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Market Update November 23rd

Market Update November 23rd
October 23, 2015 wpengine

After a few relatively quiet days on the stock market, the Dow Jones Industrial Average soared 320 points on Thursday after Alphabet, (Google’s parent company) Amazon and Microsoft all significantly beat profit expectations.

  • Investors have renewed faith for the time being that the markets are the place to put your money.

This week provided a number of housing reports that are pointing towards optimism for the future of housing.

  • On Monday the October Housing Market Index, which is a survey of homebuilders that asks them to rate the general economy and housing market conditions, came in strong with a gain of three points.
  • The current gain in home sales, along with the strong increase in construction permits, has builders very optimistic that housing will continue to grow in the coming months.

The housing starts index for the month of September reinforced growth in the real estate sector.

  • The increase was driven primarily by multi-family construction
  • But is still positive news for the housing market.
  • Multi-family construction jumped 6.5 percent while single-family starts rose a meager 0.3 percent.

The strongest housing report came from the existing home sales data, which bounced back very strongly in the month of September.

  • Sales jumped 4.7 percent which reverses the prior months drop of 5.0 percent.
  • Based upon the recent track record of home sales it appears that the decline in August was more an exception than a real indication of the current housing trend.
  • The sales report was on the high end of most analysts’ predictions and is the second best reading on existing home sales since the start of the recovery.
  • Compared to last year existing homes sales are up 8.8 percent.

The only housing report this week to come in with less of a bang was the FHFA House Price Index.

  • The index, which measures the data on single-family home prices reported by Fannie Mae and Freddie Mac, showed that price appreciation slowed somewhat in August.
  • Home prices from July to August only increased 0.3 percent.
  • This was on the low end of expectations and comes in less than July’s revised increase of 0.5 percent.
  • Year over year home prices are 5.5 percent higher.

Finally, with mortgage rates sitting at 6 month lows, applications for purchases and refinances soared for the week of October 16th.

  • Applications for purchases jumped 16.0 percent while refinance apps rose a strong 9.0 percent.

What is great news about the loan data is that typically when rates decline, refinance applications rise more than purchase apps. In this case the opposite happened which reinforces that future home sales data will likely be strong.

Next week’s potential market moving reports are:

  • Monday October 26th – New Home Sales
  • Tuesday October 27th – Durable Goods Orders & S&P Case-Shiller HPI
  • Wednesday October 28th – MBA Mortgage Applications & FOMC Announcement
  • Thursday October 29th – First Time Jobless Claims & GDP
  • Friday October 30th – Consumer Sentiment