This article publishes the Tuesday after Christmas, so if you’re reading this, your holiday celebrations are likely already over. I’m writing this on Friday to have it ready for you on Tuesday, and it’s the last thing I’ll write this year. I’m stoked to get the festivities started. I certainly hope your holiday was everything you could have asked for.
It seems they tried to squash every possible economic report they could into last week before splitting for the holidays. We’ve got a lot to cover, so let’s not waste another minute.
Housing Market Index
Homebuilders are feeling pretty good going into the holiday season. The sentiment in this index was up five points to 74 in newly released December numbers. A big piece of this was that traffic of prospective buyers was up eight points to 58, the high point of the economic expansion.
The other data in the report is also strong, with current sales up four points to 81 and sales over the next six months rising three points to come in at 79. These are also expansion highs.
Turning to regional data, the West comes in at 85, with the Midwest and South at 76 and 75, respectively. The Northeast is well behind but still on a growth track at 53.
Housing starts were up 3.3% in November to a seasonally adjusted annual rate of 1.297 million. Starts for single-family homes were up 5.3% to 930,000.
On the permit side, these were down 1.4% to 1.298 million. However, there was a 1.4% gain in single-family housing permits to 862,000.
In one piece of bad news, completions were down 6.1%, which won’t help inventory. However, things are picking up in the West and also the South, a sign that hurricane recovery is continuing.
MBA Mortgage Applications
Despite a decline of four basis points in the 30-year fixed mortgage rate to 4.16%, people weren’t in a big hurry last week to get mortgages before the holidays.
Applications fell 4.9% overall as purchase application volume dropped 6.0% and applications to refinance dipped 3.0%.
Existing Home Sales
Existing home sales rose 5.6% on the month to a seasonally adjusted annualized rate of 5.810 million in November. This is up 3.8% on the year.
Acting as a double-edged sword, the increased sales meant that supply became even tighter, dropping 17.2% to 1.670 million. There are only 3.4 months’ worth of supply left if sales continue at the current pace. Limited inventory no doubt helped propel prices up 0.8% in a month to $248,000, rising 5.9% on the year.
The West was the only region that saw sales slip, with surges of more than 8% in the Midwest and South, with the Northeast close on their heels.
Gross Domestic Product (GDP)
The growth of the economy fell back 0.1% in the final revision of the third quarter to 3.2% on a seasonally adjusted annualized basis, still a fairly strong number. A big piece of this was a 4.7% boost in nonresidential fixed investment.
Inventories also rose, as did net exports, with exports rising as imports fell. Government spending was only up 0.7%. Meanwhile, residential investment fell 4.7%, which didn’t help the number.
Prices in consumer spending were both up in the quarter on a seasonally adjusted basis. They rose 2.1% and 2.2%, respectively.
Initial jobless claims were up 20,000 to 245,000 in the latest data. This moved the four-week average 1,250 higher to 236,000.
These numbers are still somewhat being impacted by the hurricane that hit Puerto Rico, where claims are double their normal level.
On the continuing claims side, these were up 42,000, coming in at 1.932 million. The four-week average was 1.923 million, up 4,250 from the week prior.
FHFA House Price Index
Home prices rose 0.5% in October, according to the Federal Housing Finance Agency. This brings yearly appreciation up to 6.6%. Home prices are up 8.7% in the Pacific and 8.2% in the Mountain states. Meanwhile, South Central states and New England were behind but still showing growth at 5.5 and 5.7%, respectively.
Durable Goods Orders
Durable goods orders were up 1.3% in November and have now risen 8.2% on the year. The gains were all in transportation. When this category was taken out, orders were down 0.1% and have risen 7.0% on the year. There was also a 0.1% drop in core capital goods orders, but still an 8.1% yearly gain.
Boeing had a big month at the Dubai Air Show, and aircraft orders were up 31%. October’s reading excluding transportation was revised up to 1.3%, which makes up for this month’s minor drop. Vehicle orders were also up 1.4% in November. Finally, capital goods orders are strong after an upward revision to 0.8% in October.
Personal Incomes and Outlays
Personal incomes were up 0.3% in November, including a 0.4% increase in wages and salaries. Americans put that money back into the economy rather than saving it, as spending was up 0.6%. The savings rate was down 0.3%, coming in at 2.9%.
Prices were up 0.2% overall and 1.8% on the year. Meanwhile, prices in core categories increased 0.1% and 1.5% annually, below Federal Reserve targets.
Consumers spent 1.2% more on nondurable goods, mostly reflecting higher gas prices. Spending on durable goods was unchanged, with vehicle sales being lower. Spending on services was up 0.6% on the month.
New Home Sales
New home sales had a huge spike in November, up 17.5% to 733,000 on a seasonally adjusted annualized basis.
Homebuilders were giving a slight discount, with prices down 0.3% to $318,700. Prices for new homes are only up 1.2% annually. Supply relative to sales is unchanged at 4.6 months.
On a regional level, sales were up 31.1% in the West and 22.8% on the year. In the South, sales were up 14.9% and 32.5% yearly. Meanwhile, sales in the Northeast were up 9.5%, but it still represents the smallest growth in terms of new home sales.
Consumer sentiment fell 0.9 points to 95.9 points in the final reading of December. In a bit of good news, people remain optimistic about the current state of things. This reading is at 113.8.
Expectations were down 4.6 points to 84.3, which represents the weakness in this report. Democrats and Republicans were split as to whether tax reform was a positive or negative.
Inflation expectations over the next year were up 0.2% since November, arriving at 2.7%. Five-year expectations remained flat month to month at 2.4%.
Mortgage rates were up across the board last week, but not by too much. If you’re in the market to buy or refinance, it’s still an excellent time to lock your rate .
Leading off, the 30-year fixed mortgage was up a basis point to 3.94% last week with 0.5 points in fees. At the same time last year, the rate was 3.58%.
Looking at shorter terms, with 0.5 points, the rate for a 15-year fixed mortgage was up two basis points to 3.38%. At this time a year ago, the rate was 3.24%.
Finally, a 5-year treasury-indexed hybrid adjustable rate mortgage (ARM) with 0.3 points was up three basis points on the week. At this time last year, the rate was 3.32%.
Despite closing lower on Friday, the Dow Jones industrial average and S&P 500 both put up five-week winning streaks as President Trump signed the tax bill into law.
The Dow was down 28.23 points Friday to finish at 24,754.06. Nevertheless, this was a 0.42% gain for the week. The S&P 500 ended the week at 2,683.34, down 1.23 points, but with a weekly gain of 0.28%. The Nasdaq finished the week up 0.34%, despite falling 5.40 points Friday to close at 6,959.96.
The Week Ahead
Wednesday, December 27
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.
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.
Pending Home Sales Index (10:00 a.m. ET) – The National Association of REALTORS ® developed the Pending Home Sales Index as a leading indicator of housing activity. Specifically, it’s a leading indicator of existing home sales, not new home sales.
Thursday, December 28
International Trade in Goods (8:30 a.m. ET) – The Bureau of Economic Analysis has begun breaking out the goods from the remaining international trade numbers to get an idea of import and export estimates for GDP calculations.
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.
Quicken Loans will be closed next Monday in observance of New Year’s Day, but I’ll have it all for you next Tuesday.
If mortgages and economic data are the last thing on your mind as you get back to work, I certainly understand. If you subscribe to the Zing Blog below, we’ve got plenty of home, money and lifestyle content to share with you. How about some great tips on keeping those resolutions ? Have a great week!
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