In this week’s economic review, mortgage rates saw a minimal increase, existing home sales rebounded, and home prices posted strong gains.
Existing Home Sales
After dropping over 3 percent in January, existing home sales made a slight comeback in February with a 3.0 percent gain.
Single-family home sales rose 4.2 percent in the month to a 4.960 million rate and a year-over-year reading of plus 1.8 percent. Condo sales fell a sharp 6.5 percent with a year-over-year reading of minus 4.9 percent.
The median price rose 0.4 percent to $241,000, a 5.9 percent increase from this time last year. A major positive in the report was the increase in supply, up 4.6 percent, but in comparison to February’s sales pace, inventory stands at a thin 3.4 months.
New Home Sales
February new home sales were in line with expectations with upward revisions to the two prior month reports. Despite the revisions, February sales put the year-over-year gain at only 0.5 percent.
Prices gained traction in the month, moving up 0.6 percent to a median of $326,800. Year-over-year, new home sales prices are up 9.7 percent. Supply continues to be added, up a monthly 2 percent with a yearly increase of 16 percent. The new home inventory level stands at a healthy 5.9-month supply.
As expected, the Federal Open Market Committee (FOMC) voted to move on interest rates at their Tuesday meeting putting the new benchmark funds rate at a target of 1.5 to 1.75 percent. This marks the sixth rate hike since December 2015.
In a post-meeting statement, the FOMC stated that the economic outlook has recently strengthened, and Fed officials have increased their forecast for 2018 GDP growth from 2.5 percent to 2.7 percent.
The FHFA House Price Index increased more than expected in January, up 0.8 percent in the month with the year-over-year rate hitting a three and a half year high of +7.8 percent.
This week in the economy:
- As of March 22nd, the 30-year average fixed rate was 4.45% with 0.5 points, according to Freddie Mac.
- In the week of March 16th, the purchase sector of mortgage applications rose a seasonally adjusted 1 percent. The refinance sector fell 5 percent in the week, dropping the refinance share of mortgage activity to 38.5 percent. This is the lowest share since September 2008.
- In the week of March 17th, initial jobless inched 3,000 higher to 229,000. The 4-week average is up slightly at 223,750 but shows little change from the month-ago comparison.
- The Bloomberg Consumer Comfort Index increased 0.6 points in the week of March 18th bringing the index to a level of 56.8.
The economic calendar for the week of March 26th, 2018:
- Tuesday – S&P Corelogic Case-Shiller HPI, Consumer Confidence
- Wednesday – MBA Mortgage Applications, GDP, Pending Home Sales Index
- Thursday – Jobless Claims, Bloomberg Consumer Comfort Index, Consumer Sentiment
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