Last week's scheduled economic news included releases from the National Association of Home Builders, Housing Starts, and Existing Home Sales. Weekly reports on new jobless claims and mortgage rates were also released.
The National Association of Realtors® reported that sales of previously owned homes rose to 5.46 million sales on an annual seasonally adjusted basis in December. This reading surpassed expectations of 5.21 million sales and November's reading of 4.76 million sales. November's low reading was in part affected by new mortgage rules, which delayed some closings into December. Economic factors pushing housing markets include low driven by falling fuel costs easing consumers' budgets could provide confidence to move up to a larger home and for first time buyers to enter the market.
Existing Home Sales Up 7.6 Percent in December
There was a 3.9 month supply of pre-owned homes on the market in December; this was the lowest inventory since January 2005. High demand for homes and a slim supply of available homes continued to tighten housing markets. Growing demand for homes coupled with a shortage of homes for sale are driving up prices; the national average price of a pre-owned home rose 7.60 percent in December to $224,100. Rapidly rising home prices present an obstacle to first time buyers and as home prices rise, more buyers will face affordability concerns.
Housing Starts dipped in December to 1.15 million as compared to expectations of 1.23 million and November's reading of 1.18 million housing starts annually. Builders constructed homes in 2015 at the highest rate since the recession. While December's reading fell short of expectations, housing starts increased nearly 11 percent year-over-year. While builders cite obstacles such as shortages of land and labor, a growing pace of housing starts is seen as a partial solution to the shortage of available homes.
Building permits issued increased 12 percent in 2015; permits issued gauge future building activity and supply of available homes.
Mortgage Rates Fall for Third Consecutive Week
Average mortgage rates fell last week according to Freddie Mac. The average rate for a 30-year fixed rate mortgage dropped 11 basis points to 3.81 percent; the rate for a 15-year fixed rate mortgage fell by nine basis points to an average of 3.10 percent. The average rate for a 5/1 adjustable rate mortgage dropped 10 basis points to 2.91 percent. Discount points averaged 0.60, 0.50 and 0.40 percent respectively. Sean Becketti, chief economist for Freddie Mac, cited turbulence in the financial markets as a factor contributing to lower mortgage rates.
New jobless claims rose to a seven week high of 293,000 new claims as compared to expectations of 279,000 new claims and the prior week's reading of 283,000 new claims. The four-week rolling average of new claims jumped by 6.500 new claims to an average of 285,000 claims. Lingering layoffs of temporary holiday workers were cited as contributing to higher first-time claims.
Next week's scheduled events include data on new and pending home sales, the Case-Shiller home price indexes. The Fed will release its latest FOMC statement. Weekly reports on mortgage rates and new jobless claims will be released as usual. Reports on consumer confidence and sentiment will also be released.