Market Recap: ADP Employment Gains and Increase in Construction Spending
Mortgage rates started the New Year with a drop from the previous week and dropped further by the end of the week. In housing news, US Construction spending increased somewhat and mortgage applications dropped. The ADP Employment report was also released this week, showing continued steady job growth.
US Construction Spending increased 0.9% from October to November, the sixth increase in seven months. The jump surpassed expectations of a 0.6% increase after October’s 0.5% gain. Spending on residential construction is up 1%, driven by single-family home construction. On a year-over-year basis, total construction spending is up 4.1% to $1.18 Trillion.
The MBA mortgage purchase applications survey showed an unsurprising decline over the holidays. New purchase applications are down 2% and refinances are down 22% for a composite index drop of 12%. This week’s reading measures a two week period, since no report was issued over the Christmas holiday. Mortgage applications tend to drop off over the holidays. Additionally, the recent interest rate hike contributed to the drop in applications. New buyers and potential refinancers may be holding off, as they wait for mortgage rates to level off.
The ADP Employment Report showed the addition of 153,000 jobs in December. While still a positive gain, the number is slightly less than predictions and significantly less than November’s addition. Any job growth indicates a strong labor market, but the growth appears to be slowing its pace.
After nine straight weeks of increases, mortgage rates appear to be leveling out. Sean Becketti, chief economist with Freddie Mac, reported that this is the first time since 2014 that the year opened with a mortgage rate above 4%. Most economists are forecasting steady growth in new purchases with a drop in refinances for 2017.
Sources: Mortgage News Daily, HousingWire, MarketWatch, HousingWire, MarketWatch