Financial Reports

Last week’s economic reports included readings on construction spending and multiple labor sector reports including private and public sector jobs and the national unemployment rate. Weekly reports on average mortgage rates and first-time jobless claims were also released.

Construction Spending Falls 0.80 Percent in October

Commerce Department reports on construction spending said that spending fell by 0.80 percent to a seasonally-adjusted annual rate of $1.29 million. Analysts expected construction spending to increase by 0.40 percent based on September’s original reading of 0.50 percent growth, which was later revised to -0.30 percent.

Less construction of multifamily homes and apartments caused a decrease in October construction spending. Private construction spending fell by -1.00 percent in October; residential construction fell 0.90 percent as multi-family construction spending fell 1.60 percent after a 2.10 percent dip in September. Construction spending on single-family homes increased by 1.60 percent.

Low mortgage rates, a strong job market, and rising wages contributed to a strong demand for homes. Short inventories of available homes continued to pressure home builders to build more homes; construction of homes jumped 3.80 percent in October.

Mortgage Rates, Mixed, New Jobless Claims Fall

Freddie Mac reported no change in the average rate of 3.68 percent for 30-year fixed-rate mortgages; rates for 15-year fixed-rate mortgages averaged 3.14 percent and were one basis point lower than for the prior week.

Rates for 5/1 adjustable-rate mortgages fell four basis points on average to 3.39 percent. Discount points averaged 0.50 percent for 30-year fixed-rate mortgages and 0.40 percent for 15-year fixed-rate mortgages and 5/1 adjustable-rate mortgages.

First-time jobless claims fell from the prior week’s reading of 213,000 claims to 203,000 claims filed last week. ADP reported 67,000 private-sector jobs added in November.

The federal government’s Non-Farm Payrolls report offset the dismal reading for private-sector job growth. 266,000 public and private sector jobs were added in November and surpassed expectations of 180,000 public and private sector jobs added.

Approximately 55,000 were accounted for as auto workers returned after a strike. 156,0000 public and private sector jobs were added in October. The national unemployment rate dropped to 3.50 percent in November and matched the reading for unemployment posted at the end of 1969.

What’s Ahead

This week’s scheduled economic reports include readings on inflation, retail sales and the post-meeting statement from the Federal Reserve’s Federal Open Market Committee. Fed Chair Jerome Powell is scheduled to give a press conference after the FOMC statement. Weekly readings on mortgage rates and new jobless claims will also be released.

Last week’s economic news included readings from Case-Shiller Home Price Indices, readings on new and pending home sales and weekly readings on mortgage rates and new jobless claims. The holiday break on Thursday and Friday curtailed some economic reports.

Case-Shiller Reports Uptick in September Home Prices

Home prices rose 0.10 percent to a year-over-year growth rate of 3.20 percent in September. Rates of home price growth showed a new geographic trend with smaller cities showing higher home price growth than the coastal cities that dominated rapid home price growth in recent years. Homebuyers seeking affordable options turned inland and southward where home prices are less expensive.

Home prices in Phoenix, Arizona rose 6.00 percent year-over-year in September and claimed the top spot for home price growth in Case-Shiller’s 20-City Home Price Index. Charlotte, North Carolina held second place in home price growth with a reading of 4.60 percent year-over-year.

Tampa, Florida rounded out the top three cities with home price growth of 4.50 percent year-over-year. September’s readings indicate slowing home price growth as compared to double-digit growth rates that dominated Case-Shiller Home Price Indices in the past.

Analysts said that while low mortgage rates are helpful to home buyers, strict mortgage requirements and home price growth rates continued to outstrip inflation and wage growth.

New and Pending Home Sales Dip in October

The Commerce Department reported 733,000 sales of new homes in October; this was lower than 738,000 new homes sold in September but exceeded analysts’ forecasts for 705,000 sales. Fewer homes are sold in the fall as peak home-buying season winds down and winter holidays approach; September’s reading for new homes sold was upwardly revised from the original reading of 701,000 new homes sold.

The National Association of Realtors® reported fewer pending home sales in October with a negative reading of -1.70 percent as compared to September’s reading of +1.50 percent. Factors contributing to fewer purchase contracts signed included shortages of available homes and higher mortgage rates in October.

Pending sales are home sales for which purchase offers have been made and the sale is awaiting completion. Pending home sales are a gauge of future mortgage loan volume and completed home sales.

Mortgage Rates, New Jobless Claims

Freddie Mac reported mixed movement on average mortgage rates last week. Rates for 30-year fixed-rate mortgages averaged 3.68 percent and were two basis points higher. The average rate for 15-year fixed-rate mortgages was unchanged at 3.15 percent. The average rate for 5/1 adjustable rate mortgages rose four basis points to 3.43 percent.

New jobless claims fell sharply last week from 228,0000 claims filed the prior week to 213,000 first-time claims filed last week. The dip in new jobless claims brought last week’s reading near to a post-recession low.

What’s Ahead

This week’s scheduled economic news includes readings on construction spending, public and private-sector jobs and the national unemployment rate. The monthly reading on consumer sentiment will be released along with weekly reports on mortgage rates and first-time jobless claims.