MetroIntelligence Economic Update by P. DUFFY
Annual home prices rose 6.7 percent in September, highest gain since May 2014
National home prices increased 6.7 percent year-on-year in September 2020, nearly double the annual increase a year ago and the highest gain since May 2014. The economic downturn that started in March 2020 is predicted to slow the HPI increase to 0.2 percent by September 2021, which would be the lowest increase in annual home prices since January 2012.
Purchase loan apps dip 1 percent but up 25 percent year-on-year
The Market Composite Index increased 3.8 percent on a seasonally adjusted basis from one week earlier, with purchase loans falling 1 percent (but up 25 percent year-on-year) and refinances rising 6 percent (and up 88 percent year-on-year). The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances edged up to 3.01 percent.
3QW20 commercial and MF loan originations down 47 percent year-on-year
Commercial and multifamily mortgage loan originations were 47 percent lower in the third quarter compared to a year ago, and increased 12 percent from the second quarter of 2020. The third quarter saw a 94 percent year-over-year decrease in the dollar volume of loans for hotel properties, an 83 percent decrease for retail properties, a 58 percent decrease for office properties, a 51 percent decline for health care properties, a 31 percent decrease in multifamily properties, and a 23 percent decrease for industrial property loan originations.
Service sector economic index dips to 56.6, but still well in growth mode
The Services PMI™ registered 56.6 percent in October, 1.2 percentage points lower than the September reading of 57.8 percent. This reading represents a fifth straight month of growth for the services sector, which has expanded for all but two of the last 129 months. Respondents’ comments are cautiously optimistic about business conditions and the economy, but there is a degree of uncertainty due to the pandemic, capacity constraints, logistics and the elections.