Market Recap: Construction Spending Strong, ADP Adds Jobs, Mortgage Apps Mixed
This week was another short week with markets closed on Monday in observance of New Year’s Day. Mortgage rates did not move much this week, starting their upward trend following the end of the year rate hike. The Mortgage Bankers Association (MBA) resumed the release of the mortgage application survey. US construction spending improved and the ADP employment report strengthened.
This week’s MBA mortgage application survey covered the two-week period ending on 12/29. New purchase applications improved 1.0% and refinance applications scaled back -7.0% for a composite decrease of -2.8%. Although mortgage rates have not yet changed significantly, they are starting to trend upward.
US construction spending counts the total of all public and private construction projects. In November, total construction spending increased 0.8% to a seasonally adjusted annual rate of $1.26 trillion. Private projects were up 1.0% month-over-month. Specifically, residential construction was up 7.9% annually and single-family home construction was up 8.9% annually. Public projects only posted a 0.2% monthly gain.
Job growth triggers economic momentum and additionally housing activity, as gainfully employed workers are able to save and finance big purchases like homes. The ADP employment report added 250,000 jobs in December, exceeding expectations. Chief economist for Moody’s Analytics Inc., Mark Zandi, explained in a statement, “Robust Christmas sales prompted retailers and delivery services to add to their payrolls. The tight labor market will get even tighter, raising the specter that it will overheat.
Mortgage rates are expected to trend upward in the coming year, but home price appreciation is expected to slow. Going into 2018, housing numbers are strong and economists are optimistic about continued growth.
Sources: Bloomberg, Bloomberg, MarketWatch, Mortgage News Daily