Market Forecast: Construction Spending, Mortgage Apps, and the ADP Employment Report
Last week, the Federal Open Market Committee voted to raise the benchmark interest rates, and mortgage rates reacted accordingly. This week in housing news, US construction spending report comes out on Monday and the weekly mortgage application survey comes out on Wednesday. The ADP employment report comes out on Wednesday.
US construction spending tracks total spending on construction projects both private and public. Total construction spending increased 0.1% month-over-month and 5.8% year-over-year in July. Residential construction spending was up 0.6% month-over-month and 6.6% year-over-year. Overall, the numbers were weak because of increased construction costs and affordability concerns around materials like steal and lumber. Typically, construction activity is stronger during warmer months and tends to slow down into the fall and winter.
The Mortgage Bankers Association (MBA) weekly mortgage application survey tracks week to week changes in mortgage application submissions. For the week ending 9/21, both new purchase and refinance applications increased 3.0% for a composite increase of 2.9%. An increase in available homes for sale may have helped to boost sales activity. Last week’s new home sales report showed that at the current sales pace it would take 6.1 months to exhaust all available housing inventory, the highest figure in several years.
The ADP employment report is based on data from 400,000 private US businesses employing approximately 23 million workers nationwide. The labor market has been exceptionally strong in recent years and the unemployment rate continues to hover a record-low rate. In August, hiring slowed. The ADP employment report showed the addition of 163,000 jobs, much lower than estimates of 190,000 jobs. As the labor market nears full employment, the biggest challenge employers are facing is finding skilled workers to fill open positions.
Construction activity picked up in August and may carry into September. Both housing starts and new home sales posted exceptionally strong increases, indicating builders are starting to replenish inventory. Sustained buyer demand has kept builders busy in today’s competitive housing market. Serious home shoppers should get preapproved before making an offer. Mortgage preapproval shows the seller that you are serious and you’ve already started the home financing process, it can also be the key to getting your offer accepted in a busy market.
Sources: CNBC, CNBC, Econoday, MarketWatch, MarketWatch, MarketWatch, Mortgage News Daily