In this week’s economic review, the housing market generated some positive news with both new and existing home sales gaining some much-needed ground and home prices continuing to climb.
Existing Home Sales
Though housing stumbled in the spring selling season, existing home sales rebounded 1.1 percent in May to a higher-than-expected 5.620 million annualized rate. In April, the index dropped over 11 percent.
Furthermore, the increase in sales did not come at the expense of lower pricing. The median home price jumped 3.2 percent to $252,800 with a year-over-year increase of 5.8 percent. Inventory was also a positive in the report, up to a 4.2-month supply from 4.1 months in April and 3.8 months in March.
The Federal Housing Finance Agency’s (FHFA) House Price Index jumped 0.7 percent in April with a 0.1 percent upward revision for March. The increase brings the year-over-year rate to plus 6.8 percent, which is the highest the index has been in three years.
The Mountain region leads in year-over-year price gains with a +8.9 percent followed by the South at +8.0 percent and the Pacific at +7.5 percent.
New Home Sales
Another big positive for the housing market was Friday’s new home sales report, which rose 2.9 percent to an annualized rate of 610,000, close to high-end estimates. April’s report also got a sizable upward revision of 24,000.
New home prices were the big shock of the report, surging 11.5 percent in the month to $345,800. Year-over-year, pricing is up nearly 17 percent while sales are up 8.9 percent.
The major increase in pricing points to high demand as supply remains tight. While new homes on the market did increase 1.5 percent to 268,000 units, inventory remains unchanged at a 5.3-month supply.
This week in the economy:
- The average 30-year fixed-rate fell 1 basis point as of June 22nd, landing at 3.90% with 0.5 points, according to Freddie Mac.
- Purchase applications fell a seasonally adjusted 1 percent in the week of June 16. Refinance applications increased 2 percent after the prior week’s increase bumped the sector to the highest level since November 2016, according to MBA Mortgage Applications.
- Initial jobless claims saw little change in the week of June 17 with an increase of 3,000, according to Bloomberg. The 4-week average is still up slightly a level of 244,750. May’s 4-week average was 241,000.
- The Bloomberg Consumer Comfort Index decreased 0.6 points in the week of June 18, landing at a still-strong level of 49.4.
The economic calendar for the week of June 26th, 2017:
- Tuesday – Consumer Confidence, S&P Corelogic Case-Shiller HPI
- Wednesday – MBA Mortgage Applications, Pending Home Sales Index
- Thursday – Jobless Claims, Bloomberg Consumer Comfort Index, GDP
- Friday – Consumer Sentiment
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