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CCL Market Update

Mortgage Applications

Purchase applications for home mortgages rose a seasonally adjusted 0.4 percent in the week of November 10th, a marginal increase that put the purchase index a sharp 17 percent above its year ago level. Applications for refinancing rose 6.0 percent in the week, taking the refinancing share of mortgage activity to 51.3 percent, 1.3 percentage points more than in the prior week and the highest share since September.

Jobless Claims

Jobless claims rose 10,000 but it’s not due to Puerto Rico. Initial claims in the week of November 11th came in at 249,000 vs. the expected 236,000 but claims in Puerto Rico which have been backed up since September when Hurricane Irma appeared, totaled 6,565 which is down from the prior week’s 8,2181. Claims in Puerto Rico are still about three times as high as usual which did contribute to the week’s overall increase. The four-week average was up a sharp 6,500 higher to 237,750, for the first gain for the average in seven weeks. Continuing claims have shown no hurricane effects and fell a sizable 44,000 in lagging data for the week of November 4th t5o 1.860 million. The unemployment rate for insured workers is down 1 tenth to a very low 1.3 percent. Despite the jump higher in the latest initial claims, the data points to very tight conditions in the labor market.

Housing Market Index

Home builders are reporting acceleration going into the year end with November’s 70 reading for the housing market index the best since March. Both current and future sales are very strong, each at 77 and traffic is improving up 2 points to 50 for the best reading since May. Strength in this report has not translated this year to strength in actual housing data though these results are favorable for housing start and permits data.

Housing Starts

Housing starts, and permits posted unexpectedly strong gains in October, up 13.7 percent for starts to a 1.290 million annualized rate and up 5.9 percent for permits to 1.297 million. All readings show strength including single family homes, up 5.3 percent for starts to an 877,000 rate and up 1.9 percent for permits to 839,000. Multifamily starts jumped 36.8 percent to 413,000 with permits up 13.9 percent to 458,000. Completions are a special positive up 12.6 percent overall to 1.232 million and adding immediate supply to a very thin new home market. This is the high3est level of completions since February 2008. Homes under construction were also up, 0.9 percent higher to 1.096 million. Housing started off the year strong and stumbled through a weak spring season and flat summer. The year on year rates have been held down by multi units, with total starts down 2.9 percent and permits up only 0.9 percent.

House Republicans Pass Tax Reform Bill

On Thursday house republicans passed a bill to cut taxes on businesses and individuals. The tax reform plan passed the chamber with 227 votes in favor and 205 against. The House plan would permanently chop the corporate tax rate to 20 from 35 percent and make other tweaks aiming to make businesses more competitive. It would reduce individual tax brackets to four from seven and make changes to several tax breaks.

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