Sep 25, 2023 | Financial Reports
Last week’s economic reports included readings on U.S. housing markets, housing starts and building permits, and the scheduled post-meeting statement from the Federal Open Market Committee of the Federal Reserve. Data on sales of previously owned homes were released along with weekly reports on mortgage rates and jobless claims.
National Association of Home Builders: Rising Mortgage Rates Shake Builder Confidence
Homebuilders lost confidence in U.S. housing market conditions in September. September’s index reading was 45 as compared to the expected reading of 49.5 and August’s reading of 50. The combination of rising mortgage rates and high home prices presented obstacles to first-time and moderate-income buyers, while homeowners delayed listing homes for sale while awaiting lower mortgage rates. Low inventories of previously owned homes for sale drove would-be buyers to consider purchasing new homes.
Home builders offered price cuts averaging 25 percent to buyers in August; the price cuts were deeper in September with cuts averaging 32 percent. The NAHB said 59 percent of home builders offered buyer incentives other than price cuts.
Building Permits Rise as Housing Starts Fall in August
The Commerce Department reported 1.54 million building permits issued in August as compared to 1.44 million permits issued in July. The August reading exceeded analysts’ expectations of 1.45 million building permits issued in August. Housing starts fell to 1.28 million starts in August as compared to July’s reading of 1.44 million starts and the expected reading of 1.43 million housing starts in August.
Sales of previously owned homes fell to 4.04 million sales in August as compared to July’s reading of 4.07 million sales and the expected reading of 4.10 million sales.
Fed Leaves Key Interest Rate Range Unchanged
The Federal Open Market Committee of the Federal Reserve announced its decision to leave the federal funds rate range unchanged at 5.25 to 5.50 percent, but policymakers hinted at another rate hike before the end of 2023. FOMC members review a variety of domestic and global financial and economic data to inform their decision-making process.
Mortgage Rates Rise, Jobless Claims Fall
Freddie Mac reported fixed mortgage rates above 7 percent last week. The average rate for 30-year fixed-rate mortgages was one basis point higher at 7.19 percent. The average rate for 15-year mortgages rose by three basis points to 6.54 percent.
First-time jobless claims fell to 201,000 claims last week as compared to the previous week’s reading of 221,000 new claims and the expected reading of 225,000 claims filed.
What’s Ahead
This week’s scheduled economic reporting includes readings on new home sales, S&P Case-Shiller home price indices, the Federal Reserve Chair’s speech, and reports on inflation. Weekly readings on mortgage rates and jobless claims will also be released.
Sep 11, 2023 | Financial Reports
Last week’s scheduled economic reporting was limited due to the U.S. Labor Day holiday on Monday. The Federal Reserve released its Beige Book report and weekly readings on mortgage rates and jobless claims were also published.
Federal Reserve Releases Beige Book Report
The Beige Book report is a summary of information supplied to Federal Reserve policymakers by their business and professional contacts. Highlights of September’s Beige Book report included:
- Accelerated leisure spending by consumers boosted economic growth during July and August.
- Non-essential retail sales slowed, but the economy was boosted by a final stage of post-COVID-19 pent-up demand.
- Prices for consumer goods fell faster than in many other sectors.
- Auto sales rose due to better inventories available to consumers but increased sales were not connected with rising consumer demand for vehicles.
- Rising business costs reduced profit margins.
The Beige Book report is published eight times a year before scheduled meetings of the Federal Reserve’s Federal Open Market Committee.
Mortgage Rates, Jobless Claims Fall
Freddie Mac reported lower mortgage rates last week; rates for 30-year fixed-rate mortgages averaged 7.12 percent and were six basis points lower than in the previous week. Rates for 15-year fixed-rate mortgages were three basis points lower and averaged 6.52 percent.
Initial jobless claims were lower with 216,000 first-time claims filed as compared to the prior week’s reading of 229,000 initial jobless claims filed. Analysts expected a reading of 230,000 new jobless claims filed.
What’s Ahead
This week’s scheduled economic reports include readings on inflation, U.S. retail sales, and the preliminary monthly report on consumer sentiment. Weekly readings on mortgage rates and initial jobless claims will also be released.
Sep 5, 2023 | Financial Reports
Last week’s economic reporting included readings on inflation, consumer sentiment, and weekly readings on mortgage rates and jobless claims.
Inflation Rates Are Similar in August
Month-to-month, the inflation rate holds relatively steady at 3.18 percent. This is slightly up when compared to 2.97 percent last month; however, it is significantly lower than the rate of 8.52 percent last year. When compared to the long-term average, inflation is trending in the right direction, as the long-term average is 3.2 percent.
Inflation rose at a pace of 0.20 percent in July and met analysts’ expectations. There was no change in the pace of month-to-month inflation from June’s reading of 0.20 percent growth. The Consumer Price Index also reported that year-over-year inflation reached 9.10 percent, which was the highest reading since reaching a 40-year high in mid-2022.
While we still wait for core inflation, experts predict it to come in at around 3.38 percent. Core inflation, also known as the CPI, excludes food and fuel prices, which are historically volatile. If core inflation comes in at 3.38 percent, this would be significantly lower than the July reading of 4.7 percent.
Right now, it is unclear whether the Federal Reserve will raise interest rates, as they are still waiting for other metrics, including the core inflation above.
Mortgage Rates Rise, Job Market Cools
The 30-year fixed, the preferred metric for mortgage rates, remains at around 7.53 percent. These are the highest mortgage rates of the last 20 years. Rates continue to rise when compared to July’s mortgage rates, which were just under 7 percent. This continues to put pressure on those interested in purchasing homes. The 15-year fixed mortgage rate is about 6.81 percent. This is slightly higher than the 15-year fixed for August, which was 6.55 percent on average.
When comparing these mortgage rates to last week, the 30-year fixed has gone up. It was 7.23 percent, on average, last week, and has jumped to 7.53 percent this week. The average rate for a 15-year fixed is 6.81 percent this week, which is slightly higher than last week, where the average 15-year fixed was 6.55 percent.
It appears that the increase in interest rates is finally having an impact on the job market. Unemployment rose to 3.8 percent, and the economy added 187,000 jobs in August. While these are still historically solid numbers, it is clear that the job market is cooling, when compared to July.
University of Michigan Consumer Sentiment Survey
The University of Michigan released its monthly consumer sentiment report, and consumer sentiment has dropped slightly when compared to last month. The index reading was 72.0 in July, but it dropped to 69.5 in August. The overall sentiment regarding the economy also dropped from 76.6 in July to 75.7 in August.
These numbers reflect that consumers are still a bit wary of economic conditions. While inflation continues to come down, many consumers are likely still nervous about the increase in interest rates and the cooling job market. While sentiment remains positive, there is some cooling in the economy.
What’s Ahead
During the next week, mortgage rates will get an update, and the Federal Reserve will receive some new metrics regarding the economy. These numbers will be very important for the Fed, as it decides whether it will raise interest rates again in September in an attempt to cool inflation further.
Aug 14, 2023 | Financial Reports
Last week’s economic reporting included readings on inflation, consumer sentiment, and weekly readings on mortgage rates and jobless claims.
Inflation Rate Holds Steady in July
Month-to-month inflation rose at a pace of 0.20 percent in July and met analysts’ expectations. There was no change in the pace of month-to-month inflation from June’s reading of 0.20 percent growth. The Consumer Price Index also reported that year-over-year inflation reached 9.10 percent, which was the highest reading since reaching a 40-year high in mid-2022.
Core inflation, which excludes volatile food and fuel prices, was unchanged from June’s month-to-month pace of 0.20 percent growth. July’s month-to-month reading matched analysts’ expectations. Year-over-year core inflation dipped slightly to 4.70 percent in July as compared to June’s reading of 4.80 percent year-over-year inflation.
Federal Reserve leaders said that they would continue monitoring domestic and global economic developments along with financial and economic data before determining whether or not to raise the Fed’s key interest rate range.
Mortgage Rates, Jobless Claims Rise
Freddie Mac reported higher mortgage rates for the third consecutive week. The average rate for a 30-year fixed-rate mortgage approached seven percent and rose by six basis points to 6.96 percent. Rates for 15-year fixed-rate mortgages rose by nine basis points to 6.34 percent.
248,000 initial jobless claims were filed last week, which surpassed expectations of 231,000 new claims filed and the previous week’s reading of 227,000 first-tine jobless claims filed.
University of Michigan Consumer Sentiment Survey
In other news, the University of Michigan released its monthly preliminary reading on U.S. consumer sentiment.
Consumer sentiment rose to an index reading of 72.0 in August as compared to the July reading of 71.6. The majority of.consumers surveyed indicated that the economy improved in the three months leading up to the survey., Component readings included consumer sentiment index readings for current economic conditions and economic conditions within the next six months. The survey reading for consumer sentiment about economic conditions over the next six months fell to an index reading of 67.3 from the July reading of 68.3 Readings over 50 indicate that most consumers are confident about current economic conditions.
Joanne Hsu, the University of Michigan’s director of consumer surveys, said: “…In general, consumers perceived few differences in the economic environment from last month, but they saw substantial improvement relative to just three months ago.”
What’s Ahead
This week’s scheduled economic reporting includes reading on housing starts and building permits issued, the minutes of the Federal Reserve’s recent meeting of its Federal Open Market Committee, and weekly readings on mortgage rates and jobless claims.
Aug 7, 2023 | Financial Reports
Last week’s scheduled economic reporting included readings on construction spending, public and private sector payroll growth, and the national unemployment rate. Weekly readings on mortgage rates and new jobless claims were also released.
Construction Spending Slips in June
U.S. construction spending slipped by 0.60 percent to 0.50 percent growth in June; analysts expected a month-to-month reading of 0.70 percent growth in construction spending. Year-over-year construction spending increased by 3.50 percent of which single-family residential construction accounted for 2.10 May’s reading for construction spending was revised from 0.90 percent growth to 1.10 percent growth from May to June.
Private residential construction rose by 0.30 percent in June. Spending on public residential construction decreased by -0.20 percent.
July Payroll Growth Shows Mixed Results
ADP reported 324,000 private sector jobs added in July. Analysts predicted only 175,000 private sector jobs added in July while June’s reading showed 455,000 jobs added. The federal government’s Nonfarm Payrolls report showed 187,000 jobs added in July. Analysts expected 200,000 public and private sector jobs added in July while June’s reading showed 185,000 public and private sector jobs added.
The U.S. national unemployment rate dropped to 3.50 percent in July from June’s reading of 3.60 percent.
Mortgage Rates and Initial Jobless Claims Rise
Freddie Mac reported higher mortgage rates last week as the average rate for 30-year fixed-rate mortgages rose to 6.90 percent. The average rate for 15-year fixed-rate mortgages rose by 14 basis points to 6.25 percent. The Commerce Department reported that 227,000 jobless claims were filed last week, which matched expectations and was higher than the 221,000 unemployment claims filed in the previous week.
What’s Ahead
This week’s scheduled economic reporting includes readings on inflation and consumer sentiment. Weekly reports on mortgage rates and jobless claims will also be released.
Jul 31, 2023 | Financial Reports
Last week’s economic reporting included readings on the Fed’s interest rate decision, S&P Case-Shiller’s Home Price Indices, sales of new homes, and pending home sales. Weekly readings on mortgage rates and jobless claims were also released.
The Federal Reserve raised its target interest rate range to 5.25 to 5.50 percent; this announcement signaled that rates for home loans and unsecured credit would also rise.
S&P Case-Shiller Reports Slower Home Price Growth in May
Average U.S. home prices fell in May according to the S&P Case-Shiller 20-City Home Price Index. Home prices were -1.70 percent lower as compared to an expected dip of -1.90 percent and April’s reading of -1.70 percent. The top three cities reporting the highest pace of year-over-year home price growth were Chicago, Illinois with home price growth of 4.60 percent; Cleveland Ohio, where home prices grew by 3.90 percent, and New York City, where home prices rose by 3.50 percent.
Sales of previously owned homes fell due to high demand and slim supplies of homes for sale. Homeowners stayed on the sidelines while waiting for lower mortgage rates, but prospective buyers didn’t seem discouraged by rising rates, which recently approached 7 percent.
Craig J. Lazzara, managing director at S&P Case-Shiller Indices, said that the rally in U.S. home prices continued in May.
New home sales fell to a seasonally adjusted annual pace of 697,000 sales in June. Analysts estimated a pace of 725,000 sales and May’s reading showed a pace of 715,000 new home sales. Higher home prices in popular metro areas and rising mortgage rates created affordability challenges for first-time and moderate-income home buyers.
In related news, the FHFA Home Price Index reported that home price growth for homes owned and sold by Fannie Mae and Freddie Mac rose by 0.70 percent in May and was unchanged from April’s pace of home price growth. The FHFA reported year-over-year home price growth of 2.80 percent.
Mortgage Rates Rise as Jobless Claims Fall
Freddie Mac reported higher mortgage rates for the fourth consecutive week as the average rate for 30-year fixed-rate mortgages rose by three basis points to 6.81 percent. The average rate for 15-year fixed-rate mortgages was five basis points higher at 6.11 percent.
First-time jobless claims fell to 221,000 claims as compared to the previous week’s reading of 228,000 claims filed.
What’s Ahead
This week’s scheduled economic reporting includes readings on construction spending, public and private-sector payrolls, and the national unemployment rate. Weekly readings on mortgage rates and first-time jobless claims will also be released.
