Weekly Economic Review: New Home Sales Reach 8-Month High, Mortgage Rates Increase

Posted by Laine Smith on 5/1/17 10:19 AM

Topics: Economy

In this week’s economic review, mortgage rates increased after weeks of declines, home prices continue to rise and new home sales saw a higher-than-expected increase.

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iStockPhoto/Julia_Sudnitskaya

Home Prices

The FHFA house price index moved past high-end expectations in February with a 0.8 percent increase. Year-over-year the index is up 6.4 percent, close to the 2-year highs of 6.5 percent last seen in October and September 2016.

Pending Home Sales

Though home sales soared in March, the Pending Home Sales report is suggesting some retreating for April. Pending sales in March fell 0.8 percent after a surge of 5.5 percent in February.

Scant inventory is a major contributor to the lack of contract signings with the South being the only sector to see an uptick in pending sales for March. Despite the monthly decline, the index is 0.8 percent higher year-over-year.

New Home Sales

New home sales in March were much stronger than expected, reaching an annualized rate of 621,000, the second best rate of the expansion. Pricing was up a strong 7.5 percent for the month with a median price of $315,100. Year-over-year, pricing is up only 1.2 percent.

Consumer Confidence

Consumer confidence eased in April, but alongside March, the index still saw some of two of the best monthly readings in eight years. The April index came in at 120.3 after March’s downward revision of 124.9. Inflation expectations were unchanged while both the present situation and expectations components decreased.

GDP

Despite high consumer confidence, last Friday’s GDP report did not portray consumers’ optimism in the economy. For the first quarter of 2017, the economy’s growth came in at its lowest level in three years at a 0.7 percent annual growth rate for real GDP.

This week in the economy:

  • The 30-year fixed-rate increased the week of April 27th with the average standing at 4.03 percent with 0.5 points, according to Freddie Mac.
  • Purchase applications fell a seasonally adjusted 1 percent the week of April 21, but refinance applications increased by 7 percent, according to MBA Mortgage Applications.
  • Initial jobless claims incrased by 14,000 the week of April 22 to a higher-than-expected 257,000, according to Bloomberg.
  • The Bloomberg Consumer Comfort Index increased nearly a point in the week of April 23, standing at a level of 50.8.
  • Consumer sentiment dropped one point from March to April at a reading of 97.0.

The economic calendar for the week of May 1st, 2017:

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

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