Weekly Economic Review: Pace of Home Sales Hits Lowest Level in 2017

Posted by Laine Smith on 8/27/17 10:00 AM

Topics: Economy

In this week’s economic review, home sales fell unexpectedly in July, home price gains slowed, and mortgage rates dropped.

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Home Prices

The June FHFA House Price Index posted a lower-than-expected gain with just a 0.1 percent increase. The consensus range was between 0.3 and 0.6 percent. Despite the month’s weakness, year-over-year prices are up 6.5 percent.

New Home Sales

Despite home builders’ confidence in the market, July’s headline sales fell to a far lower-than-expected annualized rate of 571,000. However, the decline is offset by 33,000 total in upward revisions for May and June. The 3-month average still stands over 600,000 which is just below expansion highs.

Supply in the new home market is up 4,000 to 276,000. The increase pulled supply up from 5.2 months to 5.8 months, which is close to the 6-month mark of a balanced new home market.

Pricing has its share of good and bad news. Prices were up 0.7 percent in July to a median of $313,700, which is good for residential investments. On the other hand, the 6.3 percent year-over-year price increase may be pricing first-time buyers out of the market.

Existing Home Sales

Following suit with the new home market, existing home sales fell 1.3 percent in July to a lower-than-expected annualized rate of 5.440 million. This marks the lowest level of sales in 2017. The index has been trending lower, but overall, sales are up 2.1 percent year-over-year and still near expansion highs.

The median home price fell 1.9 percent in the month to $258,300. Year-over-year, prices are up 6.2 percent. Supply was not bolstered by lower sales, slipping one percent in the month and landing at an unchanged 4.2-month supply.

This week in the economy:

  • The average 30-year fixed-rate fell 3 basis points as of August 24, landing at 3.86% with 0.5 points, according to Freddie Mac.
  • Purchase applications fell another 2 percent (seasonally adjusted) in the week of August 18 while refinance activity increased again by 3 percent, according to MBA Mortgage Applications. The refinance share of mortgage activity is up 1.1 percent to 48.7 percent. Despite two weeks of declines, the year-over-year growth of purchase applications remains strong.
  • Initial jobless saw little change in the week of August 19 after a sizable drop the week prior, according to Bloomberg. Initial claims edged 2,000 higher to 234,000 with the 4-week average down to the lowest level since May.
  • The Bloomberg Consumer Comfort Index surged to a new expansion high in the week of August 20. Jumping 1.6 points, the index landed at a level of 52.8.

The economic calendar for the week of August 28th, 2017:

  • Tuesday – Consumer Confidence, S&P Corelogic Case-Shiller HPI
  • Wednesday – MBA Mortgage Applications, ADP Employment Report, GDP
  • Thursday – Jobless Claims, Bloomberg Consumer Comfort Index, Pending Home Sales
  • Friday – Employment Situation, Consumer Sentiment

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