Market Recap: Job Market Strengthens, Construction Improves, and Rates Continue to Rise
Mortgage rates started to decline slightly this week, and then ticked back up. The ADP Employment report showed substantial job growth, pending home sales posted a modest increase, and construction spending increased to a 7-month high.
The ADP Private Employment report posted gains this month. Traditionally any improvement with income and employment rate relays into an improvement in the housing market. This month’s report showed an addition of 216,000 jobs in the private sector, well surpassing the expectations of 160,000 jobs.
Pending home sales measures the number of homes under contract, but not closed deals. Pending sales of existing homes are up only 0.1% in October, a small increase but growth nonetheless. The numbers only show declines in one region, the South. Its 1.3% drop offset gains elsewhere including the Northeast where sales were up 0.4%, the Midwest where sales were up 1.6%, and the West where sales were up 0.7%. All indices showed gains on a year-over-year basis.
Construction spending increased 0.5% in October to $1.173 Trillion, the highest level since March 2016. Previous reports for September and August were also revised, September was adjusted from a 0.4% decline to no change, and August’s 0.5% decline was changed to a 0.5% increase. Construction spending is up 3.4% on a year-over-year basis. The gains were driven by home building and public outlays.
Ahead of this month’s FOMC meeting, mortgage rates are likely to hover and not increase or decrease drastically. Rising rates are turning away refinancers, but many homebuyers are looking to expedite the process to finalize their purchases before further rate increases.
Sources: Mortgage Daily News, MarketWatch, CNBC, Reuters, USA Today