Market Recap: Construction Spending and ADP Employment Improve
Mortgage rates trended downward this week after an uptick last week. US construction spending increased, mortgage applications returned mixed numbers, and the ADP Employment report posted a sizable gain.
US construction apending bounced back in February after a 1.0% decline in January. Month-over-month, construction spending is up 0.8%, driven by residential projects. Multifamily spending is up 2% and single-family construction is up 1.2% for a composite increase of 1.8%. Nonresidential spending dropped 0.3%. The unseasonably warm weather may have spurred construction.
The Mortgage Bankers Association (MBA) application survey reported a 1.0% increase in new purchase applications and a 4.0% decrease in refinance applications, for a composite decrease of 1.6%. The refinance share of applications is down to its lowest level since October 2008. With rates back on the rise after years of historic lows, most homeowners planning to refinance have already completed the transaction.
The ADP Employment report continued to improve in March, with the addition of 263,000 jobs, well above the 185,000 prediction. Goods-producing firms led the growth with the addition of 82,000 jobs and the construction industry added 49,000 jobs. Professional and business services added 57,000 jobs, leisure and hospitality were up 55,000, and healthcare increased by 46,000. Chief Economist of Moody’s Analytics, Mark Zandi, said in a statement, “job growth is off to a strong start in 2017. The gains are broad-based but most notable in the goods and manufacturing side of the economy including construction, manufacturing, and mining.”
Significant increases in construction spending and job availability suggest a busy home buying season ahead. Typically, spring and summer are more active for new home construction because of warmer weather.
Sources: Mortgage News Daily, CNBC, Bloomberg, MarketWatch