Weekly Economic Review: January Existing Home Sales Up Despite Concerns of Low Inventory

Posted by Laine Smith on 2/26/16 1:05 PM

Topics: Economy

Many U.S. economic reports released this week were above expectations, including GDP, housing and inflation. As a result, mortgage rates ended the week a little higher after several weeks of declines.

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Existing home sales were up an encouraging 0.4 percent in January, according to the National Association of Realtors. Year-over-year sales are in the double digits while the median price fell by 4.2 percent to $213,800. The most notable statistic of the report is the inventory component, which has been holding at low levels for quite some time. Though January’s supply relative to sales was up to a 4-month supply, year-over-year this component is down.

Home price appreciation did rise in December but slowed going into the new year, according to the December FHFA House Price Index. The December index increased 0.4 percent, at the low end of expectations, while the year-over-year rate dropped 2-tenths to plus 5.7 percent.

New home sales dropped 9.2 percent in January due to lows sales in the Western region, which fell a steep 32 percent in the month.  The median new home sales price decreased 5.7 percent in January to $278,800. Year-over-year the median new home sales prices has declined 4.5 percent.

2015’s fourth quarter GDP was revised from 0.7% to 1.0%. GDP, the broadest measure of economic activity, has been volatile in the latest readings but 2016’s first quarter GDP is expected to increase to 2.0%.

Last week in the economy:

  • Mortgage rates (the national average) increased 0.03% (3 basis points).
  • Low mortgage rates continue to drive the increase in purchase applications, up 2 percent in the February 19 week with a year-over-year gain of 27 percent, according to the Mortgage Bankers Association. The refinance index remains strong, though it dipped 8 percent in the latest week.
  • Initial jobless claims increased by 10,000 in the February 20 week but overall remain near historically low levels at 272,000.
  • Consumer confidence slowed for the month, down to 92.2 from January’s downwardly revised 97.8. The drop is attributed mainly to the “jobs hard to get” component, which did increase to 24.2 percent but is still very low.
  • The Bloomberg Consumer Comfort Index held steady for the week of February 21, down only one-tenth of a point from the prior week.
  • Consumer sentiment is up 1.0 point to 91.7, just below January’s 92.0 reading.

What's on the economic calendar for the week of February 29, 2016:

Monday: Pending Home Sales Index

Tuesday: Construction Spending

Wednesday: MBA Mortgage Applications & ADP Employment Report

Thursday: Jobless Claims & Bloomberg Consumer Comfort Index

Friday: Employment Situation

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