As we wrap up June, the third quarter, and the first half of the year, mortgage rates are holding steady, as they have been for most of the month of June. This month looks to be ending as the least volatile month in well over a year. For analysts, this absence of much movement signals indecision in the bond market, particularly over economic data, namely hot-button topics like inflation, recession, and jobs.
And speaking of steady, mortgage rates have played in the same 1.0 percent or less range for an entire year. Time flies, right?! There are some very nerdy data points I’m seeing that analysts believe are signaling economic growth softening and inflation heading lower. If these become so, it can be a recipe for a bond market moving higher, which can support a trend for some lower interest rates. We’ll see…
As for the short term, this week there are a half dozen high-impact economic reports and housing data coming out that could rouse rates out of their sleepy summertime sideways trend.
The first report on Durable Goods Orders is a leading indicator of future economic activity. Forecasters, who predicted orders falling 1.0 percent in May after April’s 1.1 percent rise, were surprised with a 1.7 percent rise, showing demand for capital goods remains strong.
On Thursday we get the final report on first quarter GDP (gross domestic product). It’s expected to show the nation’s economic growth at 1.4 percent for Q1 edging 1 tenth higher than the prior estimate.
Friday, the Fed’s favorite inflation indicator, the PCE Index, comes out. Inflation readings for May are expected at monthly increases of 0.1 percent overall versus April’s respective increases of 0.4 for an annual rate of 3.8 versus April’s 4.4 for the topline rate. Lessening inflation bodes well for the bond market, and when bond prices go up, mortgage rates are more likely to improve.
As for the housing market, there are quite a few important reports coming out. The Case-Shiller Home Price Index was expected to show the monthly rate rising 0.5 percent in April but came in higher at 0.9 percent higher, lessening the expected annual contraction in prices of 1.7 percent.
The FHFA Report once again beat expectations, showing a 0.7 percent increase in prices, but slowing more on the annual basis to 3.1 percent price appreciation.
As for New Home Sales, after a solid 683,000 sales rate in April, new home sales in May were expected to slow to 667,000 but instead roared higher to 763,000. Knowing this, the report on Pending Home Sales, due out on Thursday will be interesting. Pending home sales in May, which were unchanged in April, are expected to fall 0.6 percent.
I’ll be keeping an eye on all of it for you and report back! And in the meantime, if I can serve you, your friends, and your family in your home financing needs, please reach out to me.
