Bruno Mars had a really good night at the Grammys Sunday, sweeping all the top categories, including record, album and song of the year.
Bruno may have “24K Magic,” but the stock market has its own answer, with the Dow Jones industrial average in the 26K range.
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MBA Mortgage Applications
A push toward higher rates in recent weeks seems to have pushed the demand for mortgage applications up as people are locking the rates they like. The average rate on a 30-year fixed mortgage was up three basis points to 4.36%, the highest it’s been since March, according to the Mortgage Bankers Association.
Despite this, overall applications were up 4.5% last week ,with refinance applications rising 1% and purchase applications up 6.0% on the week.
FHFA House Price Index
Prices rose 0.4% nationwide in the month of November, according to the Federal Housing Finance Agency (FHFA). Prices are appreciating at a rate of 6.5% year to year.
The West North Central region had the strongest monthly performance, gaining 0.9% in November. This was followed by the South Atlantic at 0.8%.
It wasn’t all rosy, as the East South Central region fell 1.1%, and New England was down slightly, declining 0.1%.
Looking at annual rates, the Mountain region is up 8.9%, with the Pacific following at 8.6%. Homes in the Mid-Atlantic bring up the rear, with a 4.2% yearly gain.
Existing Home Sales
December wasn’t a great month for existing home sales, as they fell 3.6% on the month to a seasonally adjusted annualized rate of 5.570 million. However, part of this may be the fact that November was the best month since the last recession, according to this report from the National Association of REALTORS®.
Lack of supply is still a problem. It fell 11.4% to 1.480 million and is down to 3.2 months if sales continue at the current pace. Buyers just aren’t finding the homes they want. Median prices fell 0.2% to $246,800 but are still up 5.8% on the year.
Sales of existing homes are only up 1.1% on the year at this point.
Jobless Claims
Initial jobless claims were up 17,000 to 233,000 last week. Despite this, the four-week moving average was down 3,500 to 240,000.
It was a good week for continuing claims, down 28,000 to 1.937 million. The four-week moving average of continuing claims was down 3,500, coming in at 1.920 million, according to the Department of Labor.
New Home Sales
New home sales were down 9.3% to an annual rate of 625,000 on a seasonally adjusted basis. This is despite supply being up 3.9% in the market.
The supply issue may be getting better on the new home front. It’s up from 4.9 months in November to 5.7 months in December. For context, six months’ supply in the market is considered by analysts to indicate balance.
The median price of a new home was up 0.1% to $335,400, up just 2.6% on the year. However, there’s speculation that prices may be able to move up more, as sales were up 14.1% annually in December.
Durable Goods Orders
Grammys are probably considered a durable good. They just sit in the trophy case, after all. There were 350 trophies prepared for last year’s show. Bruno Mars may have been prophetic with his hit song because Grammys are plated in 24-karat gold.
There’s no word on how much Grammy production might have contributed to this, if at all, but durable goods orders were up 2.9% in December and have risen 11.5% on the year. A big part of this bump was that aircraft orders were up 1.5% after rising 24.4% the month previously. Vehicle orders were also up 0.4%.
However, excluding transportation, orders were up just 0.6% on the month and 8.2% on the year. Despite orders of capital goods falling 0.3% for an 8.4% annual gain, orders of machinery were good, as were orders of primary metals and fabricated materials.
The weakness in capital goods production is due to weakness in electrical and communications equipment and computers. Orders of communications equipment fell 6.1% on the month.
Gross Domestic Product (GDP)
The economy grew at a rate of 2.6% on a seasonally adjusted annualized basis in the fourth quarter. Prices were up 2.4% in the quarter. Finally, in a strong positive, consumer spending was up 3.8%, a strong holiday season.
Residential investment was up 11.6% on an annual basis in the quarter, and there was a 14.2% increase in spending on durable goods. Nonresidential fixed investment was also up 6.8%. Finally, government purchases saw a 3.0% increase.
On the negative side, net exports did decrease, with the trade deficit coming in at $652.6 billion. Inventories also increased at a slower pace than last quarter.
International Trade in Goods
The U.S. goods gap increased by $1.6 billion in December to $71.6 billion. Exports were up 2.7% on the month while imports increased 2.5%.
Exports came in at $137.6 billion, including a 2.7% rise in capital goods exports to $47.6 billion. Consumer goods were also up 2.7% to $17.5 billion.
Unfortunately, consumer goods were also up on the import side, up 6.0% to $55.6 billion. This makes sense with the holidays and was the biggest import driver of note. Imports totaled $209.2 billion.
Mortgage Rates
There can be no doubt about it at this point – mortgage rates are on their way up. While rates are still pretty good at the moment, they’ve risen steadily over the past several weeks. The 10-year treasury is at its highest point since 2014, with people moving their money out of bonds and into stocks as they expect economic growth. This is good for your 401(k), but it makes borrowing money for major purchases more expensive.
If you’re in the market to buy or refinance a home and you see a rate you like, don’t hesitate to lock it. Although no one can predict where rates will go from hour to hour, let alone week to week, the recent trend is not a friend if you’re thinking rates are going to dip.
The average rate on a 30-year fixed mortgage was 4.15%, with 0.5 points in fees, up 11 basis points on the week. This is down from 4.19% at this time last year.
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Taking a look at shorter terms, the average rate for a 15-year fixed mortgage with 0.5 points was 3.62%, up 13 basis points on the week and rising from 3.40% at the same time last year.
Closing out rates for the week, the average rate on a 5-year treasury-indexed hybrid adjustable rate mortgage (ARM) with 0.4 points was up six basis points last week to 3.52%. Last year, the rate was 3.20% at this time.
Stock Market
All three major stock indexes hit record highs, led by optimism over a growing economy backed up by Friday’s great GDP report as well as strong earnings in tech and health care.
The Dow finished the week at 26,616.71, up 223.92 points on the day and 2.09% on the week. Meanwhile, the S&P 500 rose 2.23% on the week, up 33.62 points on the day to finish at 2,872.87. Finally, the Nasdaq was up 94.61 points on the day, closing at 7,505.77, up 2.31% weekly.
The Week Ahead
Monday, January 29
Personal Income and Outlays (8:30 AM ET) – This is a measurement of how much consumers are taking in as well as their corresponding spending. This also gives insight into how much is being saved.
Tuesday, January 30
S&P Case-Shiller HPI (9:00 a.m. ET) – The S&P Case-Shiller Home Pricing Index tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the U.S.
Consumer Confidence (10:00 a.m. ET) – The Conference Board compiles a survey of consumer attitudes on the economy. The Consumer Confidence Index is based on consumer perceptions of current business and employment conditions, as well as their expectations when considering business conditions, employment and income.
Wednesday, January 31
MBA Mortgage Applications (7:00 a.m. ET) – The mortgage applications index measures applications to mortgage lenders. This is a leading indicator for single-family home sales and housing construction.
Thursday, February 1
Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals filing for unemployment insurance for the first time. An increasing trend suggests a deteriorating labor market. The four-week moving average of new claims smooths out weekly volatility.
ISM Manufacturing Index (10:00 a.m.) – This index measures the general direction of manufacturing within the U.S. The qualitative survey of purchasing managers looks at production, new orders, order backlogs, inventories and supplier deliveries, among other factors.
Friday, February 2
Employment Situation (8:30 a.m. ET) – The employment situation report measures unemployment in the labor force as well as the sentiments of workers about the job market.
Consumer Sentiment (10:00 a.m. ET) – The University of Michigan’s Consumer Survey Center questions 500 households each month on their financial conditions and attitudes about the economy. Consumer sentiment is directly related to the strength of consumer spending.
There’s quite a bit going on this week, including the always important employment situation report. There’s also a Federal Reserve meeting starting tomorrow, and we’ll be sure to keep you abreast of any developments and the effect they may have on mortgage rates.
Although I’ve turned into a total economic nerd in my time here, I completely understand it’s not everyone’s cup of tea. Fortunately, if you subscribe to the Zing Blog below, we have plenty more home, money and lifestyle content where this came from. Let’s continue our celebration of music by taking a look at songs that offer the best financial advice.
If you have rooting interest in the game on Sunday, good luck! Hopefully the rest of us get some good football. If for some reason the game doesn’t hold your attention, there’s always the food and commercials. Have a great week!
Call Michael Hansen at So EZ Mortgage right now 855-955-7639 for a free mortgage consultation for a no cost loan in CA and AZ or email him at Mike@SoEZ.tv
Bruno may have “24K Magic,” but the stock market has its own answer, with the Dow Jones industrial average in the 26K range.
Headline News
MBA Mortgage Applications
A push toward higher rates in recent weeks seems to have pushed the demand for mortgage applications up as people are locking the rates they like. The average rate on a 30-year fixed mortgage was up three basis points to 4.36%, the highest it’s been since March, according to the Mortgage Bankers Association.
Despite this, overall applications were up 4.5% last week ,with refinance applications rising 1% and purchase applications up 6.0% on the week.
FHFA House Price Index
Prices rose 0.4% nationwide in the month of November, according to the Federal Housing Finance Agency (FHFA). Prices are appreciating at a rate of 6.5% year to year.
The West North Central region had the strongest monthly performance, gaining 0.9% in November. This was followed by the South Atlantic at 0.8%.
It wasn’t all rosy, as the East South Central region fell 1.1%, and New England was down slightly, declining 0.1%.
Looking at annual rates, the Mountain region is up 8.9%, with the Pacific following at 8.6%. Homes in the Mid-Atlantic bring up the rear, with a 4.2% yearly gain.
Existing Home Sales
December wasn’t a great month for existing home sales, as they fell 3.6% on the month to a seasonally adjusted annualized rate of 5.570 million. However, part of this may be the fact that November was the best month since the last recession, according to this report from the National Association of REALTORS®.
Lack of supply is still a problem. It fell 11.4% to 1.480 million and is down to 3.2 months if sales continue at the current pace. Buyers just aren’t finding the homes they want. Median prices fell 0.2% to $246,800 but are still up 5.8% on the year.
Sales of existing homes are only up 1.1% on the year at this point.
Jobless Claims
Initial jobless claims were up 17,000 to 233,000 last week. Despite this, the four-week moving average was down 3,500 to 240,000.
It was a good week for continuing claims, down 28,000 to 1.937 million. The four-week moving average of continuing claims was down 3,500, coming in at 1.920 million, according to the Department of Labor.
New Home Sales
New home sales were down 9.3% to an annual rate of 625,000 on a seasonally adjusted basis. This is despite supply being up 3.9% in the market.
The supply issue may be getting better on the new home front. It’s up from 4.9 months in November to 5.7 months in December. For context, six months’ supply in the market is considered by analysts to indicate balance.
The median price of a new home was up 0.1% to $335,400, up just 2.6% on the year. However, there’s speculation that prices may be able to move up more, as sales were up 14.1% annually in December.
Durable Goods Orders
Grammys are probably considered a durable good. They just sit in the trophy case, after all. There were 350 trophies prepared for last year’s show. Bruno Mars may have been prophetic with his hit song because Grammys are plated in 24-karat gold.
There’s no word on how much Grammy production might have contributed to this, if at all, but durable goods orders were up 2.9% in December and have risen 11.5% on the year. A big part of this bump was that aircraft orders were up 1.5% after rising 24.4% the month previously. Vehicle orders were also up 0.4%.
However, excluding transportation, orders were up just 0.6% on the month and 8.2% on the year. Despite orders of capital goods falling 0.3% for an 8.4% annual gain, orders of machinery were good, as were orders of primary metals and fabricated materials.The weakness in capital goods production is due to weakness in electrical and communications equipment and computers. Orders of communications equipment fell 6.1% on the month.
Gross Domestic Product (GDP)
The economy grew at a rate of 2.6% on a seasonally adjusted annualized basis in the fourth quarter. Prices were up 2.4% in the quarter. Finally, in a strong positive, consumer spending was up 3.8%, a strong holiday season.
Residential investment was up 11.6% on an annual basis in the quarter, and there was a 14.2% increase in spending on durable goods. Nonresidential fixed investment was also up 6.8%. Finally, government purchases saw a 3.0% increase.
On the negative side, net exports did decrease, with the trade deficit coming in at $652.6 billion. Inventories also increased at a slower pace than last quarter.
International Trade in Goods
The U.S. goods gap increased by $1.6 billion in December to $71.6 billion. Exports were up 2.7% on the month while imports increased 2.5%.
Exports came in at $137.6 billion, including a 2.7% rise in capital goods exports to $47.6 billion. Consumer goods were also up 2.7% to $17.5 billion.
Unfortunately, consumer goods were also up on the import side, up 6.0% to $55.6 billion. This makes sense with the holidays and was the biggest import driver of note. Imports totaled $209.2 billion.
Mortgage Rates
There can be no doubt about it at this point – mortgage rates are on their way up. While rates are still pretty good at the moment, they’ve risen steadily over the past several weeks. The 10-year treasury is at its highest point since 2014, with people moving their money out of bonds and into stocks as they expect economic growth. This is good for your 401(k), but it makes borrowing money for major purchases more expensive.
If you’re in the market to buy or refinance a home and you see a rate you like, don’t hesitate to lock it. Although no one can predict where rates will go from hour to hour, let alone week to week, the recent trend is not a friend if you’re thinking rates are going to dip.
The average rate on a 30-year fixed mortgage was 4.15%, with 0.5 points in fees, up 11 basis points on the week. This is down from 4.19% at this time last year.
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Taking a look at shorter terms, the average rate for a 15-year fixed mortgage with 0.5 points was 3.62%, up 13 basis points on the week and rising from 3.40% at the same time last year.
Closing out rates for the week, the average rate on a 5-year treasury-indexed hybrid adjustable rate mortgage (ARM) with 0.4 points was up six basis points last week to 3.52%. Last year, the rate was 3.20% at this time.
Stock Market
All three major stock indexes hit record highs, led by optimism over a growing economy backed up by Friday’s great GDP report as well as strong earnings in tech and health care.
The Dow finished the week at 26,616.71, up 223.92 points on the day and 2.09% on the week. Meanwhile, the S&P 500 rose 2.23% on the week, up 33.62 points on the day to finish at 2,872.87. Finally, the Nasdaq was up 94.61 points on the day, closing at 7,505.77, up 2.31% weekly.
The Week Ahead
Monday, January 29
Personal Income and Outlays (8:30 AM ET) – This is a measurement of how much consumers are taking in as well as their corresponding spending. This also gives insight into how much is being saved.
Tuesday, January 30
S&P Case-Shiller HPI (9:00 a.m. ET) – The S&P Case-Shiller Home Pricing Index tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the U.S.
Consumer Confidence (10:00 a.m. ET) – The Conference Board compiles a survey of consumer attitudes on the economy. The Consumer Confidence Index is based on consumer perceptions of current business and employment conditions, as well as their expectations when considering business conditions, employment and income.
Wednesday, January 31
MBA Mortgage Applications (7:00 a.m. ET) – The mortgage applications index measures applications to mortgage lenders. This is a leading indicator for single-family home sales and housing construction.
Thursday, February 1
Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals filing for unemployment insurance for the first time. An increasing trend suggests a deteriorating labor market. The four-week moving average of new claims smooths out weekly volatility.
ISM Manufacturing Index (10:00 a.m.) – This index measures the general direction of manufacturing within the U.S. The qualitative survey of purchasing managers looks at production, new orders, order backlogs, inventories and supplier deliveries, among other factors.
Friday, February 2
Employment Situation (8:30 a.m. ET) – The employment situation report measures unemployment in the labor force as well as the sentiments of workers about the job market.
Consumer Sentiment (10:00 a.m. ET) – The University of Michigan’s Consumer Survey Center questions 500 households each month on their financial conditions and attitudes about the economy. Consumer sentiment is directly related to the strength of consumer spending.
There’s quite a bit going on this week, including the always important employment situation report. There’s also a Federal Reserve meeting starting tomorrow, and we’ll be sure to keep you abreast of any developments and the effect they may have on mortgage rates.
Although I’ve turned into a total economic nerd in my time here, I completely understand it’s not everyone’s cup of tea. Fortunately, if you subscribe to the Zing Blog below, we have plenty more home, money and lifestyle content where this came from. Let’s continue our celebration of music by taking a look at songs that offer the best financial advice.
If you have rooting interest in the game on Sunday, good luck! Hopefully the rest of us get some good football. If for some reason the game doesn’t hold your attention, there’s always the food and commercials. Have a great week!
Call Michael Hansen at So EZ Mortgage right now 855-955-7639 for a free mortgage consultation for a no cost loan in CA and AZ or email him at Mike@SoEZ.tv
