Volume 24, Number 16
Reginald J. Smith, Community Development Manager – Bank of Kansas City
Economic Highlights for Week Ending April 27, 2018
MONDAY, April 23rd
Existing home sales rose for the second consecutive month in March, gaining 1.1% to annual pace of 5.60 million following an increase of 3.0% in February to an annual rate of 5.54 million. Despite last month’s gain, existing home sales are still trending a bit lower, and are down 1.2% over the past year. Regionally, sales fell 3.1% in the West after an outsized 11.4% gain in February. Sales slipped 0.4% in the South and were up 6.3% and 5.7% in the Northwest and the Midwest, respectively. The inventory of homes available for sale increased 5.0% on the month to 1.670 million which represents just a 3.6-month supply at the current sales pace. However, inventories remained down a sharp 7.2% on the year. Clearly, such low supply on the market is constraining sales and lifting prices. House prices continued to move higher over the past year as the median price for an existing home gained 5.8% in March to $250,400 from March 2017. NAR chief economist, Lawrence Yun said that closings in March eked forward despite challenging market conditions in most of the country.
TUESDAY, April 24th
New home sales jumped 4.0% in March to an annualized pace of 694k following an upwardly revised gain of 3.6% in February to an annual rate of 667k. New home sales are now 8.8% higher than in March 2017. Regionally, new home sales were wildly mixed with declines of 54.8% in Northeast and 2.4% in the Midwest while surging 28.3% in the West and just 0.8% in the South. The inventory of new homes available for sale was unchanged in March at 301k which represents a 5.2-month supply at the current sales pace. Supply is close to the normal which hopefully will bring some relief to inventory shortages in the resale market. New home prices shot higher over the past year with the median price for a new home up 4.8% in March to $337,200. Given incoming supply and room for prices to move even higher, the outlook for new home sales remains positive for 2018. The housing market is expected to remain a positive contributor to GDP growth this year.
The Conference Board’s consumer confidence index rose 1.7 points in April to 128.7. the level of the index indicates strong optimism among consumers. Indeed, consumers gave higher ratings for both the present situation and expectations in April while purchasing plans increased. Details in the data showed positive labor market assessments with consumers seeing jobs as plentiful and income rising.
The S&P Case/Shiller 20-city home price index rose 0.7% in February from January and gained 6.8% from February 2017, up from a 6.4% year-over-year gain in the previous month. All 20 metro areas tracked by this index reported yearly price gains with Seattle posting the highest rate at 12.7%, followed by Las Vegas with an 11.6% increase, and San Francisco at 10.1%. David M. Blitzer, Managing Director and Chairman of the Index said that with expectations for continued economic growth and further employment gains, the current run of rising prices is likely to continue going forward.
WEDNESDAY, April 25th
The MBA mortgage applications index slipped 0.2% for the week that ended April 20. The purchase index was unchanged on the week while the refinance index dipped 0.3%. Contract mortgage rates rose to their highest level since September 2013. The average 30-year fixed rate for a conforming mortgage jumped 7 bps last week to 4.73%.
THURSDAY, April 26th
Jobless claims plunged by 24k to 209k for the week ending April 21. This marks the lowest level of claims since December 6, 1969 when it was 202,000. Initial claims tend to be volatile so we can’t read too much into the outsized weekly decline. The 4-week average, which smooths weekly bumps, fell only 2,250 in the week to 299,250 which is about where it was this time last month.
FRIDAY, April 27th
The economy grew at an annualized pace of 2.3% in the first quarter, according to the BEA’s advance estimate which was better than expected but down a bit from a 2.9% rate of growth in the fourth quarter. Growth, though moderate, was widespread, including investment, consumer spending, trade, and government. Imports and durable goods spending were drags. Real disposable income growth accelerated to 3.4% on the back of tax cuts, after rising 1.1% in the fourth quarter. The saving rate jumped to 3.1%, from 2.6% in Q4.
Stock Market Close for the Week
A Week Ago
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 Sources: IBC’ s Money Fund Report; Bank Rate Monitor; Federal Home Loan Bank of San Francisco
Key Interest Rates
6 Mos Ago
1 Yr Ago
Sources: IBC’ s Money Fund Report; Bank Rate Monitor; Federal Home Loan Bank of San Francisco