Discussing consumer confidence, employment numbers from ADP, construction spending, manufacturing, mortgage rates and more…
The Conference Board Consumer Confidence Index®, which had increased in December, retreated in January. The Index now stands at 111.8 (1985=100), down from 113.3 in December. The Present Situation Index increased from 123.5 to 129.7, but the Expectations Index decreased from 106.4 last month to 99.8.
Consumer confidence decreased in January, after reaching a 15-year high in December. The decline in confidence was driven solely by a less optimistic outlook for business conditions, jobs, and especially consumers’ income prospects. Consumers’ assessment of current conditions, on the other hand, improved in January. Despite the retreat in confidence, consumers remain confident that the economy will continue to expand in the coming months.
Consumers’ appraisal of current conditions improved in January. Those saying business conditions are “good” increased slightly from 28.6 percent to 29.3 percent, while those saying business conditions are “bad” decreased from 17.8 percent to 16.1 percent. Consumers’ assessment of the labor market was also more positive than last month. The percentage of consumers stating jobs are “plentiful” rose from 26.0 percent to 27.4 percent, while those claiming jobs are “hard to get” decreased from 22.7 percent to 21.5 percent.
Consumers’ short-term outlook, which had increased considerably last month, declined in January. The percentage of consumers expecting business conditions to improve over the next six months decreased from 24.7 percent to 23.1 percent, while those expecting business conditions to worsen increased from 8.9 percent to 10.7 percent.
Consumers’ outlook for the labor market was somewhat mixed. The proportion expecting more jobs in the months ahead decreased from 21.7 percent to 19.8 percent, while those anticipating fewer jobs was virtually unchanged at 14.0 percent. The percentage of consumers expecting their incomes to increase declined from 21.5 percent to 18.0 percent, while the proportion expecting a decrease rose from 8.6 percent to 9.6 percent.
Not good. We will have to wait and see if this is a blip or will turn into a sustained downturn in consumer confidence.
Private sector employment increased by 246,000 jobs from December 2016 to January 2017 according to the January ADP National Employment Report®. The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis.
Ahu Yildirmaz, vice president and co-head of the ADP Research Institute said:
The U.S. labor market is hitting on all cylinders and we saw small and midsized businesses perform exceptionally well. Further analysis shows that services gains have rebounded from their tepid December pace, adding 201,000 jobs. The goods producers added 46,000 jobs, which is the strongest job growth that sector has seen in the last two years.
Great news about the goods producing jobs hitting a 2 year high. BUT 46,000 jobs divided across the entire U.S. isn’t really a huge amount compared to the population.
Mark Zandi, chief economist of Moody’s Analytics said:
2017 got off to a strong start in the job market. Job growth is solid across most industries and company sizes. Even the energy sector is adding to payrolls again.
As I have preached since the housing market and economy went haywire, good paying jobs are one of the keys to recovery in the housing market.
Economic activity in the manufacturing sector expanded in January, and the overall economy grew for the 92nd consecutive month.
Construction spending during December 2016 was estimated at a 0.2% below the November estimate and 4.2% above the December 2015 estimate. Spending on private construction was 0.2% above the revised November estimate. Residential construction was 0.5% above the revised November estimate.
The Consumer Financial Protection Bureau (CFPB) today took action against Prospect Mortgage, LLC, a major mortgage lender, for paying illegal kickbacks for mortgage business referrals. The CFPB also took action against two real estate brokers and a mortgage servicer that took illegal kickbacks from Prospect. Under the terms of the action announced today, Prospect will pay a $3.5 million civil penalty for its illegal conduct, and the real estate brokers and servicer will pay a combined $495,000 in consumer relief, repayment of ill-gotten gains, and penalties.
CFPB Director Richard Cordray said:
Today’s action sends a clear message that it is illegal to make or accept payments for mortgage referrals. We will hold both sides of these improper arrangements accountable for breaking the law, which skews the real estate market to the disadvantage of consumers and honest businesses.
If the people trying to eliminate or weaken the CFPB have their way, will things such as this go unpunished?
I am NOT a fan of the CFPB but I am also not a fan of people doing sleazy stuff either…
Freddie’s Outlook on Multifamily Demand, Oversupply Risks in 2017
The multifamily market has enjoyed several years of rapid growth and seems poised to continue to grow in 2017, although at a more moderate pace.
Slow-but-steady economic growth continued in 2016, which supported strong demand for multifamily rental units. Despite high levels of construction permits and starts, vacancy rates remained flat, while strong demand pushed up rents and gross-income growth above the historical norm.
A greater amount of new supply will be delivered to the market in 2017 but most of it will be absorbed, given continued economic growth and strong multifamily fundamentals. Vacancy rates will increase slightly, but still leave room for rent and gross-income growth.
Until the shortage of affordable homes for sale is solved, the demand for rentals will remain high.
As 2017 gets underway, rent prices have followed the trend from the end of last year: prices of the top rental markets, for the most part, have plateaued or declined while mid tiered cities are on the rise. Though there still is a considerable gap between the two groups, it seems that the prices for these tiers are converging more so than they are diverging.
Overall, the Zumper National Rent Index is up again for the 3rd month in a row, 0.4% to $1,143 for one bedroom apartments and 0.7% to $1,358 for two bedroom apartments.
While every real estate market is different, you can expect rents in the Anderson SC area to rise. Rents may be much higher in other areas of the country but the growth in rents should be about the same.
It’s fairly common to hear that a particular economic data point is the best since the recession. But you’d have to go back a bit further to compare the last time home builder sentiment was so high.
In December, builder sentiment, as measured by the National Association of Home Builders’ housing market index, surged to the highest reading since July 2005 — the height of the housing bubble.
December also marked a fresh high for a key component of the sentiment index, the sub-gauge that tracks perceptions of buyer traffic. The traffic gauge didn’t just reach its highest since the housing bubble last month – it also marked the first time the gauge crossed the neutral 50 line.
Hopefully all these lookers turn into home buyers ASAP. After all, home prices and mortgage rates are increasing…
Mortgage applications decreased 3.2% from one week earlier according to the Mortgage Bankers Association. They also reported increasing rates!
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,000 or less) increased to 4.39%. This is the highest level since December 2016.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,000) increased to 4.32%
The average contract interest rate for 15-year fixed-rate mortgages increased to 3.61%.
That’s it for today!