Weekly mortgage applications declined 1.7% last week and were 15% lower than a year ago.  Mortgage applications to purchase homes declined 1% for the week, and applications to refinance decreased 3%.  Lower mortgage rates did not seem to give a lift to the mortgage market as the 30-year fixed rate mortgage rate decreased three basis points to 4.78% from 4.81%.

Senior economist at Zillow, Aaron Terrazas, commented “Home value appreciation has slowed, but it's still triple its historic pace and three times the rate of wage growth."  With home prices rising @ 6% and average hourly earnings rising @ 2.7% affordability becomes a problem, especially for entry level buyers.

Pending homes sales followed the lead of mortgage applications and disappointed, declining 0.7% in July from June (consensus +0.5%) according to the National Association of Realtors’ (NAR).  Year-over-year, the index was down 2.3%.     

Lawrence Yun, chief economist for NAR, commented. "The reason sales are falling off last year's pace is that multiple years of inadequate supply in markets with strong job growth have finally driven up home prices to a point where an increasing number of prospective buyers are unable to afford it."

Gross Domestic Product  

Gross Domestic Product (GDP) is the value of all goods and services produced in the U.S.  The Bureau of Economic Analysis (BEA) estimates the nation’s GDP for each quarter.  As new data becomes available, or is updated, the BEA revises its estimates to improve accuracy.  The initial estimate is the advanced estimate, which is followed by the second estimate and then the final estimate. 

The BEA reported that the second estimate for second quarter GDP came in at 4.2%, 0.1% better than the 4.1% advanced estimate.  The second quarter GDP Deflator increased to 3.2% from the advanced estimate of 3.0%.   

Personal consumption was revised down to 3.8% from 4%.  The decrease in consumption was offset by higher estimates for government spending, business spending on software and a downward revision to imports, as petroleum imports declined.         

Retail is weak today, being led lower by recent high flyers such as Kohl’s (KSS) and Macy’s (M) which are both trading lower by 3%. Dick’s Sporting Goods (DKS) is also pressuring retail, the company gave disappointed same store sales guidance and is trading down over 3% after trading down 10% earlier in the session.    

Large cap stocks are leading the Nasdaq higher today.  Stocks such as AAPL (+0.9%), CSCO (+1%), MSFT (+1.1%) and NVDA (+1.0%) are providing support for the information technology sector.