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Consumer Spending, New Home Sales and Rate Update

In the spirit of the holiday season, we have a retail sales update, new home sales numbers, and a brief market recap.

Initial estimates of Black Friday sales suggest record numbers. ShopperTrak estimated sales on Black Friday at $11.4 billion, a record high, and up 6.6 percent from last year. For the weekend, sales were up 16.4 percent and totaled $52.5 billion according to the National Retail Federation (NRF), who cited a BIGresearch survey. According to the same company, individual shoppers spent $398.62 each, up from $365.23 last year. The NRF estimated that 226 million shoppers visited stores and websites over the weekend.

Even before the Black Friday numbers, third quarter consumer spending grew at 2.3 percent, its fastest pace of the year, according to the Commerce Department. Consumer spending accounts for 70 percent of the economy, and this improvement is seen as cause for optimism heading into the fourth quarter, which is the strongest retail season.

Consumer indebtedness fell slightly during the third quarter by $60 billion or 0.6 percent. Household debt now sits at $11.66 trillion nationally. The decline is due partially to a decrease in mortgage balances.

October saw a slight uptick in new home sales. According to the Commerce Department, new-home sales went up 1.3 percent last month to an annual rate of 307,000.  While positive, the number is well off of the 700,000 sales that economists suggest should be sold to maintain a healthy housing market. According to the National Association of Home Builders, each home built generates $90,000 in tax revenue and creates an average of three jobs for a year.

Overall, however, the picture for homebuilding looks bleak. Nationally, only 162,000 new homes went on sale in October – a record low.  Builders have stopped new projects due to low demand, difficulty in obtaining financing, and a surplus of existing homes on the market.

The market shot up today after a seven day rough stretch on news about possible European debt solutions and strong retail numbers. The Dow is up 291 points and the S&P 500 is up 33.88 points.

Last week, rates approached record lows, but with the positive market performance, they might be slightly less favorable to begin the week. The national average of the 30 year fixed is 4.02 percent (4.06 percent APR). The 15 year fixed sits at 3.38 percent (3.52 percent APR).

This week we will see numbers on home prices, consumer confidence, mortgage applications, pending home sales, and the employment situation. Check in with our Facebook and Blog for more updates throughout the week.

Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile