Weekly Economic Review: Mortgage Rates Hit New 2017 Low, Economy Grows at Fastest Pace in Two Years

Posted by Laine Smith on 9/3/17 2:11 PM

Topics: Economy

In this week’s economic review, home price data showed stagnancy, consumer confidence continued to increase, mortgage rates continued their downslide, and the economy grew at a faster pace than expected in the second quarter of 2017.

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Case-Shiller Home Price Index

Case-Shiller’s June index fell in line with the release of last week’s FHFA House Price Index, posting just a 0.1 percent gain. The unadjusted index increased 0.7 percent with a year-over-year rate of plus 5.7 percent. The year-over-year rate is unchanged from May but down 0.2 percent from earlier in 2017.

Consumer Confidence

The August Consumer Confidence report moved higher to 122.9 from July’s revised 120. The August reading is the best since March 2017 and the second highest reading in nearly 17 years.

The jobs-hard-to-get component fell sizably by 1.4 percent to 17.3 percent. In the expectations component, optimists in the income category rose by 9-tenths to 20.9 percent.

Employment

ADP called for a 237,000 rise in August private payrolls, which was considerably off-mark. Private payrolls rose by only 165,000, according to Friday’s employment report.

While August payroll growth was solid overall, it missed the mark on consensus levels. Non-farm payrolls increased by 156,000 with July taking a backward revision of 20,000. The unemployment rate increased by 1 tenth to 4.4 percent.

Average hourly earnings were a major disappointment for August with just a 0.1 percent monthly increase. The year-over-year rate stands at +2.5 percent.

GDP

The U.S. economy grew at a faster pace in the second quarter than expected with GDP up 3.0 percent versus a 2.7 percent expectation. This is the quickest pace in more than two years. Strength of the report was centered in consumer spending, which is now at a 3.3 percent rate.

Pending Home Sales

Marking the fourth decline in five months, the pending home sales index fell 0.8 percent in July after making a brief recovery in June. Year-over-year the index is down 1.3 percent.

According to Lawrence Yun, chief economist for the National Association of Realtors, home sales will not begin to gain ground “unless supply miraculously improves.”

The amount of existing homes on the market stood at a 4.2-month supply in July.

This week in the economy:

  • The average 30-year fixed-rate fell 4 basis points as of August 31, landing at 3.82% with 0.5 points, according to Freddie Mac.
  • Purchase applications fell for the third straight week, down another (seasonally adjusted) 3.0 percent in the week of August 25 while refinance activity lost some of its recent steam, according to MBA Mortgage Applications. Refinance applications fell 2 percent. Year-over-year, purchase applications are just 4.0 percent higher.
  • Initial jobless claims remained near historically low levels in the week of August 26, posting a small gain of 1,000, according to Bloomberg. The 4-week average continues to fall, landing at 236,750.
  • Consumer Sentiment jumped sharply in August’s preliminary report with a 4.3-point gain. The increase pulled the index level to 97.6, the highest report since January 2017.
  • The Bloomberg Consumer Comfort Index reached another new expansion high in the week of August 27. Jumping 0.5 points, the index landed at a level of 53.3.

The economic calendar for the week of September 4th, 2017:

  • Wednesday – MBA Mortgage Applications
  • Thursday – Jobless Claims, Bloomberg Consumer Comfort Index
  • Friday – Consumer Credit

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