Despite the fact that the Federal Housing Finance Agency released their report accidentally on Tuesday evening instead of Wednesday morning, the important aspect is that the report continues to show an improving housing market. According to the FHFA home prices rose 0.7% in August following a 0.1% rise in July. Experts were anticipating an increase of 0.4% so the fact that the August report was better than expected bodes well for the belief that housing is on the rebound. The August increase is 4.7% better than the same time last year.
The new home market is a greater source of strength for the economy in that new home sales jumped 5.7% in September. This is the largest increase since the stimulus efforts of 2010. Although prices for new homes slid back just by 3.2%, we are still seeing that median home prices are 11.7% higher from a year ago. Despite all of the recent strong news in housing, the stock market has not been reacting to it because of investors being focused primarily on employment and corporate profits reports.
The pending home sales report continues to lag behind the sales growth for new homes. September's increase of only 0.3% was a little disappointing to most that were expecting an increase of 2.5%. The National Association of Realtors remained upbeat in that the report was in positive territory and that the belief that continued low interest rates will spur home purchases significantly in 2013.
Speaking of corporate profits, overall the numbers released this week have been worse than many analysts and investors anticipated. Talk of an economic slowdown is really taking hold as more and more data is showing that consumers are retreating in their spending habits once again. Initially I thought that a big portion of this could be due to the impending election, however the slowdown is on a global scale and not just in the United States.
First time jobless claims have been swinging wildly over the last few months and this week's report is no exception. After jumping up to 392,000 the prior week, the report this week shows a drop down to a slightly better level of 369,000 which was in line with expectations. What is more concerning is that the prior week's report initially came in at 388,000 and then was adjusted up to 392,000. Had the initial report come in at the higher level, you would have seen much more reporting about it because that is coming dangerously close to the psychological 400,000 mark.
To no one's surprise the Fed left interest rates unchanged after this week's monetary policy meeting. In addition, the Fed reiterated their commitment to keep interest rates exceptionally low as well as continue their massive bond buying and mortgage backed securities purchase programs to keep interest rates down.
This week's economic reports are:
Wednesday October 31st - MBA Applications and ADP Employment Report
Thursday November 1st - First Time Jobless Claims and ISM Manufacturing Index
Friday November 2nd - National Unemployment
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