Last week in the News – Economic Update!

After a two-day meeting, the Federal Reserve left short-term interest rates at 5.25%, where they have stood since June 29, when the Fed halted a two-year rate-hike campaign aimed at controlling inflation. Fed policymakers said on October 25 that “economic growth has slowed over the course of the year, partly reflecting a cooling housing market.”
Existing-home sales fell during September for a sixth straight month to a 6.18 million annual rate, a 1.9% decrease from August’s unrevised 6.3 million annual pace, the National Association of Realtors (NAR) said October 25. “The worst is behind us as far as a market correction,” said David Lereah, NAR’s chief economist.
New-home sales in September increased 5.3% to a seasonally adjusted annual rate of 1.075 million, the Commerce Department said October 26. Economists had expected no gain.
However, the median price for a new home sold in September was $217,100, a drop of 9.7% from September 2005, the Commerce Department reported October 25. It was the lowest median price for a new home since September 2004 and sharpest year-over-year decline since December 1970.
Orders for durable goods — items expected to last at least three years — increased by 7.8% last month to a seasonally adjusted $226.7 billion, the Commerce Department said October 26. Economists had anticipated a 2% gain.
Interest rates on 30-year fixed mortgages rose for the week ending October 26, Freddie Mac reported.
This week look for updates on consumer confidence on October 31 and construction spending on November 1.

Compliments of American Home Mortgage Investment Corp.

Last week in the News – Economic Update!

Compliments of American Home Mortgage Investment Corp.

Helped by sinking gasoline prices, consumer prices fell by 0.5% in September, the largest dip in 10 months, the Labor Department reported October 18. The decline was better than the 0.3% drop predicted by Wall Street analysts. Consumer core inflation, which excludes energy and food, rose 0.2%, the third straight month of modest gains. Producer prices — the prices that producers charge wholesalers — fell by 1.3%, nearly double the expected decline and the largest in more than three years. Producer core inflation, however, jumped 0.6% in September, the biggest increase in 20 months. Much of the rise in core inflation was attributed to auto dealers ending their incentives to try to sell a glut of unsold cars. Meanwhile, the Conference Board said on October 19 that its September Index of Leading Economic Indicators edged up 0.1%. The index, which had slipped 0.3% in July and 0.2% in August, is designed to predict economic activity three to six months in the future. The small September gain fits with economists’ expectations that growth will slow in coming months. Housing starts showed an unexpected rise of 5.9% in September, the Commerce Department reported October 18. While an improvement over August, September’s housing starts are still 17.9% lower than a year ago. Issuance of building permits — a key indicator of future building activity — declined 6.3% in September, the biggest drop since October 2001. After last week’s gain, rates on 30-year fixed mortgages declined for the week ending October 19. This week look for updates on existing home sales on October 25 and new home sales on October 26.