Last week’s economic news included readings from Case-Shiller on home prices, pending home sales, construction spending and a post-meeting statement from the Federal Open Market Committee of the Federal Reserve.
Consumer sentiment was released along with Commerce Department reports on public and private sector job growth and the national unemployment rate. Weekly readings on mortgage rates and new jobless claims.
Home Price Growth Slows in May
The Case-Shiller National Home price Index showed slower home price growth in May; this was the 14th consecutive month of slower growth in national home prices and the lowest reading for home price growth since the Great Recession.
Home prices grew by 3.40 percent on a seasonally-adjusted annual basis as compared to a 3.50 percent reading in April. While easing home price growth is a plus for would-be home buyers, slower growth in home prices could be a sign of overall economic slowing.
Construction spending was lower in June and fell by 1.20 percent. Analysts expected spending to slow at 0.10 percent based on May’s reading of -0.80 percent. Les spending suggests fewer homes will be built and demand for homes could increase based on the combined effects of slower price gains, low mortgage rates and fewer available homes.
Pending home sales jumped 2.80 percent in June and 1.60 percent year-over-year according to the National Association of Realtors®. The year-over-year gain was the first in 17 months. Analysts said that slower growth in home prices coupled with lower mortgage rates would prompt more buyers to enter the housing market.
The Federal Reserve’s Open Market Committee lowered the Fed’s benchmark interest rate range on Wednesday. Committee members voted to lower the key fed rate range from 2.25-2.50 percent to 2.00-2.25 percent. Fed Chair Jerome Powell said that this rate reduction was not first in a series of rate cuts, but one-off rate cuts by the Fed are not common.
Job Growth Mixed, Unemployment Rate Unchanged
Labor-sector readings for July showed mixed results for public and private-sector job growth, ADP reported 156,000 private sector jobs were added in July as compared to 112,000 jobs added in July.
The Commerce Department reported 164,000 private and public-sector jobs added in July as compared to June’s reading of 193,000 public-and private-sector jobs added. July’s lower reading was not unexpected as analysts projected 163,000 public and private-sector jobs added in July.
The national unemployment rate held steady at 3.70 percent; this was higher than in recent months, but remained relatively low, which suggested few layoffs and strong job markets.
Freddie Mac reported little change to average mortgage rates. 30-year fixed rate mortgages averaged 3.75 percent and were one basis point higher than for the prior week. Rates for 15-year fixed rate mortgages were two basis points higher and averaged 3.20 percent. Rates for 5/1 adjustable rate mortgages averaged 3.46 percent and were one basis point lower.
Discount points averaged 0.60 percent for 30-year fixed rate mortgages, 0.50 percent for 15-year fixed rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.40 percent.
First-time jobless claims rose to 215,000 claims filed and surpassed expectations of 210,000 new claims filed, which was based on the prior week’s reading of 208,000 first-time claims filed.
Last week’s economic reports wrapped up with the University of Michigan’s Consumer Sentiment Index reading for July, which was two points higher than June’s index reading of 98.2. Consumers surveyed reported paying off debt and increasing savings as a hedge against slower economic growth.
This week’s economic readings include weekly reports on mortgage rates and first-time jobless claims.