Market Matters
This week was dominated by the risk-on and risk-off trade that seemed to alternate daily, as one day mortgages would rally from the spread of the virus, while the next day mortgages would sell off with excitement over new vaccine news. Until we see a change in the market, we may keep seeing this take place, especially in the upcoming holiday week. We are seeing what appears to be expectations for the Fed to extend their WAM (weighted average maturity) of their QE purchases, so this should push down 10-year and 30-year U.S. Treasuries. Expectations are that the Fed will make this announcement in their December 16th FOMC meeting, so, this is something to keep in mind in the upcoming weeks.
Initial Jobless Claims
Initial Jobless Claims rose by +31k to 742k in the week ending November 14th versus the prior week’s revised count of 711k (orig. 709k). Continued claims, which lag by a week, declined by -429k to 6.372mln in the week ending November 7th. We also see a revised number for the prior week’s total to 6.801mln from originally reported 6.786mln. Continuing claims have now fallen in each week but 2 since July 18th. Since that time, they have declined a total of 10.59mln.
Philly Fed
The Philly Fed’s Manufacturing Business Outlook Survey fell -6.0 points to +26.3 for November, however, this is the sixth straight positive reading after reaching long-term low points in April and May. The index for new orders decreased -5.0 points to a reading of 37.9. According to the report, nearly 49% of the firms reported increases in new orders this month, compared with 55% last month. The current shipments index fell -22.0 points to 24.9 in November, while nearly 41% of the firms reported higher shipments, compared with 57% last month. The current employment index increased +15.0 points to 27.2, as 34% of the firms (up from 23% last month) reported increases, while 7% reported decreases. The average workweek index was positive for the fifth consecutive month and was essentially unchanged at 25.7. Overall, responses to the November survey suggest continued recovery for the region’s manufacturing sector. Although the indicators for current activity, new orders, and shipments all moderated from last month, the current employment index showed notable improvement. The survey’s future indexes also moderated this month but suggest that growth is expected to continue over the next six months.
Existing Home Sales
According to the National Association of Realtors, existing home sales rose by +4.3% to a seasonally adjusted rate of 6.85mln in October, now posting their fifth consecutive monthly increase. Looking YoY, existing sales are now up +26.6% versus October 2019. The median existing home price was $313k, which is almost +16% more than this time last year. Total housing inventory at the end of October totaled 1.42mln units, which is down -2.7% from September, and down -19.8% from one year ago (1.77mln). Unsold inventory sits at an all-time low 2.5-month supply at the current sales pace, down from 2.7 months in September, and down from the 3.9-month figure recorded in October 2019. Properties typically remained on the market for 21 days in October 2020, seasonally even with September, and down from 36 days in October 2019. Seventy-two percent of homes sold in October 2020 were on the market for less than a month. First-time buyers were responsible for 32% of sales in October, up from the 31% in both September 2020 and October 2019. Finally, looking at the regional breakouts, we see sales in the Northeast up +4.7% on the month, and up +30.4% YoY. The Midwest sales jumped +8.6% on the month and are up +28.1% versus a year ago. In the South, we see sales up +3.2% on the month, and up +26.5% YoY. Lastly, the West rose +1.4% on the month, with sales up +22.8% from a year ago.
Housing Starts
Housing Starts rose +4.9% to a seasonally adjusted annual rate of 1.53mln units in October versus the upwardly revised data for September at 1.459mln units (originally reported 1.415mln units). Starts in October for single-family homebuilding rose by +6.4% to 1.179mln units, which is the highest since April 2007, and marks the sixth consecutive monthly increase. Multi-family starts were essentially unchanged at 351k units. On the permits side, we see an unchanged rate of 1.545mln units in October. Single-family permits rose by +.6% to 1.12mln units, while permits for multi-family housing fell -1.6% to a rate of 425k units. Finally, YoY stats now show that total starts are up by +14.2%, while total permits are +2.8% versus October 2019.
