Last Week in the News (December 29, 2008)

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ending December 19 soared 48% from the previous week. Purchase volume increased 11%, while refinancing applications jumped 63%. Total applications and refinance activity were at their highest levels since July 2003.

On Tuesday, December 23, the Commerce Department reported that the gross domestic product, the broadest measure of economic health, declined at an annual rate of 0.5% in the July-September quarter. It was also reported that corporate profits fell 1.2% in the third quarter.

The Reuters/University of Michigan consumer sentiment index rebounded this month from the lowest level in 28 years. The index rose in December to 60.1 from 55.3 in November. Economists had forecast a reading of 58.8. The increase was attributed to easing inflationary pressures and a decline in gasoline prices. According to AAA, the price of a gallon of regular unleaded gasoline at the pump was $1.65 on December 23, compared with a record high $4.11 on July 17.

The median sales price of an existing home fell 13.2% in November to $181,300, from $208,000 a year ago. It was the biggest year-over-year drop since recordkeeping began in 1968, said the National Association of Realtors. The median price for a new home sold in November declined 11.5% from a year earlier to $220,400.

New home sales dropped 2.9% in November to an annual sales rate of 407,000 units, according to a report by the Commerce Department. The rate was the lowest since January 1991.

The National Association of Realtors reported existing home sales fell 8.6% in November to an annualized rate of 4.49 million units. Economists had expected an annualized rate of 4.93 million.

Meanwhile, the Commerce Department reported that orders for durable goods dropped by 1%, less than the 3% decrease economists had expected.

Upcoming on the economic calendar is a report on consumer confidence on December 30.