Volume 24, Number 8
Reginald J. Smith, Community Development Manager – Bank of Kansas City
Economic Highlights for Week Ending March 2, 2018
MONDAY, February 26th
New home sales declined 7.8% in January to an annualized pace of 593k following a similar sized decline of 7.6% in December to an annual pace of 643k. New home sales downshifted the last couple of months after a strong November to leave January new home sales down 1.0% from last year. Regionally, new home sales were quite mixed with huge declines in the Northeast and South, a strong gain in the Midwest and a modest gain in the West. The inventory of new homes available for sale rose 2.4% to 301k in January from December which represents a 6.1-month supply at the current sales pace. Supply is in the normal range which hopefully will bring some relief to inventory shortages in the resale market. New home prices continued to appreciate moderately over the past year with the median price for a new home up 2.5% to $323,000 in January from January 2017. Given incoming supply and room for prices to move higher, the outlook for new home sales remains positive for 2018, despite recent declines. The housing market is expected to remain a positive contributor to GDP growth this year.
TUESDAY, February 27th
The S&P CoreLogic Case-Shiller 20-city home price index rose 0.6% in December on a monthly, seasonally adjusted basis and posted a 6.3% year-over-year gain, down from 6.4% in the previous month. All 20 major metro areas tracked by this index posted house price gains over the past year led by Seattle at 12.7%, followed by Las Vegas at 11.1% and San Francisco at 9.2%. David M. Blitzer, Managing Director and Chairman of the Index says that we are experiencing a boom in housing prices. Recent data suggest some slowing in housing activity; if it persists we could see some moderation in prices gains later this year.
The consumer confidence index shot up 6.5 points in February to 130.8, its highest level since early 2000. This months report showed solid improvement in present situations and in economic expectations. Consumers were more pleased with the job market, and businesses reported good business conditions. Purchase plans rebounded somewhat, with homebuying and appliance purchasing plans moving higher.
The new Fed Chairman, Jerome Powell in his first testimony before Congress today emphasized that the strength of the economy and the likelihood that inflation will rise and hold near the Feds 2% target will bring a series of gradual rate hikes this year though he failed to specify if it would be three or four. He said that fiscal policy will remain stimulative and that it should be good for economic growth. He downplayed the ongoing volatility of the stock market saying financial conditions remain supportive of the economy and are not weighing heavily on the outlook. Powells remarks raised rate hike concerns and equities sold off with the Dow down 1.2% today to 25,410. Expectations of rate hikes led to sinking demand for short-term Treasuries which raised corresponding yields with the 2-year yield up a noticeable 4 basis points to 2.27 percent.
WEDNESDAY, February 28th
Mortgage applications were up last week, even amid higher rate recently. The MBA mortgage applications index rose 2.7% for the week ending February 23. The purchase index was up 6.2% on the week as the refinance index fell 1.2%. Contract mortgage interest rates for conforming mortgages were little changed last week at 4.64%, after gaining in recent weeks to the highest level in 4 years.
The pending home sales index dropped 4.7% in January to 104.6 to end three straight months of consecutive gains. The index which is a forward-looking indicator of existing home sales suggests that re-sales will continue to slow over the next month or two, after declines in December and January. Lack of supply is a key factor holding down sales along with rising mortgage rates.
THURSDAY, March 1st
Jobless claims fell 10k to 210k for the week ending February 24. This is the lowest level of initial unemployment insurance filings in 49 years! The 4-week moving average also declined to 220,500 which is 15k lower than its month-ago comparison indicating another strong showing for the February employment report.
FRIDAY, March 2nd
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