Weekly Economic Review: New Home Sales, Pending Sales Strong in September

Posted by Laine Smith on 10/28/16 12:06 PM

Topics: Economy

Economic highlights this week included new home sales and home prices, both of which were in the plus column. Average mortgage rates fell, following last week’s increase and consumer confidence dropped, as well.

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Image courtesy of hywards at FreeDigitalPhotos.net

Home prices increased in August with the highest monthly gain since September 2015, according to the Federal Housing Finance Agency (FHFA) House Price Index, which measures single-family housing. From July, August home prices moved up 0.7 percent following an already-strong 0.5 percent increase in July. Year-over-year the index is up 6.4 percent, which is not far from the year-over-year rate high of 6.9 percent in February 2014.

The new home market had a strong September, with sales up 3.1 percent to an annualized rate o 593,000. Sales are up 30 percent year-over-year. New home prices were up nearly 7 percent in the month to a median of $313,500. Supply, though, remains limited, down to a 4.8-month supply from a 4.9-month supply in August. Last September, there was a 5.8-month supply.

Final sales of existing homes astounded in September, and according to the National Association of Realtors, contract signings are bound to prove a positive month of sales in October. Pending sales increase 1.5 percent in September to the best reading since April 2016.

Consumer confidence is down for the month of October, falling nearly 5 points to 98.6. Both the present situation and expectation components fell to their lowest readings since July. Despite the overall drop, the component in which consumers describe jobs as “hard to get” has continued its decline, down 0.2 percent in the month. More consumers are also expecting to see their incomes improve, up fro 7.1 to 7.7 points.

This week in the economy:

  • The 30-year fixed-rate average fell back to 3.47% during the week, according to Freddie Mac.
  • In the October 21 week, purchase applications from the MBA Mortgage Applications report fell a seasonally adjusted 7 percent to the lowest ready since January. Year-over-year, though, purchase applications are up 9 percent. The refinance sectors also declined by 2 percent to the lowest level since June 2016.
  • Initial Jobless Claims fell by 3,000 in the October 22 week after rising 13,000 the week prior. The 4-week average is up slightly to 253,000.
  • The Bloomberg Consumer Comfort Index fell 0.8 points in the October 16 week, dropping below the 42-point mark where it spent much of the last four weeks.
  • Third quarter GDP exceeded expectations at 2.9 percent. Personal consumption was the largest contributor to the increase, rising to a 2.1 percent annualized rate and adding 1.5 percentage points to the third quarter rate.
  • Consumer Sentiment fell sharply in October, down to 87.9 from September’s 91.2. Weakness is centered in expectations and future income prospects.

What’s on economic calendar for the week of October 31, 2016:

  • Wednesday – MBA Mortgage Applications, Gallup U.S. Job Creation Index, FOMC Meeting Announcement
  • Thursday – Jobless Claims, Bloomberg Consumer Comfort Index
  • Friday – Employment Situation

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