixed rate was 3.95 percent with 0.5 points, according to Freddie Mac.
- Purchase applications rose a seasonally adjusted 0.4 percent in the week of November 10th. Though marginal, this marked the second week in a row of increased purchase activity, pushing the purchase up 17 percent year-over-year. Refinance applications increased 6 percent from the previous week with the refinance share of mortgage activity rising to 51.3 percent – the highest share since September.
- In the week of November 11th, initial jobless claims jumped 10,000 to 249,000, the second week of 10,000-jumps. The increase lifted the 4-week average by 6,500 to 237,750, the first increase for the 4-week measure in nearly 2 months.
- The Bloomberg Consumer Comfort Index rose 0.6 points from 51.5 to 52.1 in the week of November 22nd.
The economic calendar for the week of November 20th, 2017:
- Tuesday – Existing Home Sales
- Wednesday – MBA Mortgage Applications, Consumer Sentiment, FOMC Minutes, Bloomberg Consumer Comfort Index
- Thursday – Markets Closed
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