On a positive note, the economy grew at a faster pace than previously estimated in the second quarter on stronger consumer spending and construction. GDP was revised up to 3.9% from a previous 3.7% as consumer spending, which accounts for more than two-thirds of the economy, was revised up to 3.6% as Americans spent more on transportation and healthcare.
Source: White House
After reaching a post-recession high in July, existing home sales fell for the first time in four months in August, slipping 4.8% to an annual pace of 5.31 million. At the current sales pace, the supply of existing homes stands at 5.2 months. According to the National Association of Realtors: “With sales and overall demand higher than a year ago and supply mostly unchanged, low inventories will likely continue to limit options for those looking to buy this fall even with the overall pool of buyers shrinking because of seasonal factors…When the Federal Reserve decides to lift short–term rates — likely later this year — the impact on mortgage rates and overall housing demand will likely not be pronounced. With job growth holding steady, prospective buyers can handle any gradual rise in mortgage rates — especially if today’s stronger labor market finally leads to a boost in wages and homebuilding accelerates to alleviate supply shortages and slow price growth in some markets”.
Americans purchased new homes at the fastest pace in 7 years, as new homes sales jumped 5.7% in August to an annual rate of 552,000 – marking the highest level since 2008. According to the NAHB: “Today’s report indicates the release of pent-up housing demand as the overall economy strengthens, consumer confidence grows and mortgage interest rates remain low. The housing market should continue to move forward at a modest but more persistent pace throughout the rest of 2015.”
Durable goods orders fell for the first time in three months in August, dropping 2% on a pullback in demand for cars and aircraft. Auto orders slipped 1.6% and aircraft orders fell 5.9%, while business investment softened.