Market Forecast: New Home Sales, Pending Home Sales, and GDP
Mortgage rates are trending upward, heading into the seasonal winter slowdown. This week, the new home sales reports comes out Wednesday and pending home sales index comes out Thursday. The first estimate for third quarter’s Gross Domestic Product (GDP) will be released Friday morning.
The new home sales report tracks the sale of newly constructed homes. In August, new home sales declined 3.4% to a seasonally adjusted annual rate of 560,000. This figure is down 1.2% year-over-year and the lowest annual rate since December 2016. The housing industry is hurting from lack of available homes for sale, and new construction is struggling to keep up.
Pending home sales track homes that are under contract but not yet closed. The pending home sales index is used to predict future housing market activity. In August, pending home sales were down 2.6% month-over-month, the fifth decline in the past six months, and the lowest level since January 2016.
GDP is the most comprehensive economic scorecard. Consumer spending makes up approximately two-thirds of GDP activity. The first estimate of Q3 GDP showed a growth rate of 3.1%.
The economy has yet to meet the Federal Reserve’s inflationary target, despite stronger consumer spending and a job market nearing full employment. Based on last week’s Beige Book, analysts believe the Fed may still raise interest rates after the December meeting.
Sources: Bloomberg, MarketWatch, Mortgage News Daily