Home sales data was mixed this week as new home sales boomed but existing home sales and pricing reports were lower than usual. Mortgage rates ended the week a little lower.
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July New Home Sales skyrocketed a monthly 12.4 percent to a 654,000 annualized rate with a 10,000 downward revision from June. The median price fell 5.1 percent to $294,600, putting the year-over-year price into the negative column by 0.5 percent. New home inventory continues to lag, falling by 7,000 in the month. With the current sales rate, inventory is at 4.3 month level, which is nearly a month below July 2015’s inventory.
Home prices, according to the FHFA House Price Index, were unusually weak in June. Up 0.2 percent in the month, the year-over-year rate fell to 5.6 percent. The report cited seller discounting as the major factor in decreased pricing.
Existing Home Sales in July slowed to a weaker-than-expected 5.39 million annualized rate. Down 3.2 percent for the month, the year-over-year rate went into the negative column at minus 1.6 percent. Existing home prices also fell by 1.4 percent to $244,100. The year-over-year rate is still at a respectable plus 5.3 percent.
Fed Chair Janet Yellen cited the likelihood of interest rate hikes in a much-anticipated speech Friday. In her prepared remarks, Yellen said that “in light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months.”
This week in the economy:
- Mortgage rates (the national average) fell 0.2 percent of (2 basis points).
- The purchase application index of MBA Mortgage Applications fell 0.3 percent over the August 19 week, down to a new low for the year, according to Bloomberg. The refinance index also dropped by 3 percent.
- Initial Jobless Claims fell by 1,000 in the August 20 week to a level of 261,000. The 4-week average is down by 1,250 to 264,000.
- Bloomberg’s Consumer Comfort Index increased a respectable 1.7 points in the August 21 week for the best reading of the year. The index started the month of August at 41.8 and this week’s reading was 45.3.
- Consumer Sentiment is still respectable despite a 0.2-point dip from July. The expectations sector of the index was up, indicating confidence in the employment outlook, while the current conditions index fell 2 points.
What’s on economic calendar for the week of August 29, 2016:
- Tuesday – Consumer Confidence
- Wednesday – MBA Mortgage Applications, ADP Employment Report, Pending Home Sales Index
- Thursday – Jobless Claims, Bloomberg Consumer Comfort Index
- Friday – Employment Situation
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