Market Forecast: Construction Spending, Mortgage Applications, ADP Employment Report
Heading into the end of the year, mortgage rates have levelled out after rising following September’s interest rate hike. This week in housing news, US construction spending comes out on Monday and the Mortgage Bankers Association weekly mortgage application survey comes out on Wednesday. Other market-moving reports include the ADP employment report.
US construction spending tracks total spending on private and public construction projects. In September, total construction spending increased marginally month-over-month and 7.2% year-over-year to a seasonally adjusted annual rate of $1.330 trillion. Residential construction specifically is up 0.6% month-over-month. National Association of Home Builders Chairman Randy Noel commented, “The recent decline in lumber prices from record-high levels earlier this summer is also welcome relief, although builders still need to manage construction costs to keep homes competitively priced.”
The Mortgage Bankers Association (MBA) weekly mortgage application survey tracks week to week changes in new purchase and refinance mortgage application submissions. For the week ending 11/23, refinance applications rebounded 1.0% and new purchase applications surged 9.0% for a composite increase of 5.5%. The rise in new purchase activity was driven by conventional mortgages signaling there are fewer first-time home buyers in the market.
The ADP employment report is based on data from approximately 400,000 US businesses employing approximately 23 million workers nationwide. Though the data subset is limited to the private sector it is still used to gauge employment trends. In October, the ADP employment report increased by the largest margin in eight months. The strong labor market is likely to continue putting upward pressure on wage growth, and wage growth typically spurs consumer spending on large purchases like housing.
Buying a home this holiday season? You might be in luck. “It may be a greater supply of homes for sale. It may be price cuts on those homes. Whatever the reason, buyers are coming back to the market and driving mortgage demand,” wrote CNBC Real Estate Editor Diana Olick. Expedite your mortgage transaction by getting preapproved before you start shopping. Once you’re ready to make your offer you’ll have already started the mortgage financing process and can ensure a quick closing.
Sources: CNBC, Econoday, HousingWire, MarketWatch, Mortgage News Daily, Reuters