I finally went and saw the big blockbuster space movie of the year. It was pretty good, although I thought certain things were a little weird. This last week has been weird in general if you’re a fan of basketball or the Grammys. The slightly unsettled feeling has carried over into the stock market as traders have concerns over the coronavirus.
Before we get to stocks, let’s take a look at economic data.
Headline News
Here are this week’s selected economic releases. This information was compiled with the assistance of Econoday summaries.1
MBA Mortgage Applications
Mortgage applications were down 1.2% on the week, but they’re still at a very high volume considering the prior week saw an increase of 30.2% in applications.
Purchase applications were down 2% after being up 16% the week prior. These are still up 8% on the year. On the refinance side, after being up 43% last week, applications were only down 2% as well. Rates for a 30-year fixed conforming mortgage with a 20% down payment averaged 3.97% last week.
FHFA House Price Index
Home prices were up 0.2% on the month of November. This was on the low side of the expectations. The consensus was for a 0.3% increase. Additionally, year-on-year growth took a step back, of just 4.9% compared to 5% in October. This is the slowest annual growth in a couple of years.
It’s worth noting that this is the data in that lags by 2 months, so it doesn’t take into account the recent uptick in new home sales seen in December.
Existing Home Sales
Existing home sales in December were up 3.6% on the month to come in at 5.54 million, easily beating expectations for 5.43 million in sales. This is a huge jump in comparison to last December. The year-on-year sales growth rate is 10.8%, way up from 2.7% in November. This is the highest that sales have been in about 2 years.
Single-family homes saw their sales increase 2.7% on the month and 10.7% on the year to come in at 4.92 million, but the real driver of sales growth was condo sales which were up 10.7% in December to 620,000, which is 12.7% than a year ago.
The median price of an existing home was up 7.8% on the year at $274,500. However, supply was down 14.6% at 1.4 million units. At the current rate of sales, there’s only 3 months’ worth of supply left on the market.
Jobless Claims
Initial jobless claims were up 6,000 last week to come in at 211,000. The 4-week average of initial claims was down 3,250 to settle at 213,250.
Meanwhile, on the continuing claims side, these were down 37,000 to come in at 1.731 million. The 4-week moving average was up 2,000 at about 1.758 million.
Mortgage Rates
Mortgage rates hit a 3-month low last week. The stock market reversed some of its recent gains and no doubt this had people pouring some money into the bond market. If you happen to be in the market to purchase or refinance a home, it’s a great time to lock your rate.
The average rate for a 30-year fixed mortgage with 0.8 points paid in fees was down five basis points to come in at 3.6%, which has fallen from 4.45% a year ago.
Looking at shorter terms, the average rate on a 15-year fixed mortgage with 0.8 points paid was also down five basis points to 3.04%. This is down from 3.88% last year.
Finally, the average rate on a 5-year treasury-indexed, hybrid adjustable rate mortgage was down 11 basis points to 3.28% with 0.3 points paid. This is a decrease from 3.9% at this time last year.
Stock Market
It’s not often that we have cause to comment on public health crises here in Market Update, but a previously unseen version of the coronavirus is what was moving the market last week. The virus, which is in the same class as the common cold but also more serious illnesses like SARS and MERS, has infected thousands and killed 80 as of the latest available report. The epicenter is Wuhan, China. Although authorities have placed areas across the region on lockdown, there are now five U.S. cases.
As evidenced by the long and drawn-out trade war with the U.S., nations consider China a significant player in the modern global economy. Between that and the spread of the virus to other nations, there are serious concerns over the impact on the global economy. The Dow Jones Industrial Average was down significantly again this morning due to concerns about the virus and a downturn in travel stocks.
The Dow was down 170.36 points Friday to close at 28,989.73, down 1.22% on the week. Meanwhile, the S&P 500 was down 1.03% on the week after falling 30.07 points Friday to close at 3,295.47. Finally, the Nasdaq finished Friday at 9,314.91 falling 87.57 points on the day and 0.79% over the previous 5-day period.
The Week Ahead
Monday, January 27
New Home Sales (10:00 a.m. ET) – This report measures the number of newly constructed homes with a committed sale during the month.
Tuesday, January 28
Durable Goods Orders (8:30 a.m. ET) – These are based on new orders placed with domestic manufacturers for factory goods.
S&P CoreLogic Case-Shiller HPI (9:00 a.m. ET) – The S&P CoreLogic Case-Shiller home price 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 surveys consumers on their feelings about current and future business and employment conditions as well as their future spending plans.
Wednesday, January 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
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.
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, January 30
Gross Domestic Product (GDP) (8:30 a.m. ET) – This release measures the monetary value of all final goods and services produced within the U.S. This report is released on a monthly basis with estimates on the growth in the previous quarter.
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 4-week moving average of new claims smooths out weekly volatility.
Friday, January 31
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.
Personal Income and Outlays (10:00 a.m. 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.
All this will be covered for you in next week’s Market Update. There’s also a Federal Reserve interest rate decision, so traders and analysts will be busy.
If this isn’t the type of thing that gets your motor running on a Monday afternoon, we’ve got plenty of home, money and lifestyle content to share with you if you subscribe to our mailing list below. The big game is coming up. Don’t forget to enter our Rocket Mortgage® Super Bowl Squares Sweepstakes. Here are our tips for hosting the ultimate Super Bowl party. Have a great week!
1Important Legal Notice: Econoday has attempted to verify the information contained in this calendar. However, any aspect of such information may change without notice. Econoday does not provide investment advice, and does not represent or warrant that any of the information is accurate or complete at any time. Copyright 2020 Econoday, Inc. All rights reserved.
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