• Corporate
  • News
  • Market Recap: Construction Spending Up, New Purchase Mortgage Apps Up, ADP Employment Grows

Market Recap: Construction Spending Up, New Purchase Mortgage Apps Up, ADP Employment Grows

  • September 07, 2018

Construction spending improved in July, led by a surge in residential spending.  New purchase mortgage applications increased while refinance applications decreased.  The ADP employment report showed the addition of 163,000 jobs in August.  Mortgage rates trended slightly upward.

US construction spending tracks total spending on private and public construction projects.  In June, construction spending increased 0.1% month-over-month and a significant 5.8% year-over-year.  Residential construction spending specifically improved 0.6% month-over-month and 6.6% year-over-year as buyer demand continues to outpace supply.  Home improvement spending increased substantially, up 2.1% month-over-month, as some homeowners are choosing to withdraw home equity to reinvest in their homes. 

The Mortgage Bankers Association (MBA) weekly mortgage application survey was mixed for the week ending 8/31.  New purchase applications increased 1.0% and refinance applications decreased 1.0% for a composite decrease of 0.1%.  The data signaled that more first-time home buyers are starting to enter the market, as the average size of purchase loans has dropped to the lowest level since last year.  Home price appreciation has started to slow somewhat, MBA chief economist Mike Frantantoni noted, “home prices, while decelerating, continue to rise faster than household income."

The ADP employment report tracks data from approximately 400,000 US businesses employing approximately 23 million US workers.  Though the data is limited to private payrolls, it is used to gauge employment trends.  In August, companies added 163,000 jobs, down from July’s gain of 217,000 jobs.  Medium-sized companies led the growth with the addition of 111,00 jobs, followed by large firms adding 31,000 jobs and small businesses adding 19,000 jobs.  Vice president and co-head of the ADP Research Institute, Ahu Yildirmaz commented, “although we saw a small slowdown in job growth the market remains incredibly dynamic.” 

The increase in residential construction spending is particularly good for the housing market, but all construction spending triggers economic momentum with the creation of jobs and the purchase of materials.  The unemployment rate is at a record low and a strong labor market typically translates into housing momentum.  Refinance mortgage activity is expected to pull back as rates rise.  The increase in first-time home buyer activity signals more first-time buyers have found ways to overcome the down payment obstacle and enter the housing market. 

 

Sources: CNBC, CNBC, Econoday, MarketWatch, MarketWatch, Mortgage Daily News

Latest Tweets

© CMG Financial, All Rights Reserved. CMG Financial is a registered trade name of CMG Mortgage, Inc., NMLS ID #1820 in most, but not all states. CMG Mortgage, Inc. is an equal opportunity lender with corporate office located at 3160 Crow Canyon Road, Suite 400, San Ramon, CA 94583 888-264-4663. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act No. 4150025; AK #AK1820; AZ #0903132; Colorado regulated by the Division of Real Estate; Georgia Residential Mortgage Licensee #15438; Illinois Residential Mortgage Licensee; Kansas Licensed Mortgage Company #MC.0001160; Massachusetts Mortgage Lender License #MC1820 and Mortgage Broker License #MC1820; Mississippi Licensed Mortgage Company Licensed by the Mississippi Department of Banking and Consumer Finance; Licensed by the New Hampshire Banking Department; Licensed by the NJ Department of Banking and Insurance; Licensed Mortgage Banker – NYS Department of Financial Services; Ohio Mortgage Broker Act Mortgage Banker Exemption #MBMB.850204.000; Licensed by the Oregon Division of Financial Regulation #ML-3000; Rhode Island Licensed Lender #20142986LL; and Licensed by the Virginia State Corporation Commission #MC-5521. CMG Mortgage, Inc. is licensed in all 50 states and the District of Columbia. Offer of credit is subject to credit approval. For information about our company, please visit us at www.cmgfi.com. To verify our complete list of state licenses, please visit www.cmgfi.com/corporate/licensing and NMLS Consumer Access (www.nmlsconsumeraccess.org).