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03/29/2017
Market Update

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Existing-home sales softened by 3.7% in February to an annualized rate of 5.480 million; many first-time buyers were put off by rising prices and an ongoing supply shortage (despite inventory improving slightly from January’s 18-year low). Condo sales led the overall decline, while single-family home sales were also weak.
This Week
  • Existing-home sales softened by 3.7% in February to an annualized rate of 5.480 million; many first-time buyers were put off by rising prices and an ongoing supply shortage (despite inventory improving slightly from January’s 18-year low). Condo sales led the overall decline, while single-family home sales were also weak.
  • The number of new homes sold in February surged by 6.1% to an annualized rate of 592,000, the highest since July last year, despite elevated prices and climbing mortgage rates. Analysts attribute the growth to a resilient job market and improving household incomes.
  • Mortgage purchase applications declined by 2% and refinancing applications fell by 3% in the week ending March 17. Adjustablerate mortgage applications accounted for 9% of all home-loan applications, highest percentage since October 2014, as borrowers turned to shorter-term loans with fixed rates.
  • Initial jobless claims grew by 15,000 to a seven-week high of 258,000 in the week ending March 18. The four-week moving average (which smooths out volatility in the weekly reading) rose by just 1,000 to 240,000, hovering near a 40-year low. Continuing claims for the week ending March 11 fell by 39,000 to two million.
  • Durable-goods orders rose by 1.7% in February, mainly within aircraft, gaining only 0.4% when excluding transportation. Nonmilitary capital-goods orders excluding aircraft (a gauge for business investment) inched 0.1% lower due to continued lack of demand for U.S. factory goods.
  • Economic activity moderated in March, with preliminary readings of Markit’s purchasing managers’ index (PMI) coming in lower than expectations. The manufacturing and services sectors each recorded the slowest pace of growth in six months, with shrinking backlogs and inventories for manufacturers and softening employment within services.
  • Eurozone economic activity reached the highest level in six years in March. Initial data from the composite PMI showed sharp improvement in both manufacturing and services, each significantly improving within new orders, backlogs, selling prices and wages.
  • U.K. inflation grew by 0.7% in February, led by transport and food prices. The year-over-year rate jumped by 0.5% to 2.3% — the first annual inflation rate exceeding 2% since November 2013, and the fastest annual growth since September 2013. With consumer prices growing at nearly the same pace as workers’ wages, there could be a pullback in British consumer spending in the coming months. However, retail sales in the U.K. came roaring back in February after three consecutive monthly declines, led by nonstore retail and household goods.
  • Preliminary estimates for Japan’s March manufacturing PMI showed the first decline since November; although it remained at a level consistent with expansion for the seventh consecutive month. Output and new orders moderated, while employment was flat. Manufacturers also reported a positive work backlog and optimism about prospects over the next 12 months.

 

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