Market Recap: Pending Home Sales Up, Construction Spending Down, and the ADP Employment Report
Mortgage rates edged downward this week. The pending home sales index turned around this month, but total construction spending dropped slightly. The ADP employment report was positive but below expectations.
After three months of declines, the pending home sales index surged in June, up 1.5% month-over-month to a level of 110.2 and May’s reading was revised upward. Every region improved except the Midwest, down 0.5% month-over-month. Gains were led by the West, up 2.9% month-over-month and the South up 2.1% month-over-month. The Northeast improved slightly, up 0.7%. Even with this month’s positive numbers, the National Association of Realtors (NAR) warns about shrinking housing inventory.
After no change in May, US construction spending fell in June, down 0.4% month-over-month but up 1.6% year-over-year. Both public and private project spending dropped. Spending on public construction projects was down 5.4%, to the lowest level since February 2014. Private construction spending was down 0.1%, private residential construction is down 0.2%. The construction industry is coping with labor shortages and rising supply costs, impacting new construction.
The ADP employment report counts the addition of private sector jobs based on data from about 400,000 businesses employing approximately 23 million workers. In July, the report showed the addition of 178,000 jobs, slightly under the expected 185,000 addition. The gains were driven by service industry positions, like mining manufacturing and construction, up 174,000 jobs. Professional and business services added 65,000.
Jobs reports have been strong this year, as the labor market nears full employment. Still, expectations for further rate hikes have dropped as inflation tapers off. Mortgage rates did not move much after either of the Federal Open Market Committee’s summer policy meetings. The next policy meeting is scheduled for September 19-20, with a press conference to follow.
Sources: Bloomberg, Business Insider, CNBC, MarketWatch, Mortgage News Daily, Reuters