Tucson Mortgages Home Loan News 8-10-2020

By Todd Abelson NMLS #180858 on .

Week of August 3rd, 2020 in Review

Last week was all about the labor sector, as two key employment reports for July were released. In the private sector, job creations slowed significantly in July per the ADP Employment Report, with only 167,000 new jobs added last month. However, there was a bright spot with June’s figures revised sharply higher.

Meanwhile, the highly-anticipated Jobs Report from the Bureau of Labor Statistics (BLS) showed that there were 1.8 million job gains in July, which was better than expected. The report also showed that the unemployment rate improved. However, the headline numbers don’t tell the whole story, as detailed below.

The latest Initial Jobless Claims showed that another 1.2 million people filed for unemployment for the first time during the week ending August 1, which was the first decline we’ve seen in several weeks. Continuing claims also improved in the latest week, but the figures still remain astonishingly high.

CoreLogic’s latest Home Price Index Appreciation report showed that home prices rose 1.0% from May to June and 4.9% when compared to June of last year. The annual gain was also up from the 4.1% year-over-year appreciation reported in May’s report. Perhaps most significant is the improvement in the forecast for home prices in the year ahead, which is noted below.

And there was some positive news from the manufacturing sector, as the ISM Index, which measures the health of US manufacturing, came in at 54.2 for the month of July, which was above expectations of 53.5. While production remains below pre-pandemic levels, readings above 50 do indicate growth.

 

Digging Deeper into July Jobs Reports

Both the ADP and BLS Jobs Reports for July had some important details to note behind the headline figures. First in on Wednesday was the ADP Employment report, which showed a gain of only 167,000 jobs in the private sector. This was much lower than the 2 million new jobs that were expected. However, June’s report had a huge revision from 2.4 million to 4.3 million jobs created in that month.

The more-closely anticipated BLS report showed that there were 1.8 million job gains in July, which was stronger than the 1.5 million that was expected. There are two reports within the Jobs Report, and there is a fundamental difference between them. The Business Survey is where the headline job number comes from and it’s based predominately on modeling.

Week of August 3rd, 2020 in Review

Last week was all about the labor sector, as two key employment reports for July were released. In the private sector, job creations slowed significantly in July per the ADP Employment Report, with only 167,000 new jobs added last month. However, there was a bright spot with June’s figures revised sharply higher.

Meanwhile, the highly-anticipated Jobs Report from the Bureau of Labor Statistics (BLS) showed that there were 1.8 million job gains in July, which was better than expected. The report also showed that the unemployment rate improved. However, the headline numbers don’t tell the whole story, as detailed below.

The latest Initial Jobless Claims showed that another 1.2 million people filed for unemployment for the first time during the week ending August 1, which was the first decline we’ve seen in several weeks. Continuing claims also improved in the latest week, but the figures still remain astonishingly high.

CoreLogic’s latest Home Price Index Appreciation report showed that home prices rose 1.0% from May to June and 4.9% when compared to June of last year. The annual gain was also up from the 4.1% year-over-year appreciation reported in May’s report. Perhaps most significant is the improvement in the forecast for home prices in the year ahead, which is noted below.

And there was some positive news from the manufacturing sector, as the ISM Index, which measures the health of US manufacturing, came in at 54.2 for the month of July, which was above expectations of 53.5. While production remains below pre-pandemic levels, readings above 50 do indicate growth.

 

Digging Deeper into July Jobs Reports

Both the ADP and BLS Jobs Reports for July had some important details to note behind the headline figures. First in on Wednesday was the ADP Employment report, which showed a gain of only 167,000 jobs in the private sector. This was much lower than the 2 million new jobs that were expected. However, June’s report had a huge revision from 2.4 million to 4.3 million jobs created in that month.

The more-closely anticipated BLS report showed that there were 1.8 million job gains in July, which was stronger than the 1.5 million that was expected. There are two reports within the Jobs Report, and there is a fundamental difference between them. The Business Survey is where the headline job number comes from and it’s based predominately on modeling.

Continuing claims, which measure people who continue to receive benefits, also improved in the latest week by 844,000 to 16.1 million.

Pandemic Unemployment Assistance Claims (PUA), which are not captured in the headline figure, totaled 656,000 in the latest week. These claims are filed by people like gig workers and contractors who would not usually be approved for unemployment benefits. Continuing PUA Claims improved 70,000 to 13 million.

All in all, the total number of people receiving some type of benefit is likely over 30 million, which is still very high and would point to a much higher unemployment rate than what we are seeing reported, as noted above.

 

Promising Change to Forecast for Home Price Appreciation

Home prices rose 1.0% from May to June and 4.9% when compared to June of last year, per CoreLogic’s Home Price Index Appreciation report. The annual reading was up from May’s 4.1% annual increase. The states with the highest annual increases were Idaho (10.5%), Montana (9.8%), Missouri (8.5%) and Arizona (8.5%).

However, the big story was the forecast, as CoreLogic projects that home prices will increase 0.1% from June to July and they expect prices to fall 1.0% in the year going forward. Their annual forecast increased significantly from a negative 6.6% in the next 12 months.

CoreLogic noted that last month’s HPI Forecast of a 6.6% home price decline through May 2021 has been revised as projected unemployment rates through 2020 showed improvement. The recent rebound of home sales suggests the pandemic did not derail home buyers, who continue to be motivated by historically low mortgage rates. This, coupled with the declining supply of homes for sale, could shield home price growth from the impacts of the current economic uncertainty.

 

Family Hack of the Week

Staying hydrated is so important when the temperatures soar. Here’s a simple recipe to help you beat the heat and keep your family smiling and cool.

First, make a simple syrup by adding 1/4 cup water and 1/4 cup sugar to a saucepan over medium heat. Bring to a boil and simmer until the sugar is dissolved. Then remove from heat, add 1 tablespoon of fresh mint and steep for 15 minutes.

Next, chop up a honeydew and add it to a blender, along with 2 cups of cold water, 4 teaspoons of lime juice and 2 tablespoons of the simple syrup. Blend and then strain through a mesh sieve.

Serve over ice, garnish with fresh mint, and sit back, relax and enjoy!

 

What to Look for This Week

We’ll get an update on July inflation this week, first on Tuesday with the Producer Price Index, which measures wholesale inflation. The Consumer Price Index follows on Wednesday.

Tuesday also brings the latest news from the National Federation of Independent Business with their small business optimism index for July, while Friday will show us how retailers fared in July with the Retail Sales report.

Finally, the latest jobless claims figures remain important to monitor when they are released as usual on Thursday.

 

Technical Picture

The Fed continues to stabilize the markets with its ongoing purchases of Mortgage Backed Securities. Mortgage Bonds challenged overhead resistance at 103.688 but were pushed lower. Bonds are in a wide range with support almost 40bp beneath present levels.