Market Recap: Mortgage Applications Down, Unemployment Hits All-Time Low, Consumer Price Index Increases
Some markets were closed on Monday in observance of Columbus Day, thus it was a slow week for housing news. The only housing-related report was the weekly mortgage application survey. Other market-moving reports included the weekly jobless claims report and the consumer price index.
The Mortgage Bankers Association (MBA) weekly mortgage application survey declined for the week ending 10/5. New purchase fell a slight 1.0% and refinance applications dropped 3.0% for a composite decrease of 1.7%. As rates rise, refinance activity is expected to contract. All mortgage activity tends to slow down in the winter months, with less buyers shopping for homes.
The weekly jobless claims report tracks week to week changes in new and continuing unemployment claims. Jobless claims continue to set record lows, on a low streak not seen since the 1960s. For the week ending 10/6, initial jobless claims increased to a level of 214,000. Continuing claims increased to a level of 1.66 million, a 45-year low. The unemployment rate currently sits at 3.7%, a 48-year low.
The consumer price index measures changes in the prices on a fixed basket of goods and services sold to final consumers. Core CPI strips out more volatile food and energy costs and is used by the Federal Reserve to gauge inflation. In September, the consumer price index increased 0.1% month-over-month and 2.3% year-over-year. Annual core CPI was unchanged at a rate of 2.2%. Rising rents significantly impacted this month’s increase, and the cost of clothing and healthcare also increased.
Heading into the slow season, some home sellers are starting to drop prices. With less buyers on the market, this could be a less competitive time to start shopping for a home. If you plan on buying a home, get preapproved before you start shopping. Making an offer with mortgage preapproval shows the seller that you have already started the financing process and can expedite the transaction.
Sources: CNBC, Econoday, MarketWatch, MarketWatch, MarketWatch, Mortgage News Daily