Mortgage rates hit a two and a half year high this week after the Fed announced their expected decision to raise the federal funds rate. Existing home sales and new home sales made surprising strides in November as dwindling supply put pressure on home prices.
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November existing home sales increased a surprising 0.7 percent to a 5.610 annualized rate, which marks a cycle high, according to Bloomberg. While year-over-year data has barely made it into the plus column, November 2016 sales were 15.4 percent higher than a year ago.
Limited homes continue to push pricing upward with supply dropping a steep 8.0 percent in the month. The median price point swelled 0.3 percent to $234,900 for a year-over-year increase of 6.8 percent.
New home sales surged 5.2 percent in November to the second highest annualized rate of the recovery. Despite the monthly increase, the 3-month average stands at 575,000 which reflects little change since summer. Supply stood at a thin 5.1 months with the November sales rate, pressing prices to a median of $305,400, which is up 0.9 percent in the month but down 3.7 percent year-over-year.
The Federal Housing Finance Agency’s House Price Index posted a smaller-than-expected gain in the month of October. The index rose 0.4 percent, which fell out of the consensus range by 0.1 percent. Despite the softer month, the index is up 6.2 percent year-over-year.
This week in the economy:
- The 30-year fixed-rate averaged 4.30 percent with 0.5 points in the December 22 week, according to Freddie Mac.
- Purchase applications rallied in the December 16 week despite rising mortgage rates with a 3.0 percent increase. Refinance applications also experience a 3 percent increase from a week ago, according to MBA Mortgage Applications.
- Initial jobless claims hit a large spike the week of December 17, rising by 21,000 to a higher-than-expected level of 275,000. This is the sample week of December’s employment report. By comparison to November’s sample week, the index is up 42,000.
- The Bloomberg Consumer Comfort Index jumped a sharp 1.2 points in the December 18 following a week of stagnancy. The index hit the 46.7 level, which is the best reading in two years according to Bloomberg.
- Third quarter GDP had its best reading in two years with an inflation-adjusted 3.5 percent annualized rate.
What’s on economic calendar for the week of December 26, 2016:
- Tuesday – Consumer Confidence
- Wednesday – Pending Home Sales Index
- Thursday – Jobless Claims, Bloomberg Consumer Comfort Index
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