The big economic news this week was much stronger than expected housing market data. While it was a volatile week, mortgage rates ended just slightly lower.
Without a doubt, the star of the show this week was the housing market! Across the board, the results were outstanding and far surpassed expectations. In July, existing home sales increased a massive 25% from June to the highest level since 2006, and median existing-home prices were 9% higher than a year ago.
Once again, a shortage of homes on the market held back even more impressive sales activity. Total inventory of existing homes available for sale was at just a 3.1-month supply, far below the 6.0-month supply which is viewed as a healthy balance between buyers and sellers, and it was 21% lower than a year ago.
While inventory levels have remained a stubborn issue for quite a while, there was encouraging news on this front as well this week. In July, housing starts surged 23% from June, the largest increase since 2016. Applications for permits to build, a proxy for future construction, rose 19%, the biggest gain since 1990. In addition, the National Association of Home Builders (NAHB) housing index showed that builder confidence jumped from 72 to 78, matching the record high set in 1998.
Looking ahead, investors will continue watching for news about medical advances, government stimulus programs, Fed monetary policy changes, and plans for reopening the economy. Beyond that, New Home Sales will be released on Tuesday. The core PCE price index, the inflation indicator favored by the Fed, will come out on Friday.
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