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Blog posted On September 10, 2018
Market-moving reports this week include consumer credit, scheduled for Monday, and the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS), scheduled for Tuesday. Both consumer borrowing and job creation drive economic and housing market momentum. In housing news, the weekly mortgage application survey comes out on Wednesday.
Consumer credit counts total outstanding consumer credit segmented by revolving and nonrevolving credit. Revolving credit includes short-term debt like credit card bills and nonrevolving credit is comprised of longer-term debt like student loans and car loans, but not mortgage debt. In June, consumer borrowing slowed, increasing by $10.2 billion to a level of $3.91 trillion. Revolving credit declined slightly, down 0.2% in June, after May’s record 11.2% gain. Nonrevolving credit increased 4.4%. Consumer spending was exceptionally strong in the first quarter, driven by tax cuts.
JOLTS tracks changes in open positions, hiring, and voluntary quits. Job openings hit a record high of 6.662 million in June and hiring declined slightly as the labor market tightens. With the unemployment rate sitting at record low levels, economists expect companies to start raising wages to attract new hires. Moody’s Analytics economist explained, “An elevated quit rate has important implications for income growth because workers typically secure new jobs paying about 5 percent to 10 percent more than their previous jobs. And employers will need to attract workers with better offers.”
The Mortgage Bankers Association (MBA) weekly mortgage application survey declined 0.1% for the week ending 8/31. New purchase application submissions increased 1.0% and refinance application submissions decreased 1.0%. As mortgage rates trend upward, refinance activity is expected to contract.
Second quarter’s Gross Domestic Product (GDP) growth was revised upward, to a growth rate of 4.2%. GDP, the most comprehensive economic scorecard, is driven by consumer spending. Economic strength typically spurs housing activity. In today’s busy housing market, the biggest challenge prospective buyers face is finding available homes for sale. To stay competitive, get preapproved for mortgage financing before you start shopping. Show the seller you are prepared to make an offer and can ensure a faster transaction.
Sources: CNBC, Econoday, MarketWatch, MarketWatch, Mortgage News Daily, Reuters