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Week In Review – September 27, 2019

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Subject Matter Experts
UFSC Week In Review
Reginald J. Smith

REGGIE SMITH
Senior Mortgage Banker
NMLS ID 492451
rsmith@fbhl.com

LAT BRANCH HOME LOANS
6201 College Blvd. Suite 375
Overland Park , KS 66211
Office: 913.438.8276
Cell: 816.719.6610
Fax: 913.686.9062


Volume 25, Number 35
Economic Highlights for the Week Ending September 27, 2019
MONDAY, September 23rd 
The Federal Housing Finance Agency purchase only house price index increased 5.0% in July from July one year ago. The housing market remains healthy with solid demand and below average inventories propelling house price growth. House price appreciation was broad based across all census divisions tracked by this index, both on a monthly and yearly basis. The Mountain census division is outperforming the rest while the Mid-Atlantic division had the slowest growth.
TUESDAY, September 24th 
The Conference Boards consumer confidence index dropped unexpectedly this month, falling to 125.1 in September from a revised reading of 134.2 in August. Nevertheless, confidence remains elevated relative to that seen for most of this expansion. In September, consumer assessments of present conditions dropped from 176 to 169, while expectations fell from 106.4 to 95.8. Buying plans were softer this month compared to last month; and more consumers believed there will be fewer jobs while fewer say that jobs are plentiful. Despite lower evaluation of the labor market, scores remain favorable. Overall, fundamentals remain solid for the consumer who will continue to be a key support for economic growth going forward. The S&P CoreLogic Case-Shiller 20-city home price index posted a 2.0% year-over-year gain in July, down from a 2.2% annual gain in the previous month. Phoenix, Las Vegas and Charlotte reported the highest year-over-year gains in July; Phoenix house prices rose 5.8% over the last year, as Las Vegas posted a 4.7% increase and Charlotte prices rose 4.6%. Year-over-year home prices continued to gain, but at ever more modest rates, said Phillip Murphy Managing Director at S&P Dow Jones Indices. Home price gains remained positive in low single digits in most cities, and other fundamentals indicates renewed housing demand.
WEDNESDAY, September 25th 
The MBA mortgage applications index plunged 10.1% in the week ending September 20. The decline was led by a 15.2% drop in the refinance index though the purchase index fell 3.1% on the week as well. Contract mortgage interest rates have moved higher recently cutting into refinancing activity. After jumping 19 bps in the prior week, 30-year fixed rates for conventional loans were up 1 bps last week to 4.02%. New home sales surged 7.1% in August to an annual pace of 713k following an upwardly revised annual rate of 666k in July. New home beat consensus estimates and are now 18.0% higher than in August 2018. Regionally, new home sales were mixed last month, with gains of 16.5% and 6.0% in the West and the South and declines of 5.9% and 3.0% in the Northeast and Midwest. Inventories of new homes available for sale fell 1.2% in August from July but were up 2.5% from one year ago to 326k, which represents a 5.5-month supply at the current sales pace. Median new home prices rose 7.5% on the month to $328,400 and were up 2.2% on the year, the first annual increase in median new home prices in three months. Stronger sales and revisions in the past few months have resulted in tighter market conditions. However, resurgent strength in new home sales, boosted by low rates and still strong jobs, looks to be a positive contributor to the 2019 economy.
THURSDAY, September 26th 
Jobless claims rose 3k to 213k for the week ending September 21. The four-week average continued to move lower last week and is now at 212k. Initial claims remain at historical lows which indicates ongoing strength in labor market conditions. The NAR’s pending home sales index rose 1.6% in August to 107.3. The index tracks the number of signed sales contracts and is considered a leading indicator of existing home sales. The gain and the level of the index suggest that moderate gain in home sales will continue over the next month or two.
FRIDAY, September 27th 
Personal income increased 0.4% in August after just a 0.1% gain in July. The August gain was supported by a strong 0.6% rise in the wages and salaries sub-component of personal income. Consumer spending rose 0.1% last month after a revised 0.5% gain in the previous month. Uneven gains in spending growth so far this quarter could detract from GDP estimates. A closely watched inflation gauge contained in this data series, the core PCE price deflator, rose just 0.1% on the month and is now up 1.8% on the year. Subdued inflation keeps the door open for another rate cut by the Fed next month.

Stock Market Close for the Week

Index Latest A Week Ago Change
DJIA 26,820.25 26,935.07 -114.82 or -0.43%
NASDAQ 7,939.63 8,117.67 -178.04 or -2.19%

WEEK IN ADVANCE

The economy is on an even keel and payroll growth is expected to hold up with the release of the employment report next Friday. The markets and political scene are quite volatile going into October, where things could get even more unpredictable.

Key Interest Rates Latest 6 Mos Ago 1 Yr Ago
Prime Rate5.005.50 5.00
Fed Discount 2.503.002.50
Fed Funds1.902.413.07
11th District COF 1.155 1.125 1.018
10-Year Note 1.682.413.07
30-Year Treasury Bond 2.132.843.20
30-Yr Fixed (FHLMC) 3.64 4.064.72
15-Yr Fixed (FHLMC) 3.163.574.16
6-Mo Libor (FNMA) 2.03650 2.68575 2.53563

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

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