Daily Forecast Update: Retail Sales, Weekly Mortgage Applications

October 14, 2009

By George Ratiu, Research Economist 

Daily Forecast Update

• NAR monthly official forecast as of October 1
• GDP 2009 Q3: +3.0% ↑
• GDP 2009 Q4: +2.4%
• GDP 2010 Q2: +3.4%
• Unemployment rate by the end of 2009: 10.3%
• Average 30-year fixed mortgage rate by the end of 2009: 5.4% ↑

What does today's data mean for REALTORS® and consumers?

• While the headline figure for retail sales is down, the decline is mostly caused by the end of the "cash for clunkers" program, which added temporary volatility in the series. Aside from auto sales, retail sales have been on an upward trend. As a result the economy is pushed up one notch in the third quarter.
• The continuation of the recent rally in the stock market might boost retail sales in the months ahead. However, in the long run, housing wealth has a bigger impact on retail sales then stock wealth. For stronger and more sustained retail sales, housing has to recover.
• The decline in mortgage applications and a slight rise in interest rates cast a cloud over the week's activity.

Retail Sales

• U.S. retail sales were down 1.5 percent in September, to $344.7 billion, from $351.4 in August. On a yearly basis, retail sales were down 5.7 percent.
• The decline was driven by a drop in motor vehicle and parts sales, down 10.4 percent from August, as the "cash for clunkers" program ended.
• Retail and food sales excluding motor vehicles and auto parts actually increased 0.5 percent in September, following a 1.1 percent growth in August.
• Sales at furniture stores, health and personal care, clothing and sporting goods were up for the month.
• Gasoline stations sales rose 1.1 percent from August; however, they were still down 25.3 percent from September 2008.

Mortgage Bankers Association Weekly Mortgage Applications

• Mortgage applications for home purchases and refinances, as measured by the Market Composite Index, decreased 1.8 percent in the past week.
• The Refinance Index, tracking applications for refinance, decreased 0.1 percent from the previous week. The Purchase Index fell 5.0 percent.
• Mortgage refinancing activity comprised 67.4 percent of total applications, an 11 basis point increase from the previous week.
• Mortgage rates (fixed-rate 30-year) according to the survey moved up to 5.02 percent nationally, from 4.89.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

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