Housing data continues to improve with the latest Case-Shiller’s 20-city index reporting a jump of 0.9 percent for the month of March.
- This is the strongest report since last November. Nineteen of the 20 cities measured by the index showed increases.
Despite the monthly gain, the growth from the same time last year remains unchanged at 5.4 percent.
- This index appears to be running behind the Federal Housing Finance Agency’s measurement of a 6.0 percent increase from a year ago.
Construction spending seems to be telling a little bit of a different story.
- Spending declined 1.8 percent in April for the worst reading since January 2011.
- There does not appear to be any recognizable factors that caused the downturn other than the fact that the previous month had a major upward revision of 1.5 percent.
- Given the huge increase last month, a reversal was not completely unexpected.
- February figures were also revised higher so this month’s decline follows two very strong months of gains.
The highlight of the construction spending report comes from the residential side.
- Even though the latest report shows a decline of 1.5 percent, this follows two upward revisions of 3.2 percent and 2.6 percent in the prior two months.
- Even better is the year-on-year rate for residential spending which is now up a very strong 8.0 percent.
- Multi-family units, up from the same time last year by 21.4 percent.
It seems like mortgage activity may be slowing slightly.
- Purchase applications for home mortgages fell 5 percent while refinancing declined 4 percent.
- There is some thought that buyers may be waiting for even lower rates as mortgage rates continue a slow decline toward the area of historical lows.
- Although we are not there yet, some analysts believe that if other areas of the economy continue to slow, mortgage rates will continue lower.
Compared to the same time last year, the purchase index is higher by 28 percent.
- Mortgage rates sitting below 4.0 percent is certainly a contributing factor.
- The housing market is doing very well.
- Many reports show continuing strength.
- Last week new home sales showed an increase of 16.6 percent and existing home sales were higher by 5.1 percent.
Finally, even the manufacturing sector is showing signs of growth.
- The ISM Manufacturing Index showed an increase of 0.5 percent.
- This appears to be due to a slowing in delivery times which is typically caused by an increase in orders.
This week’s potential market moving reports are:
- Tuesday June 7th – Productivity and Costs
- Wednesday June 8th – MBA Mortgage Applications & EIA Petroleum Status
- Thursday June 9th – First Time Jobless Claims
- Friday June 10th – Consumer Sentiment