Financial Report

Last week’s financial and economic reporting included readings from S&P Case-Shiller Home Price Indices, the  Federal Housing Finance Agency and the federal government reported on construction spending. Reports on public and private-sector jobs growth and the national unemployment rate were also published along with weekly readings on mortgage rates and jobless claims.

S&P Case-Shiller: Home Price Growth Expected to Slow in 2022

National home prices grew by 19.20 percent year-over-year in January as compared to December’s year-over-year pace of 18.90 percent according to the monthly S&P Case-Shiller National Home Price Index. The 20-City Home Price Index revealed no change in the metro areas holding the top three spots for home price growth. Phoenix, Arizona topped the list with year-over-year home price growth of  32.60 percent; Tampa, Florida followed with a year-over-year home price growth of 30.8 percent, and Miami, Florida reported year-over-year home price growth of 28.10 percent. Analysts expect home price growth to slow in 2022 and into 2023. Affordability concerns and rising mortgage rates sidelined first-time and modest-income buyers in high-demand metro areas where multiple offers and cash buyers competed with buyers financing their home purchases.

In separate reporting, the Federal Housing Finance Agency also reported higher home price growth for single-family homes owned by Fannie Mae and Freddie Mac. Year-over-year home prices grew by 18,20 percent in January as compared to December’s home price growth rate of  17.70 percent.

Mortgage Rates, New Jobless Claims Rise

Freddie Mac reported higher average mortgage rates last week as the rate for 30-year fixed-rate mortgages rose by 25 basis points to 4.67 percent. Rates for 15-year fixed-rate mortgages averaged 3.83 percent and 20 basis points higher than in the previous week. 5/1 adjustable-rate mortgages averaged 3.50 percent and were 14 basis points higher on average. Discount points averaged 0.80 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

Initial jobless claims rose last week with 202,000 new claims filed; analysts expected 195,000 new claims and 188,000 new claims were filed in the previous week. Continuing jobless claims fell with 1.31 million ongoing claims filed as compared to 1.34 million continuing jobless claims filed in the previous week.

Construction Spending, Jobs Growth Fall in February

The Commerce Department reported less construction spending in February than in  January. Spending rose by 0.50 percent as compared to the expected reading of 1.0 percent and January’s construction spending growth of 1.60 percent.

The federal government’s Non-Farm Payrolls report indicated that 431,000 public and private-sector jobs were added in March as compared to the expected reading of 490, 000 jobs and February’s reading of 750,000 jobs added. ADP reported 455,000 private-sector jobs added in March as compared to an expected reading of 450,000 jobs added and 486,000 private-sector jobs added in February. The national unemployment rate dropped from 3.80 percent to 3.60 percent in March.

What’s Ahead

This week’s scheduled economic reporting includes the release of the Federal Open Market Committee’s minutes from its last meeting and weekly readings on mortgage rates and jobless claims.

Last week’s economic reporting included a speech and press conference by Federal Reserve chair Jerome Powell, data on pending home sales and sales of new homes, and the University of Michigan’s monthly reading on consumer sentiment. Weekly readings on mortgage rates and jobless claims were also published.

Fed Chair: Rate Hikes Above 0.25 Percent May be Needed to Ease Inflation

Federal Reserve chair Jerome Powell said that the Fed is willing to move beyond its recent 0.25 percent rate hike to control inflation.  In a speech made to the National Business Association for Business Economics, Mr.Powell said, “We will take necessary steps to ensure a return to price stability. In particular, if we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at  a meeting or meetings, we will do so.” Mr. Powell clarified that the Fed is willing to raise rates as needed to control inflation. He predicted that the Fed would raise its key interest rate to 1.90 percent this year and 2,8 percent in 2023.

Mortgage Rates Rise Again as Sales of New Homes Fall

Freddie Mac reported higher mortgage rates last week as rates for 30-year fixed-rate mortgages rose 26 basis points and averaged 4.42 percent; the average rate for 15-year fixed-rate mortgages rose by 24 basis points to 3.63 percent. The average rate for 5/1 adjustable rate mortgages rose by 17 basis points to 3.36 percent. Discount points averaged 0.80 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

The combined impact of rising home prices and mortgage rates caused sales of new homes to fall in February.  772,000 new homes were sold on a seasonally-adjusted annual basis as compared to expectations of 805,000 sales and January’s reading of 788,000 new homes sold.

Initial jobless claims fell last week to 187,000 claims filed as compared to expectations of 210,000 new claims filed and the prior week’s reading of 215,000 first-time jobless claims filed. Continuing jobless claims fell to 1.35 million filings as compared to the previous week’s reading of 1.42 million jobless claims filed on a seasonally-adjusted annual basis.  

The University of Michigan’s final Consumer Sentiment Index for March showed consumer skepticism about current economic conditions. The March index reading was 59.4 as compared to the expected reading of 59.7, which matched February’s index reading for consumer sentiment.

What’s Ahead

This week’s scheduled economic reporting includes readings from Case-Shiller Home Price Indices, The Federal Housing Finance Administration’s House Price Index, and data on public and private-sector jobs growth. The national unemployment rate will be published along with weekly readings on mortgage rates and jobless claims.