Financial Reports

Economic readings released last week included Case-Shiller and FHFA Home Price Indices and reports on new and pending home sales. The week wrapped up with a report on consumer sentiment and weekly readings on mortgage rates and new jobless claims.

Case-Shiller, FHFA Report Faster Home Price Growth

Home prices rose by 3.80 percent year-over-year in December according to Case-Shiller’s National Home Price Index. Case-Shiller’s 20-City Home Price Index rose by 2.90 percent year-over-year in December as compared to November’s reading of a 3.50 percent gain over-over-year; Case-Shiller reported 0.40 percent growth in home prices from month-to-month.

The 20-City Home Price Index reported no change in the top three cities for year-over-year home price growth. Phoenix, Arizona reported 6.50 percent home price growth in December followed by Charlotte, North Carolina’s reading of 5.30 percent home price growth. Tampa, Florida reported 5.20 percent year-over-year home price growth.

The Federal HousingFinance Agency reported its 34^th consecutive quarter of home price growth in December. Home prices rose by 5.10 percent in the fourth quarter of 2019 and were 0.60 percent higher month-to-month.

2019 saw home buyers leave pricey coastal metro areas in favor of less expensive markets in mountain states and in the South. Home prices in these areas rose as demand increased. Overall, real estate pros reported lingering shortages of homes for sale in many areas, but low mortgage rates prompted would-be buyers to enter the market. Increased demand for homes further boosted home prices in many areas.

Mortgage Rates Fall as New Jobless Claims Rise

Freddie Mac reported lower mortgage rates last week as 30-year fixed mortgage rates dropped four basis points to 3.45 percent. The average rate for a 15-year fixed-rate mortgage was also four basis points lower at 2.95 percent. Rates for 5/1 adjustable rate mortgages averaged 3.20 percent and were five basis points lower.

Discount points averaged 0.70 percent for 30-year fixed-rate mortgages and 0.80 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.20 percent.

First-time jobless claims rose last week; 219,000 new claims were filed and exceeded expectations of 214,000 claims and the prior week’s reading of 211,000 first-time claims filed.

New and Pending Home Sales Increase in January

764,000 new homes were sold in January on a seasonally-adjusted annual basis according to the Commerce Department. Analysts expected 722,000 new home sales based on December’s reading of 708,000 new homes sold. Low mortgage rates boosted sales as buyers turned to new home developments to take advantage of rock-bottom mortgage rates.

Pending home sales rose 5.20 percent in January as compared to a dip of -4.30 percent in December according to the National Association of Realtors®. Pending home sales were 8.70 percent higher in the South and 7.10 percent higher in the Midwest. Pending sales rose by 1.20 percent in the Northeast and fell 1.10 percent in the West.

The University of Michigan reported slight growth in consumer sentiment in February with an index reading of 101.0 as compared to January’s reading of 100.9. Analysts expected no change from January’s reading.

What’s Ahead

This week’s scheduled economic news includes readings on construction spending and labor sector reports on public and private-sector job growth and the national unemployment rate. Weekly readings on mortgage rates and new jobless claims will also be released.

Last week’s scheduled economic reporting included readings on builder confidence in housing markets, housing starts and building permits issued and sales of previously owned homes. Weekly readings on mortgage rates and first-time jobless claims were also released.

NAHB: Builder Confidence Remains Strong Despite Challenges

February data from the National Association of Home Builders indicated strong builder confidence in housing market conditions overall, but February’s index reading was one point lower at 74. Readings over 50 indicate that most builders have a positive outlook on housing market conditions.

Homebuilder outlook remained positive, although building materials and buildable lots remained costly. Demand for affordable single-family homes was high due to short supplies of existing homes for sale. Homebuyers turned to new homes to find more options. Low mortgage rates and strong job markets contributed to high builder confidence readings.

Housing Starts Fall in January as Building Permits Rise to 13-Year High

Commerce Department data on housing starts showed that the pace of housing starts slipped  3.60 percent from 1.626 million starts in December to 1.567 million starts in January. Housing starts are calculated on a seasonally-adjusted annual basis; analysts said that January’s housing starts were markedly lower after an unexpected rise in housing starts in December 2019.

Building permits rose by 9.60 percent in January with 1.55 million permits issued as compared to 1.420 permits issued in December and an expected annual pace of 1.453 million housing starts for January.

Ongoing shortages of available single-family homes can only be resolved by building more homes, but home builders face obstacles in obtaining necessary zoning  approvals. January’s increase in permits issued is expected to help ease persistently slim inventories of homes for sale.

Sales of previously-owned homes dipped in January due to short supplies of homes for sale and fewer options for would-be home buyers. Pre-owned homes sold at a seasonally-adjusted annual pace of 5.46 million sales as compared to December’s reading of 5.53 million sales.

Mortgage Rates Mixed, New Jobless Claims Rise

Freddie Mac reported little change in average mortgage rates last week. Rates for 30-year fixed-rate mortgages rose two basis points to 3.49 percent; the average rate for 15-year fixed-rate mortgages also rose two basis points to 2.99 percent.

The average rate for 5/1 adjustable rate mortgages fell by three basis points to 3.25 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages and 0.80 percent for 15-year fixed-rate mortgages. Discount points averaged 0.20 percent for 5/1 adjustable rate mortgages.

New jobless claims rose to 210,000 claims filed, which matched expectations. The prior week’s reading showed 206,000 first-time claims filed.

What’s Ahead

This week’s scheduled economic reports include readings on home price trends from Case-Shiller and the Federal Housing Finance Agency and readings on new home sales and consumer sentiment. Weekly readings on mortgage rates and new unemployment claims will also be released.

Last week’s economic reporting included releases on inflation, retail sales, and consumer sentiment. Weekly readings on mortgage rates and first-time jobless claims were also released.

Inflation Hits Highest Growth Pace Since 2018

Consumer staples including rent, prepared food and medical expenses caused inflation to rise 0.10 percent from December to January, which was the smallest month-to-month growth in four months. Rents drove month-to-month inflation with a growth rate of  0.40 percent.

Year-over-year inflation grew from 2.30 percent to 2.50 percent, which was the highest year-over-year growth rate since Fall 2018. Analysts said that inflation remained low according to historical data and that no sharp inflationary growth was expected.

The rapid acceleration of rents and home prices continued to create obstacles for renters and homebuyers, who faced prices rising faster than the overall inflation rate and wage growth,

Retail Sales Dip in January

The Commerce Department reported an 0.30 percent drop in retail sales for January, which matched expectations, but was half the growth rate of 0.60 percent posted in December. January’s lower reading was largely attributed to clothing stores, which experienced a 3.10 percent decline in sales after the holiday season.

Analysts expected retail sales to grow at a pace fast enough to support economic growth throughout 2020.

Mortgage Rates and New Jobless Claims Rise

Freddie Mac reported higher rates for fixed-rate mortgage loans last week; rates averaged 3.47 percent for 30-year fixed-rate mortgages and were two basis points higher. Rates for 15-year fixed-rate mortgages averaged one basis point higher at 2.97percent.

Rates for 5/1 adjustable-rate mortgages rose an average of four basis points to 3.28 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages, 0.80 percent for 15-year fixed-rate mortgages and 0.30 percent for 5/1 adjustable-rate mortgages.

First-time jobless claims rose to 205,000 new claims filed but fell short of an expected reading of 211,000 new claims filed. The prior week’s reading for new unemployment claims was 203,000 claims filed.

The University of Michigan reported higher consumer confidence for February; the Consumer Sentiment Index rose to 100.8 from January’s index reading of  99.8. Analysts predicted no change for February’s reading.

What’s Ahead

This week’s scheduled economic news includes readings on NAHB Housing Markets, Housing starts, building permits and sales of previously-owned homes. Weekly readings on mortgage rates and new jobless claims will also be released.