Retail Sales, Mortgage Delinquencies, Consumer Sentiment

Americans increased their retail and food service spending by 0.3 percent in October compared with September. The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to 5.85 percent at the end of the third quarter of 2014. Though consumers are still a little edgy about current conditions, their expectations are more optimistic now.

Americans increased their retail and food service spending by 0.3 percent in October compared with September, according to the Census Bureau on Friday. Compared with October 2013, retail spending was up 4.1 percent. The bureau adjusts the increase for seasonal variation, holiday and trading-day differences, but not for price changes.

Month over month, the retail categories that gained the most in sales were sporting goods, hobby, book and music purveyors (up 1.2 percent); food service and drinking places (up 0.9 percent); and clothing stores and auto retailers (each up 0.5 percent). Non-store retailers – the Internet, mostly – enjoyed a 1.9 percent uptick in October compared with September. The biggest loser for the month were electronics sales (off 1.6 percent) and gas sales (off 1.5 percent, though that was largely because of dropping gas prices).

Most retail categories did well year over year. Non-store retail sales were up 9.1 percent, for instance, and sales at auto and other motor vehicle dealers enjoyed an 8.3 percent increase compared with last year. Department stores, on the other hand, suffered a 3.5 percent drop in sales since last year, and gas stations – again because of falling prices – saw sales shrink 4 percent since October 2013.

Mortgage Delinquencies Drop Further 

The Mortgage Bankers Association reported on Friday that the delinquency rate for U.S. mortgage loans on one-to-four-unit residential properties decreased to 5.85 percent at the end of the third quarter of 2014, down from 6.04 percent in the second quarter, and 6.41 percent a year earlier. The latest level is the lowest one since the fourth quarter of 2007.

By MBA’s reckoning, the delinquency rate includes loans that are at least one payment past due but doesn’t include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the third quarter was 2.39 percent, down 10 basis points from the second quarter and 69 basis points lower than a year earlier. That’s the lowest foreclosure inventory rate since the fourth quarter of 2007.

“We are now back to pre-crisis levels for most measures,” Mike Fratantoni, MBA’s chief economist, noted in a statement. “On an aggregated basis, both judicial and non-judicial states saw decreases in loans in foreclosure, although the judicial states continue to have a combined foreclosure inventory rate that is around three times that of non-judicial states. New Jersey continues to lead the nation in loans in foreclosure, although it saw another decrease from the previous quarter. Florida, once with the highest percentage of loans in foreclosure, experienced a significant decrease in the third quarter.”

Consumer Sentiment More Positive

The University of Michigan and Reuter’s said on Friday that its consumer sentiment index for mid-November came in at 89.4, up from 86.9 in October. That was a stronger uptick that expected, and the metric’s highest level since 2007. Though consumers are still a little edgy about current conditions, their expectations are more optimistic now.

Wall Street, still up in record territory for most of the indexes, had a mixed day on Friday, with the Dow Jones Industrial Average losing 18.05 points, or 0.1 percent. The S&P 500 gained 0.02 percent and the Nasdaq advanced 0.18 percent.