Market Forecast: Rates Drop, US Construction Spending, and ADP Employment Report
Happy New Year! Mortgage rates started to drop last week, after a steady climb following the election and the FOMC rate hike. This week is a short week with markets closed on Monday in observation of New Year’s Day. US construction spending comes out Tuesday, the weekly MBA purchase applications survey comes out Wednesday as well as the ADP employment report.
US Construction Spending for November 2016 is scheduled for release on Tuesday. Last month’s report included a 0.5% increase on a month over month basis and a 3.4% increase on a year over year measure. Construction spending is a forecasting metric for the temperature of the real estate market. As construction spending goes up, inventory availability improves and price appreciation slows.
The MBA releases its weekly measure of new mortgage purchase applications and refinance applications on Wednesday. Last month, there were slight increases in both types of applications as homebuyers and refinancers are looking to lock before rates increase further.
The ADP Employment report also comes out Wednesday. This measures private-sector employment growth based on numbers from the ADP payroll company. Employment and income growth stimulate the economy as consumers are able to spend more and acquire lines of credit for high dollar purchases like vehicles and homes.
2016 closed with a record-low average mortgage rate, as reported by Freddie Mac, the lowest rate since their inaugural survey in 1971.
Sources: Freddie Mac, Mortgage News Daily, MarketWatch, Bloomberg