In this week’s economic review, mortgage rates drop, and homebuilders remain confident in existing and future new home sales, despite new home starts stumbling in April.
Housing Market Index
New home sales surged in March and homebuilders continue to report optimism for the market, according to the May Housing Market Index. Overall, the index gained 2 points, standing at a level of 70.
In a break down of components, current sales are up 2 points to 76, 6-month sales are up 4 points and traffic hit the 51-level mark, which marks the fifth time in the last six months that component has been over the breakeven point of 50.
Though healthy gains were expected in new home starts and permits, April’s report stumbled after reaching expansion highs in March. Starts were down 2.6 percent and permits fell 4.5 percent, both well below low-end expectations.
Weakness of the report is attributed to a major drop in multi-family homes where starts fell 9.2 percent. Despite this dip in data, the housing market remains strong overall.
This week in the economy:
- The 30-year fixed-rate decreased as of May 18, landing at 4.02% with 0.5 points, according to Freddie Mac.
- Purchase applications decreased a seasonally adjusted 3 percent in the week of May 12, and refinance applications dropped 6 percent, according to MBA Mortgage Applications. Unadjusted, the purchase index is still 9 percent higher than a year ago, while the refinance share of mortgage activity stands at 41.1 percent, the lowest level since 2008.
- Initial jobless claims fell 4,000 in the week of May 13, remaining at record lows, according to Bloomberg. The 4-week average is down 2,750 to 240,750. This is the sample week for the May employment report.
- The Bloomberg Consumer Comfort Index increased half of a point in the May 14 week to 50.2, near expansion highs.
The economic calendar for the week of May 22nd, 2017:
- Tuesday – New Home Sales
- Wednesday – MBA Mortgage Applications, Existing Home Sales, FOMC Minutes
- Thursday – Jobless Claims, Bloomberg Consumer Comfort Index
- Friday – GDP, Consumer Sentiment
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