Last week’s economic news included readings on construction spending and labor reports on public and private sector jobs and the national unemployment rate. Weekly readings on mortgage rates and first-time jobless claims were also released.
Construction Spending Falls in April
The Commerce Department reported lower than expected deficits in consumer spending in April. Construction spending fell by -2.90 percent from the March reading of 0.00 percent growth in spending; analysts expected 6.80 percent less construction spending for April due to the Coronavirus pandemic.
Additional declines in construction spending are expected for May and June as impacts of the Coronavirus and uncertain economic conditions lessen demand for homes. Residential construction spending fell by 4.50 percent in May.
Mortgage Rates Mixed as Initial Jobless Claims Fall
Freddie Mac reported higher rates for 3-year fixed-rate mortgages, which increased an average of three basis points to 3.18 percent. Rates for 15-year fixed-rate mortgages were unchanged at an average of 2.62 percent. Rates for 5/1 adjustable rate mortgages fell by three basis points to an average rate of 3.10 percent. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.40 percent for 5/1 adjustable-rate mortgages.
First-time jobless claims fell last week but were much higher than readings reported before the coronavirus outbreak. States reported 1.88 million new jobless claims, which exceeded expectations of 1.81 million new claims and fell short of the prior week’s reading of 2.13 million initial jobless claims.
2.23 million initial jobless claims were filed last week including claims made under federal programs. 3.21 million total jobless claims were filed the prior week.
Jobs Reports Show Mixed Results In May
ADP reported -2.76 million private-sector jobs lost on a seasonally-adjusted annual basis as compared to April’s reading of -19.60 million jobs lost. The government’s Nonfarm Payrolls report showed 2.50 million more public and private-sector jobs than were reported in April.
Analysts expected -7.25 million fewer public and private sector jobs in May as compared to April’s reading of -20.70 million jobs lost.
The national unemployment rate dipped from April’s rate of 14.70 percent to 13.30 percent in May. Analysts expected the national unemployment rate to reach 19.00 percent in May.
Lower unemployment readings suggest that the economy is recovering at a faster pace than originally estimated, but recent civil unrest may cause another wave of coronavirus cases as protesters failed to observe social distancing protocols.
What’s Ahead
This week’s scheduled economic reports include readings on inflation and consumer sentiment. The Federal Reserve’s Federal Open Market Committee is set to meet next week, but this meeting may be canceled due to the Coronavirus pandemic.
Last week’s economic reports included monthly readings from Case-Shiller Home Price Indices, FHFA home prices, and readings on new and pending home sales. Weekly reports on mortgage rates and first-time jobless claims were also released.
Case-Shiller Home Price Indices: Home Price Growth Pace Increased In March
National home prices rose at a year-over-year pace of 4.50 percent in March from February’s reading of 4.20 percent. According to the Case-Shiller 20-City Home Price Index, home prices rose by 0.40 percent to a year-over-year growth rate of 3.90 percent.
The three cities reporting the highest rates of home price growth year-over-year were Phoenix, Arizona with 8.20 percent year-over-year growth; Seattle, Washington reported year-over-year home prices growth of 6.90 percent. Charlotte, North Carolina reported 5.80 percent home price growth.
Analysts said that Seattle home prices rose despite the Seattle metro area having a large outbreak of Covid-19 in the first weeks of the pandemic. April readings on home price growth are expected to dip into negative readings reflecting the spread of the coronavirus and its increasing impact.
17 of 19 cities reported in the 20-City Home Price Index for March had higher growth rates than in February; the Detroit metro area did not report data for the March 20-City Home Price Index.
The FHFA Home Price Index reported 5.90 percent year-over-year home price growth for March as compared to its February reading of 6.10 percent home price growth. FHFA reports on home sales connected with properties that have mortgages owned by Fannie Mae and Freddie Mac.
New Home Sales Increase in April as Pending Home Sales Fall
Sales of new homes rose in April although many areas were under stay-at-home orders related to the coronavirus pandemic. 623,000 new home sales were reported on a seasonally-adjusted annual basis as compared to the March reading of 619,000 sales of new homes. Pending home sales were -21.80 percent lower as compared to the March reading of -20.80 percent. Fewer pending home sales reflected impacts of the pandemic as government agencies issued stay-at-home orders and citizens faced financial uncertainty and health concerns.
Mortgage Rates, New Jobless Claims Fall
Freddie Mac reported lower mortgage rates last week; rates for 30-year fixed-rate mortgages were nine basis points lower at an average rate of 3.13 percent. Rates for 15-year fixed-rate mortgages averaged eight basis points lower at 2.62 percent and rates for 5/1 adjustable rate mortgages averaged 3.13 percent and were four basis points lower. Discount points averaged 0.80 percent for 30-year fixed-rate mortgages and 0.70 percent for 15-year fixed-rate mortgages. Discount points averaged 0.40 percent for 5/1 adjustable rate mortgages.
New jobless claims were lower at 2.12 million claims filed as compared to the prior week’s reading of 2.45 million initial jobless claims filed. While fewer claims filed is good news, readings for initial jobless claims far exceeded typical numbers of new jobless claims filed before the pandemic.
What’s Ahead
This week’s scheduled economic reports include readings on construction spending and labor sector reports on public and private sector jobs and the national unemployment rate. Weekly reports on mortgage rates and new jobless claims will also be released.