Last week we received several housing reports. The Wells Fargo/ NAHB Housing Market Index reported that builder confidence achieved its highest reading since November 2005, with a one-point increase to a reading of 62 in September. November 2005’s reading was 68. Readings over 50 indicate that a majority of home builders are confident about housing market conditions.
Housing Starts dropped in August. The drop wasn’t a surprise, since many housing analysts’ had expected a drop due to the New York Tax Credit expiring. The Commerce Department reported that August housing starts fell to a seasonally-adjusted annual reading of 1.13 million starts against projections of 1.16 million starts and 1.16 million housing starts in July.
Building Permits issued in August exceeded July expectations. Building permits were higher in August with a reading of 1.17 permits issued for residential construction and 1.13 million permits issued in July.
The big news came from the Fed’s Federal Open Market Committee, in which they decided not to raise interest rates. Fed Chair Janet Yellen followed up with the FOMC statement at her press conference and said that the Fed is not yet ready to raise rates, but that a majority of FOMC members are prepared to raise rates before the end of the year.
The Federal Reserve, some time back set a goal of reaching an inflation rate of 2.00 percent as one of several benchmarks for raising the target federal funds rate that currently stands at 0.00 percent to 0.250 percent. However, due to low oil prices, achieving that goal hasn’t been reached. Furthermore, the Fed’s remains concerned with external factors like growth in China and the European Union’s Quantitative Easing, which hasn’t done much if anything to stimulating their economy. All of which, could in the near future negatively affect the U.S. economy. That’s putting the Fed somewhat in a box, however, as it is unlikely that we’ll see any significant turn around in either China or Europe between now and year’s end.
The Consumer Price Index for August fell from July’s reading of 0.10 percent to -0.10 percent in August. Lower prices were driven by lower fuel costs. The dip in consumer costs was the first since January.
The Core Consumer Price Index, which excludes volatile food and energy sectors, was unchanged at 0.10 percent in August, which matches analyst expectations and July’s reading.
Freddie Mac reported that mortgage rates rose across the board last week. The rate for a 30-year fixed rate mortgage rose by one basis point to 3.91 percent. The average rate for a 15-year mortgage also rose by one basis point to 3.11 percent and the average rate for a 5/1 adjustable rate mortgage also rose by one basis point to 2.92 percent. Discount points averaged 0.60 got 30-year fixed rate mortgages, 0.70 percent for 15-year mortgages and 0.50 percent for a 5/1 adjustable rate mortgage.
What’s Ahead for the Week
This week we’ll receive reports on on new and existing home sales, FHFA’s House Price Index, along with new jobless claims and mortgage rates.
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