Last week’s economic reporting included readings on construction spending, consumer sentiment, labor sector reports on public and private sector jobs, and national unemployment. Weekly readings for mortgage rates and jobless claims were also released.
Residential Sector Drove June Construction Spending
According to the Commerce Department, construction spending rose by 0.10 percent in June alone. Analysts expected spending to increase by 0.50 percent, but builders spent less on public sector and non-residential projects. Nevertheless, spending for all construction rose at a year-over-year pace of $1.55 trillion.
Residential construction, on the other hand, rose by 1.10 percent in June. But public-sector spending fell by -1.20 percent, and non-residential construction spending fell by 0.70 percent. That said, year-over-year residential construction spending rose by 28.80 percent in June, whereas non-residential construction spending was 6.60 percent lower year-over-year.
Clearly, demand for homes continues to exceed the supply of available homes. In June, builders took advantage of lower lumber prices to ramp up construction, but shortages of affordable entry-level homes continued to challenge first-time and moderate-income home buyers. And although the COVID-19 pandemic continues to increase demand for homes, many buyers have left the market due to high home prices and few options for available homes. Plus, cash buyers and bidding wars in popular metro areas continued to drive up home prices.
Current Mortgage Rates, Jobless Claims Fall
Freddie Mac reported lower than average mortgage interest rates last week, as rates for 30-year fixed-rate mortgages fell by three basis points to 2.77 percent. The average rate for 15-year fixed-rate mortgages was unchanged at 2.10 percent; Rates for 5/1 adjustable rate mortgages averaged 2.40 percent and were five basis points lower. Discount points also averaged 0.60 percent for fixed-rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.
In other news, new jobless claims fell to 385,000 initial claims filed from the previous week’s reading of 399,000 new claims filed. Ongoing jobless claims were also lower, with 2.93 million continuing claims filed as compared to 3.30 million ongoing claims filed in the previous week.
Low Unemployment Rate Suggests Continued Economic Recovery
Yet despite fewer jobless claims, public and private sector jobs showed mixed results in July. ADP reported 330,000 private-sector jobs added in July, compared to 680,000 private-sector jobs added in June. The Labor Department reported 943,000 public and private-sector jobs added in July as compared to its June reading of 938,000 jobs added. Overall, the national unemployment rate fell to 5.40 percent in July. This was much lower than June’s reading of 5.90 percent and analysts’ expectations of an unemployment rate of 5.70 percent in July.
What’s Ahead for the Week of August 9, 2021
This week’s scheduled economic reporting includes readings on construction spending and labor sector readings on jobs growth and national unemployment. Weekly reporting on mortgage rates and jobless claims will also be released.
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