Market Recap: Construction Spending Down, Mortgage Apps Up, ADP Employment
Mortgage rates have trended slightly downward, and mortgage activity has reacted. Both new purchase and refinance mortgage application submissions increased. US construction spending is down month-over-month, but up year-over-year. The ADP employment report was strong.
US construction spending declined slightly in October, down 0.1% month-over-month to a seasonally adjusted annual $1.309 billion. September’s spending pace was revised lower. Spending on public projects strengthened, up 0.8% month-over-month and spending on private projects was up 0.4% month-over-month. Residential construction spending was down 0.5% month-over-month. However, overall spending is up 4.9% year-over-year.
Mortgage application submissions continued to come in strong for the week ending 11/30. New purchase applications are up 1.0% and refinance applications are up 6.0% for a composite increase of 2.0%. Trade tensions surround the United States and China have driven rates down over the past few weeks. The Mortgage Bankers Association associate vice president of economic and industry forecasting, Joel Kan, commented, “We saw a decrease in the average loan size for purchase applications to the lowest since December 2017 ($298,000 from $313,000). This is perhaps an indication that there are fewer jumbo borrowers, or maybe first-time buyers are having better success reaching the market as we close out the year.”
The ADP employment report showed the addition of 179,000 private-sector jobs in November, continuing the labor market’s strong trend. Small businesses added 46,000 jobs, medium-size companies added 119,000, and large firms added 13,000.
The Federal Open Market Committee will meet once more this year, December 18 and 19. Forecasts are mixed on whether or not the Fed will raise interest rates again this year. Global economic slowdown and trade tensions have caused mortgage rates to slide in recent weeks. Real estate activity also tends to slow down in the winter months. Home buyers who are searching now can take advantage of a less crowded market.
Sources: CNBC, Econoday, MarketWatch, MarketWatch, Mortgage News Daily