After the solar eclipse on Monday, data this week shed light on the stalling U.S. housing market.
New home sales were much weaker than expected in July, falling to a 571,000-unit rate. This was the lowest sales rate since last December. Over the previous 12 months, new homes sales were down 8.9 percent. Over the 12 months ending in July, the median sales price of a new house increased by 6.3 percent.
Existing home sales also fell in July. Sales of existing homes fell by 1.3 percent in July, to a 5,440,000 unit annual rate. This is clearly below the post-recession peak rate of 5,700,000 set last March. The inventory of unsold existing homes on the market remained at a tight 4.2 months’ worth. The median sales price of an existing home was up by 6.2 percent in July over the previous 12 months.
Mortgage apps for purchase look soft through August 18, falling by 1.5 percent for each of the last two weeks, while refi apps increased. The MBA rate for a 30-year FR mortgage was steady at 4.12 percent.
Initial claims for unemployment insurance increased inconsequentially by 2,000 for the week ending August 19, to hit 234,000. Continuing claims were unchanged for the week ending August 12, staying at 1,954,000. We expect to see about 175,000 net new payroll jobs created in August. The hurricane bearing down on the Texas coast will cause refinery shutdowns, but it will not affect payroll job counts for August.
Fed Chair Janet Yellen gave a speech this morning at the Fed’s annual Jackson Hole retreat. Yellen’s speech was on a review of monetary and regulatory policy in the decade after the financial crisis. She appeared to leave some daylight between her call for only modest reforms to the current financial market regulatory regime and the push from some within the Trump Administration for more significant rollbacks. The apparent gap in views on regulation may lower the odds of her getting reappointed to a second, four-year term as chairwoman of the FOMC. Yellen’s speech did not add to, nor alter, current financial market assumptions about the timing of balance sheet roll-off or the likelihood of a fed funds rate hike on September 20. We believe that Yellen & Company will use the September 20 monetary policy announcement to signal that balance sheet reduction will begin in October. We look for no fed funds rate hike on September 20.
For a PDF version of the Comerica Economic Weekly, including forecast tables and the variables calendar, click here: Comerica_Economic_Weekly_ 08252017.
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