In this week’s economic review, mortgage rates drop again, existing home sales fall as median prices rise and the Fed leaves rates as-is.
Existing Home Sales
In line with the pending home sales index, the existing home sales index fell 1.8 percent in June to a lower-than-expected annualized rate of 5.520 million. Year-over-year, sales are still holding in the plus column but at only +0.7 percent.
Prices continue to climb with a median sales price of $263,800 in June, up 6.5 percent from a year ago. Supply, though, dropped 0.5 percent with a year-over-year decline of 7.1 percent. Supply is now at 4.3 months versus 4.2 months in May.
The FHFA House Price Index, which covers single-family housing with data provided by Fannie Mae and Freddie Mac, increased just 0.4 percent in May, making it the softest monthly result since January. However, year-over-year prices are very strong at +6.9 percent.
Despite softening consumer sentiment levels, July’s consumer confidence report showed unusual strength. The index jumped nearly 4 points to 121.1, topping high-end estimates. Since the November election, the index has increased approximately 20 points and hit a 17-year peak in March 2017, according to Bloomberg.
In a breakdown of components, the jobs-currently-hard-to-get response is down to just 18 percent, a 0.4 percent drop from June. The future assessment of the jobs market also saw a smaller number of nay-sayers, dropping from June’s 14.6 percent to 13.3 percent.
New Home Sales
The new home market trended near the best levels of the expansion in June with an annualized rate of 610,000. Sales received a lift from eased pricing, which dropped 4.2 percent to a median of $310,800. Year-over-year the median price is down 3.4 percent and looking meager in comparison to the 9.1 percent year-over-year gain in sales.
As expected, the Federal Reserve left rates unchanged at their July meeting “in view of realized and expected labor market conditions and inflation” but did indicate that their next step would come “relatively soon” so long as economy expands at a moderate pace.
Consumer sentiment produced a final reading of 93.4, edging slightly higher from the 93.1 mid-month reading. The July reading is noticeably lower than June’s 95.1 with weakness in the expectations component. Meanwhile the current assessment component was up nearly 1 point to 113.4. Inflation expectations remain low at 2.6 percent for both the 1-year and 5-year outlooks.
This week in the economy:
- The average 30-year fixed-rate fell 4 basis points as of July 27th, landing at 3.92% with 0.5 points, according to Freddie Mac.
- Purchase applications fell a seasonally adjusted 2 percent in the week of July 21 to the lowest level since May. Refinance activity, though, increased 3 percent, according to MBA Mortgage Applications.
- Initial jobless claims increased by 10,000 in the week of July 22, according to Bloomberg. The 4-week average remains at 244,000.
- After falling to a post-election low two weeks before, the Bloomberg Consumer Comfort Index gained another 1 point rebound in the week of July 23, landing at 48.6.
The economic calendar for the week of July 31st, 2017:
- Monday – Pending Home Sales
- Tuesday – Construction Spending
- Wednesday – MBA Mortgage Applications, ADP Employment Report, Gallup US Job Creation Index
- Thursday – Jobless Claims, Bloomberg Consumer Comfort Index
- Friday – Employment Situation
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