Last week’s economic news included several housing-related reports that provided mixed results with lower than expected sales of previously owned homes and higher than expected sales of new homes. The FHFA also released its House Price report for July, which noted that year-over-year home prices were lower than year-over-year prices reported in June. Here’s a look at the details:
Existing Home Sales Lower, New Home Sales Higher
The National Association of REALTORS® reported August sales of existing home sales fell to 5.05 million previously owned homes sold. This was lower than the expected reading of 5.20 million existing homes sold and July’s revised reading of 5.14 million previously owned homes sold on a seasonally adjusted annual basis. The consensus figure was based on the original reading of 5.15 million homes sold in July. While the sales pace of existing homes has slowed in recent months, August’s reading marked the first time in five months that sales fell below the previous month’s reading.
Analysts cited consumer concerns over sluggish labor markets as a deterrent to home sales, and also said that tighter mortgage credit standards are making it tough for first-time home buyers to purchase homes.
New home sales were higher in August according to the Department of Commerce. 504,000 new homes were sold and surpassed expected sales of 426,000 new homes and July’s reading of 427,000 new homes sold. This surge propelled new home sales to their highest level since May 2008, and surpassed expectations of 426,000 new homes sold. The original reading for July was 412,000 new homes sold on a seasonally adjusted annual basis, but the Department of Commerce later adjusted July’s reading to 427,000 new homes sold during July. Month-to-month readings for new home sales are notoriously volatile, and many analysts prefer to consider a rolling average of several months’ new home sales data.
FHFA: Home Prices Rise in August, Regional Home Prices Higher Year-Over-Year
FHFA (Federal Housing Finance Agency), which oversees Fannie Mae and Freddie Mac, reported that prices of homes connected with Fannie Mae and Freddie Mac mortgages grew by 0.10 percent in July; this was lower than the 0.30 percent growth in home prices reported in June. FHFA also said that prices of homes were up by 4.04 percent year over year; this again represented a slower pace in home price growth. This was the eighth consecutive monthly gain for FHFA home prices, but U.S. home prices remain approximately 6.40 percent below their peak in 2007.
Year-over-year home prices rose in all nine census divisions according to FHFA. While regional home prices ranged from -0.50 to +0.40 percent from June to July, FHFA reported that year-over-year home prices grew in all nine regions and varied between +1.60 percent in the Mid-Atlantic region to 7.20 percent in the Pacific region.
Mortgage Rates Mixed
Freddie Mac reported mixed readings for average mortgage rates last week. The average rate for a 30-year fixed rate mortgage dropped three basis points to 4.20 percent. 15 year mortgage rates averaged 3.36 percent, one basis point lower than the prior week’s reading. The average rate for a 5/1 adjustable rate mortgage was two basis points higher at 3.08. Discount points remained steady at 0.50 percent for fixed rate mortgages, but dropped to 0.40 percent for 5/1 adjustable rate mortgages.
Jobless Claims Rise, Consumer Sentiment Holds Steady
The Bureau of Labor Statistics reported that new jobless claims rose to 293,000 from the prior week’s reading of 281,000 new jobless claims filed. The latest jobless claims reading was lower than expectations of 300,000 new jobless claims filed. Last week’s economic reports were rounded out by the Consumer Sentiment Index, which held steady in September with a reading of 84.6. This reading was identical to July’s reading and higher than the expected reading of 84.3.
What’s Ahead
Next week’s economic news wil include the Case-Shiller Home Price Indices for July and Construction Spending for August.
Last week’s housing related economic reports were slim, but an unexpected increase in weekly jobless claims gained attention. Analysts calmed concerns by noting that last week’s reading of 315,000 new jobless claims was not far removed from jobless claim levels before the recession. Expectations for last week’s reading were for 301,000 new jobless claims based on the previous week’s original reading of 302,000. The previous week’s reading was revised to 304,000 new jobless claims.