Last week we received a number of reports related to housing. The Case-Shiller 20-City Home Price Index for June rose to 4.50 percent as compared to May’s reading of 4.40 percent. Denver, Colorado was the only city to post double-digit year-over-year growth. The index indicated national home prices grew by five percent year-over-year in June. When comparing increases in home prices and wage increases, America has a serious problem. Wages are increasing on average at about 2.0 percent, while home pricing is over twice the rate, making home affordability harder to achieve.
FHFA also released its House Price Index for June. Home prices for properties associated with mortgages owned or backed by Fannie Mae and Freddie Mac rose at a year-over-year rate of 5.60 percent in June as compared to May’s reading of 5.70 percent.
The Commerce Department’s report on New Home Sales increased in July to a year-over-year reading of 507,000 units against expectations of 510,000 and June’s revised reading of 481,000 units sold. The original reading for June was 482,000 units sold. New home sales are one of several indicators of recovering housing markets and July’s reading was 25 percent higher than it was one year ago. Additionally, New Home Sales are at their highest rate in nearly eight years.
The housing market began the second half of 2015 on a positive note, after June’s reading of -1.80 percent. Pending home sales for July grew by 0.50 percent. Led by a solid gain in the Northeast, contract activity in most of the country held steady last month and bodes well for Existing Home Sales to maintain their elevated pace, as we close out the summer.
While demand and sales continue to be stronger than earlier this year, real estate professionals have reported since the spring that available listings in the affordable price range remains sparse for would-be home buyers and are likely holding back sales from being more robust.
Mortgage rates across the board were lower last week. Freddie Mac’s mortgage rate survey reported that the average rate for a 30-year fixed rate mortgage fell to 3.84 percent; the rate for a 15-year fixed rate mortgage also fell to 3.06 percent. The average rate for a 5/1 adjustable rate mortgage was lower at 2.90 percent. Discount points for fixed rate mortgages were unchanged and fell from an average of 0.50 percent to 0.40 percent for 5/1 adjustable rate mortgages.
Weekly jobless claims were lower last week with 271,000 new claims and met expectations. Fewer people sought U.S. unemployment benefits last week against the previous week’s reading of 277,000 new claims. Last week’s reading was the 25th consecutive week of new jobless claims readings under the benchmark of 300,000 new claims filed and this was the longest stretch for new jobless claims under the 300,000 new claims benchmark in more than fifteen years. The four-week average, a less volatile measure, ticked up 1,000 to 272,500.
Applications are a proxy for layoffs and are at historically low levels, suggesting businesses are holding onto their staff. Earlier this month, the four-week average stood at 266,000, the lowest since April 15, 2000.
The application’s data will be closely watched in the coming weeks for any sign that companies are cutting jobs in the wake of the past week’s stock market volatility and global economic turmoil. For now, the data suggest hiring has remained solid this month.
What’s Ahead for the Week?
We’ll get the Federal Reserve’s Beige Book report, ADP, the Non-farm Payrolls report and the national unemployment rate. As usual, we get Freddie Mac’s weekly survey on mortgage rates and new jobless claims.
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