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Consumer spending slowed in August, as extended unemployment benefits ran out for millions of Americans. Despite being lower than expected, retail sales still increased 0.6%.

The Fed left policy rates unchanged at this week's meeting and signaled near-zero rates will last through 2023 to aid the economy on its rebound from the coronavirus shutdowns.

Jobless claims fell slightly less than expected last week, suggesting the labor market recovery has slowed. Nearly 30 million people remain on unemployment benefits.

 
 
 
 

Single-family home construction increased 4.1% for the month. Overall, housing starts fell more than expected in August, as multi-family home construction slumped.

Builder confidence remains at an all-time high as housing leads the economic recovery. This month's level beat last month's record high despite labor shortages and rising lumber prices.

Purchase mortgage applications last week were 6% higher than a year ago, though down 1% from the previous week. Total applications declined 2.5% for the week.

 
 

 

Producer prices rose a bit more than expected in August, as the cost of services increased solidly. Underlying wholesale inflation also continued to rise, but only slightly.

Lawmakers still struggle to agree on a new stimulus package. Republicans have proposed a 'skinny' stimulus bill, and Democrats have said they will not support it.

Jobless claims missed estimates last week as employment gains tapered. Continuing claims rose to 13.385 million, an indication that labor market improvement may be tailing off.

 

 

Mortgage applications to purchase a home rose 3% last week from the previous week and were 40% higher than a year ago. Refinances were up 60% year over year.

The number of homes for sale nationwide is in record low territory, and some of the nation's most affordable areas are seeing the largest drops in housing inventories.

Bidding wars continue to send home prices higher. More than two-thirds of homes sold in July were on the market for less than a month, according to NAR.

 


 

The Fed announced a new strategy this week to restore the labor market to full employment and lift inflation. Rising inflation typically pressures rates higher.

A second reading of the 2nd quarter GDP showed the economy plunged by a worst-ever 31.7%. However, this was actually better than the initial estimates.

Initial jobless claims last week came in at roughly 1 million, suggesting the labor market recovery could be stalling. Numbers should improve as businesses continue to reopen.

 

The housing market remains a bright spot in the economy, with July's existing home sales up a record 24.7%. However, tight inventory continues to be a problem.

Pending home sales were also up, jumping more than 15% annually. Properties are going under contract in record time, with 9 new contracts for every 10 new listings.

Low mortgage rates, strong demand, and low inventory are driving home prices higher. The median price of a home sold in July rose 8.5% annually to $304,100.

 


Minutes from the last Fed meeting affirm obvious coronavirus concerns and underscore the Fed's recent actions to keep rates low.

Stocks have continued to rally after hitting a pandemic low in March, with some indices reaching new highs. However, mortgage rates have not risen, as often happens when stocks rally.

Continuing unemployment claims fell last week, though initial jobless claims unexpectedly rose back above 1 million, perhaps signaling a setback for the struggling job market.

 

 

Builder confidence in the market for newly built, single-family homes jumped 6 points to 78 in August, a record high for the NAHB Housing Market Index.

Homebuilding picked up for a 3rd straight month in July, with residential starts jumping by 22.6%. Construction surged at the highest rate since 2016, beating expectations.

Permits for future construction increased 18.8%, the most since January 1990. The 1.5 million annual rate topped the median estimate and is now above the February pre-pandemic rate.

 


 

Freddie Mac's weekly average interest rate on 30-yr., fixed-rate mortgages hit its lowest level in the survey's 49-year history. This is the 8th time this year for record lows.

The ISM manufacturing index increased to 54.2 in July, indicating manufacturing expansion for the 3rd consecutive month after the spring's steep collapse.

Initial jobless claims fell more than expected last week to the lowest since the pandemic started. The broad decline across nearly all states suggests labor market improvement.

 

 

Home prices increased 4.9% in June, even higher than May's 4.1% annual increase, according to CoreLogic. Prices climbed 1.0%, the fastest monthly gain for June since 2013.

Despite rising prices, home affordability was the best level in 4 years, requiring only 19.8% of the median monthly income to make the mortgage payment on an average priced home.

Construction spending fell for the 4th straight month in June. However, even after the declines, spending at the end of June was 5% higher than it was through first 6 months of 2019.

 


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