Health Bill Drives Market Moves – Market Update


There wasn’t much big-time economic data last week, which meant that politics took center stage in the minds of many traders. It was a wild ride, but before we get to stocks, we did get a lot of housing data.
Headline News
MBA Mortgage Applications: Mortgage applications were down 2.7% overall last week as the average rate on a 30-year fixed-rate mortgage held at 4.46%. Purchase applications were down 2.0% while applications to refinance fell 3.0%.
FHFA House Price Index: Housing prices were flat in January. This caused year-on-year appreciation to fall from 6.2% in December to 5.7% in January. This is the weakest the index has been in more than four years and the lowest annual appreciation in the last year and a half. Prices in the East South Central region fell 2.0%, rising 3.5% on the year. Homes in the Pacific were being priced 0.6% higher. There was an 8.3% annual gain in listing prices in the Mountain region as well.
Existing Home Sales: Existing home sales fell 3.7% to a seasonally adjusted annualized rate of 5.480 million. Expectations had been for a smaller decrease. Single-family home sales were down 3.0% to 4.890 million. Meanwhile, multifamily sales fell 9.2% to 590,000. Sales of existing homes are up 5.4% on the year with single-family residences being up 5.8% and condos up 1.7%. Sales prices are up 7.7% on the year at $228,400. There was a 4.2% gain in supplying the market for February coming in at 1.75 million. Supply is at 3.8 months, compared to 3.5 months in January. The average home spent 45 days on the market. Sales in the Northeast were down 13.8% with a 7.0% monthly decline in the Midwest as well.
Jobless Claims: Initial claims were up 15,000 last week to 258,000. The four-week average was 1,000 higher to come in at 240,000. Continuing claims went in the opposite direction, down 39,000 to 2 million exactly. The four-week average fell 32,000 to 2.027 million.
New Home Sales: Sales of new homes did significantly better than their existing counterparts in February, coming in at 6.1% to 592,000. Part of the reason may be that the median price fell 3.9% to $296,200. Prices have actually fallen on an annual basis, down 4.9%. However, the average price is up 11.7% on the year to $390,400, with luxury home sales lifting prices to a new record. The Midwest had sales jump 21,000 higher to 89,000. There were gains of 11,000 in the West and South as well. Sales were down by 9,000 in the Northeast, coming in at 33,000 total. Supply in the market fell from 5.6 months to 5.4 months after the number of new homes available rose to 266,000.
Durable Goods Orders: New orders were up 1.7% for durable goods in the month to an annual rate of 5.0%. When transportation is taken out of the equation, orders were only 0.4%. Most of the monthly gain was on aircraft orders. Still, orders taking out transportation are up 4.6% on the year. However, core capital goods were down 0.1%, but at 2.7% annually. Inventories grew by 0.2% and total shipments were up 0.3%.
Mortgage Rates
Mortgage rates dropped significantly last week. There’s some uncertainty in the markets for reasons we’ll get into a bit below. If you don’t want to get caught trying to time the highs and lows, this is a great chance to lock your rate while they remain low.
Last week, 30-year fixed-rate mortgages (FRMs) averaged 4.23% with an average 0.5 point for the week ending March 23, 2017, down from last week when they averaged 4.30%. A year ago at this time, 30-year FRMs averaged 3.71%.

Shorter-term 15-year FRMs this week averaged 3.44% with an average 0.5 point, down from last week when they averaged 3.50%. A year ago at this time, 15-year FRMs averaged 2.96%.
Finally, 5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 3.24% this week with an average 0.4 point, down from last week when they averaged 3.28%. A year ago, 5-year ARMs averaged 2.89%.
Stock Market
President Donald Trump’s health care bill ran into an immovable roadblock in the House of Representatives as he didn’t get the necessary number of votes. The stock market didn’t react well because it was the first test of his ability to get policy through. That said, things got a little better Friday as the market now expects him to move on to tax policy.
The Dow Jones Industrial Average closed at 20,596.72, which was down 59.86 points and fell 1.52% on the week. The S&P 500 was down 1.98 points and 1.44% on the week after closing at 2,343.98. The NASDAQ was up 11.05 points to finish at 5,828.74, down 1.22%.
The Week Ahead
Tuesday, March 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.
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, March 29
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.
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, March 30
Gross Domestic Product (GDP) (8:30 a.m. ET) – This measures the monetary value of all final goods and services produced within the U.S. This report is released on a quarterly basis.
Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to report 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.
Friday, March 31
Personal Income and Outlays (8:30 a.m. ET) – This measures all possible income sources as well as public expenditures.
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 are a few heavy-hitter economic reports this week, including the always important GDP. We’ll be keeping an eye on that.
I’m going to close this week with a public service announcement to be extra careful about anything you read this Saturday. On this April Fools’ Day, may you be the prankster rather than the pranked. If this mortgage and economic stuff isn’t floating your boat, we have plenty of home, money and lifestyle content to share with you if you subscribe to the Zing Blog below. Check out this post on the history of April Fools’ Day . Have a good week!
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