Weekly Economic Review: New Home Sales, Pending Home Sales Fall Sharply

Posted by Laine Smith on 10/1/17 6:43 PM

Topics: Economy

In this week’s economic review, pending home sales continue to fall, consumer confidence and sentiment remain considerably strong, and GDP shows the U.S. economy is growing at a steady pace.

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Home Price Index

July’s Case-Shiller Home Price Index showed that home prices firmed in July with a 0.3 percent adjusted gain. Year-over-year, prices are up an unadjusted 5.8 percent.

New Home Sales

New home sales fell sharply in August with the major weakness coming from the South, as expected. The index fell to a 560,000-annualized rate from an upwardly revised 580,000 in July.

Though sales dropped 4.7 percent in the South, declines were also posted in the West and Northeast regions with 2.6 and 2.7 percent drops. The median new home sales price also fell a sharp 6.2 percent to $300,2000. This puts the year-over-year median at plus 0.4 percent.

Consumer Confidence

While the effects of the hurricane states helped to pull down September’s consumer confidence level, the posting of 119.8 is still respectable and unusually strong.

The “jobs hard to get” component continues to drop, down 0.3 percent to 18.1 percent. The future jobs outlook is also extremely favorable with 19.5 percent expecting more jobs to open up 6 months from now.

Pending Home Sales

Pending home sales have been down for some time, but August’s report saw another very steep drop of 2.6 percent. While Hurricane Harvey didn’t help pending sales in the South, pending sales were down nationwide. Year-over-year the index is down 2.6 percent.

GDP

Second-quarter GDP showed strong economic growth. Though the 3.1 percent growth was expected, it’s also the quickest pace the economy has grown in more than two years.

Consumer Sentiment

September’s final consumer sentiment report mirrors the mid-month report, a level of 95.1. The index is down 1.7 from August, but the level is still considerably high following the aftermath of the hurricanes.

This week in the economy:

  • Mortgage rates remained at yearly lows as of September 28th. The 30-year fixed rate held steady at 3.83% with 0.5 points, according to Freddie Mac.
  • Purchase applications rebounded in the week of September 22nd with a 3.0 percent increased. Year-over-year the purchase index is up 4.0 percent. The refinancing index, though, dropped another 4 percent after falling 9 percent the previous week.
  • After experiencing a surprising fall in the week prior, the effects of the hurricanes are becoming more evident in initial jobless claims. In the week of September 23, initial claims rose 12,000 to a level of 272,000.
  • The Bloomberg Consumer Comfort Index bounced back to pre-hurricane highs with a one-point gain in the week of September 23. The index sits at 51.6.

The economic calendar for the week of October 2nd, 2017:

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

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