The Major Markets closed the last full week of August lower as all five indices showed losses for the week.
The S&P 500 traded in a narrow range most of the week ahead of Janet Yellen’s comments out of Jackson Hole, Wyoming on Friday.
Tuesday’s testing of the all-time highs on the S&P 500 could be partially due to the optimism around the New Home Sales report which showed a strong 12.4% monthly increase to 654,000. However, looking beyond the headline, the surge in sales may also be attributed to a drop in the median sales price of New Homes sold. Furthermore, July’s median price reading of $294,600 is over 5% lower than June’s and half a percent lower than the same month last year.
Wednesday’s weekly MBA Mortgage Applications pointed to a slowing of home sales as the purchase index fell 0.3% week over week and at a new low for the year.
June’s saw weakness as the month over month increase came in at only 0.2% while the year over year increase also held steady at 5.6%. Digging deeper, the largest regional year over year increase was in the Mountain region with a gain of 8.6% followed by Pacific at 7.4%.
Existing home sales were off 3.2% month over month as July’s 5.39 million seasonally adjusted annualized rate was well below the 5.52 million consensus expectations. Year over the year, July’s rate fell 1.6%. The Median Existing Home Sales also dropped, but not nearly as much as New Sales had, as the median price of $244,100 is just shy of 1.5% lower than the June reading.
In summary, the numerous housing reports this week appear to show overall softening in the housing market.
Comments out of Jackson Hole
Finally, Janet Yellen came out on Friday advocating for the possibility for a rate increase stating ““In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months,”
But then in a seemingly contradictory manner stated that “future policymakers might choose to consider some additional tools that have been employed by other central banks… For example, future policymakers may wish to explore the possibility of purchasing a broader range of assets”
Altogether, her words could seem either hawkish or dovish depending on which elements you wanted to focus on. This only added to the confusion and uncertainty to the longer-term future of our economy.