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Week In Review – April 20, 2018

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Week In Review

Volume 24, Number 15

Reginald J. Smith, Community Development Manager – Bank of Kansas CityReginald J. Smith

Economic Highlights for Week Ending April 20, 2018

 

MONDAY, April 16th

Retail sales rebounded in March but the overall spending trend remains modest. Sales rose 0.6% last month, led by a 2.0% jump in sales at auto dealerships. Excluding autos, sales rose just 0.2%. This follows very weak results in the prior three months.  Other gainers last month include drugstores, non-store retailers and furniture stores.  Sales fell at sporting goods stores, apparel stores, building supply stores, department stores, and miscellaneous store retailers.  Weather likely played a role in the weakness at building supply stores.  In March, sales were 4.5% above their year-ago level, up from 4.1% growth in February.  While the outlook for spending is positive on net, it will likely not contribute to first quarter GDP.

The NAHB housing market index slipped 1 point in April to a level of 69.  Homebuilders ratings fell 2 points to 75 for present sales and 1point to 77 for sales six months from now.  Foot traffic through model homes is holding steady at 51. Despite the declines, overall sentiment and sales readings remain quite strong and positive. This bodes well for the new home market this spring. Regionally, the readings remained steady and showed the West still out in front, at 76, the South at 72, the Midwest at 64, and the Northeast at 55.

 

TUESDAY, April 17th

New residential housing starts rose 1.9% in March to an annual rate of 1.319 million. This follows an upwardly revised pace of 1.295 million in February. Housing starts are now 10.9% above their March 2017 level. The gain last month came from an outsized 14.4% increase to a rate of 452k in multifamily housing starts. Single family starts were down 3.7% to an annual rate of 867k. Housing permit issuance, which is often used as a proxy for future building activity, rose 2.5% last month to 1.354 million and is 7.5% higher than in March 2017. Single family permit issuance was down 5.5% last month while multifamily permits surged 22.9%. Total housing permits are higher than the current pace of new starts so construction activity is likely to expand over the next several months, especially in the multifamily segment.

UFSC Week In Review

WEDNESDAY, April 18th

The MBA mortgage applications index rose 4.9% for the week ending April 13. The purchase index rose 6.1% on the week as the refinance index increased 3.5%. The average interest rate on 30-year fixed-rate conforming mortgages ($453,100 or less) remained unchanged at 4.66%. The week’s sharp pickup in mortgage activity shows buyers returning after a two-week lull and may point to a resumption of strong demand in the housing market.

The Federal Reserve’s Beige Book survey showed that economic activity expanded at a modest to moderate pace in all 12 districts in March and early April. Consumer spending was strong in most regions, with a bit of softness in vehicle sales. Residential real estate and construction were strong as well, although limited inventories constrained activity in some districts. Agriculture was little changed, partly because of drought conditions. The energy sector made strides over the reporting period in most districts. The outlook generally remains optimistic even amid concerns about newly imposed and/or proposed tariffs.

 

THURSDAY, April 19th

The U.S. labor market continues to tighten. Jobless claims fell 1k to 232k for the week ending April 14. The four-week moving average rose 1,250 from the previous week’s unrevised average to 231,250. These data include the April payroll reference week, and new filings point toward another solid showing.

Rising inflation in industrial capacity was not good for bonds today where demand fell and yields rose. At 2.92%, the 10-year Treasury yield was up 3bps on the day and 10 bps on the week and approaching the 3% level last seen in early 2014.

 

FRIDAY, April 20th

Stock Market Close for the Week


Index

Latest

A Week Ago

Change



DJIA
24,462.94
24,360.14
+102.80 or +0.42%


NASDAQ
7,146.13
7,106.65
+39.48 or +0.56%


WEEK IN ADVANCE

After a week of mostly housing market related data, reports in the coming week wrap up the sector for the month. Watch for new home sales and pending home sales, both on next week’s calendar.


Key Interest Rates

Latest

6 Mos Ago

1 Yr Ago



Prime Rate
4.75%
4.25%
4.00%


Fed Discount
2.25%
1.75%
1.50%


Fed Funds
1.68%
1.16%
0.91%


11th District COF
0.816%
0.732%
0.591%


10-Year Note
2.96%
2.33%
2.23%


30-Year Treasury Bond
3.15%
2.84%
2.88%


30 -Yr Fixed (FHLMC)
4.47%
3.88%
3.97%


15 -Yr Fixed (FHLMC)
3.94%
3.19%
3.23%

6-Mo Libor (FNMA)
2.45240%
1.50600%
1.42322%

Sources: IBC’ s Money Fund Report; Bank Rate Monitor; Federal Home Loan Bank of San Francisco