July 21st, 2018 12:36 PM by Jonathan White
Mortgage Market News for the week ended July 20, 2018
President and CEO Mortgage Broker | NMLS ID: 3443
Blue Door Mortgage, LLC
Call: 617.527.BLUE (2583)
1280 Centre Street
Strong Retail Sales
It was a relatively quiet week for mortgage rates. The major economic data was mixed, and mortgage rates ended a bit higher.
Consumer spending accounts for about 70% of economic activity in the U.S., and the retail sales data is a key indicator of growth. Retail Sales unexpectedly turned negative for three months during the winter, causing investors to question the strength of the economy. Since then, however, sales have been very strong.
Monday's data showed a solid increase in June of 0.5% from May, and the May results were revised much higher to 1.3% from 0.8%, which was the largest monthly gain since September 2017. Given the strong retail sales data, along with other major reports, the Atlanta Fed's forecast for second quarter gross domestic product (GDP) is up to a whopping 4.5%, more than double the 2.0% growth seen in the first quarter.
The news from the housing sector was less encouraging. In June, housing starts fell 12% from May to the lowest level since September 2017. The decline was split roughly evenly between single-family and multi-family units. Single-family starts reached a 10-year high in November 2017, but they have fallen steadily since then. Despite a huge need for more inventory of homes in many regions, higher labor, land, and material costs are some of the reasons cited by homebuilders for the slowdown in new construction.
Looking ahead, Existing Home Sales will be released on Monday and New Home Sales on Wednesday. Durable Orders, an important indicator of economic activity, will come out on Thursday. The first reading for second quarter gross domestic product (GDP), the broadest measure of economic growth, will be released on Friday. In addition, a European Central Bank meeting on Thursday could influence U.S. mortgage rates.
Existing Home Sales
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