The Fed met this week and maintained the target range for the federal funds rate, as expected. The Fed cited global risks and a downgraded outlook for inflation as the main reasons they issued no rate hike and pulled back their expectations for 2016.
Expectations were lowered by 50 basis points from 1.4 percent to a year-end rate of 0.9 percent. This was good for mortgage rates this week.
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The March Housing Market Index showed that demand for new homes is strong but lots and labor shortages are holding back construction. The index remained unchanged for the month, holding at a level of 58. Present sales were unchanged at 65 with future sales down 3 points to 61. Buyer traffic was a positive for this month’s index, up 4 points to 43.
Housing starts for February rose 5.2 percent to a 1.128 million annualized rate, but the more closely-watched portion of the report, permits, dropped 3.1 percent with forecasts calling for no change.
Last week in the economy:
- Mortgage rates (the national average) increased 0.07% (7 basis points).
- The purchase sector of MBA Mortgage Applications increased a small 0.3 percent in the March 11 week but still remain extremely strong, up 33 percent year-over-year. Refinance applications fell 6 percent.
- Initial Jobless Claims were up 7,000 to 265,000 in the March 12 week but are still near record lows.
- The Retail Sales gains made in February were offset by a downward revision to January’s Retail Sales Report. What initially was a 0.2 percent gain is now a minus 0.4 percent for the start of 2016. Total sales for February were weak at minus 0.1 percent.
- The Consumer Price Index was up a higher-than-expected 0.3 percent in February with a year-over-year rate of plus 0.1 percent to 2.3 percent.
- Bloomberg’s Consumer Comfort Index rose a half-point to 44.3 in the March 13 week. This reading pushed the index back to the 44 point mark, where it has hovered for the majority of 2016.
What's on the economic calendar for the week of March 21, 2016:
Monday: Existing Home Sales
Wednesday: MBA Mortgage Applications, New Home Sales
Thursday: Jobless Claims & Bloomberg Consumer Comfort Index, JOLTS
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