Weekly Economic Review: Home Construction Rebounds in June, Mortgage Rates Down

Posted by Laine Smith on 7/23/17 10:00 AM

Topics: Economy

In this week’s economic review, mortgage rates drop and home builder confidence falls despite a big jump in housing starts and permits.

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Housing Market Index

Home builders have lost some confidence with the index dropping 2 points from a downwardly revised level of 66 in June to 64 in July. This is the lowest the index has been since November 2016.

Amongst the three components, all showed lower readings with future sales leading the pack at 73, present sales at 70 and traffic at 48, holding below 50 for the second month in a row.

By region, the West continues to lead the pack, trailed by the Midwest, South and Northeast.

Housing Starts

June homebuilding rebounded more than expected after three months of declines. Housing starts jumped 8.3 percent in the month, bringing the annualized rate up to 1.215 million. Permits also had a substantial increase of 7.4 percent.

Single-family permits increased 4.1 percent with multi-family permits up 13.9 percent. The Midwest leads in permits followed by the West, South and Northeast.

This week in the economy:

  • The average 30-year fixed-rate fell 7 basis points as of July 20th, landing at 3.96% with 0.5 points, according to Freddie Mac.
  • Purchase applications picked up some activity in the week of July 14 with applications rising 1 percent. Unadjusted purchase apps were up 33 percent from the previous week and 7 percent higher than the year-ago comparison. Refinance applications increased 13 percent after falling 13 percent the week prior, according to MBA Mortgage Applications. The refinance share of mortgage activity increased 2.6 percentage points to 44.7 percent.
  • Initial jobless claims fell a sharp 15,000 in the week of July 15, according to Bloomberg. The 4-week average, however, decreased just 1,250.
  • After falling to a post-election low in the prior week, the Bloomberg Consumer Comfort Index rebounded the week of July 16 with a 0.6 gain, landing at 47.6.

The economic calendar for the week of July 24th, 2017:

  • Monday – Existing Home Sales
  • Tuesday – FHFA House Price Index, S&P Corelogic Case-Shiller HPI, Consumer Confidence
  • Wednesday – MBA Mortgage Applications, New Home Sales, FOMC Meeting Announcement
  • Thursday – Jobless Claims, Bloomberg Consumer Comfort Index
  • Friday – GDP, Employment Cost Index, Consumer Sentiment

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