In this week’s economic review, the 30-year average mortgage rate increased, new home sales and pending home sales fell, and consumer confidence remained strong despite market volatility.
New Home Sales
Though sales of new homes slowed in January, there was some overall positivity in the report. Sales came in at a much lower-than-expected 593,000 annualized rate while much needed supply moved into the market. Up 2.4 percent to 301,000 units for sale, new home inventory jumped to a 6.1-month supply versus 5.5 months in December and 4.9 months in November.
On the other hand, prices were another negative with the median sales price down 4.1 percent to $323,000. Year-over-year the median price is up 2.5 percent.
Pending Home Sales
The January pending home sales index is not suggesting a strong comeback for home sales, which have fallen in both January and December. The pending sales index was down 4.7 percent to a level of 104.6, the lowest in nearly three and a half years.
The Case-Shiller 20-city home price index rose a strong 0.6 percent in December with the overall gains highly attributed to west coast home prices. Year-over-year the index is up 6.3 percent.
The FHFA house price index, which covers single-family housing using data provided by Fannie Mae and Freddie Mac, came in at a lower-than-expected 0.3 percent gain in December. Year-over-year appreciation is at plus 6.5 percent.
The consumer confidence index is flourishing despite market volatility. The index jumped to 130.8 from a downwardly revised 124.3 in January and surpassed high-end estimates.
Only 14.7 percent of respondents say jobs are hard to get, and respondents’ outlook for the labor market continues to rise with 21.6 percent seeing more jobs opening up in the next 6 months.
Consumer sentiment ended the month of February at 99.7, well above January’s 95.7. The current conditions component is up 4.4 points to 114.9, a hint at improvement in February’s consumer spending. The expectations component was up 3.7 points to 90.0, showing optimism in the jobs and income outlook.
The final reading of fourth-quarter GDP had little change from the first two estimates, revised 1 tenth lower to an as-expected 2.5 percent annualized rate. According to CNBC, economists are forecasting that “the economy will hit the Trump administration’s 3 percent annual growth target” in 2018.
This week in the economy:
- As of March 1st, the 30-year average fixed rate climbed 3 basis points to 4.43 percent with 0.5 points, according to Freddie Mac.
- In the week of February 23rd, the purchase sector of mortgage applications rebounded with a 6.0 percent seasonally adjusted increase. Unadjusted, purchase applications were down 1.0 percent from the prior week. The refinance sector fell 1.0 percent, lowering the refinance share of mortgage activity to 41.8 percent.
- In the week of February 24th, initial jobless claims fell by 10,000 to a level of 210,000, marking the best reading in 49 years. The 4-week average stood at 220,500, trending 15,000 lower than the month-ago comparison.
- The Bloomberg Consumer Comfort Index saw little change in the week of February 25 and held at a very strong level of 56.2.
The economic calendar for the week of March 5h, 2018:
- Wednesday – MBA Mortgage Applications, Consumer Credit
- Thursday – Jobless Claims, Bloomberg Consumer Comfort Index
- Friday – Employment Situation
To receive updates on mortgage rates and other economic news, sign up for our weekly economic updates.