Weekly Economic Review: Mortgage Rates Hit Highest Level in Nearly Four Years

Posted by Laine Smith on 2/18/18 3:40 PM

Topics: Economy

In this week’s economic review, the 30-year average mortgage rate continued its upward climb, home builders remain confident in the market, and consumer sentiment was high despite falling retail sales.

Economic Update 6-25.png   Consumer Price Index

The consumer price index saw stronger-than-expected increases in January, up 0.5 percent from December. Core CPI, which excludes food and energy, was up a respectable 0.3 percent, hitting high-end estimates.

Retail Sales

Retail sales fell unexpectedly in January, posting the biggest decline in 11 months. The 0.3 percent decline was an additional negative on top of December’s downward revision which now reflects zero change instead of the previously report 0.4 percent increase.

Weakness was centered in motor vehicle purchases and building materials, which could be a result of increased demand during the months of hurricane recovery.

Housing Market Index

Home builder confidence continued into February at a strong level of 72. Traffic remained a highlight of the report at a level of 54, which gives hope of first-time buyers in the new home market.

Housing Starts

Starts surged in January after finishing 2017 on a high note. Starts hit the second highest rate of the expansion at an annualized rate of 1.326 million. Strength was centered in recently lagging multi-unit homes, but the single-family category also posted strong gains.

Permits posted even stronger gains, up to a 1.396 million rate, the highest of the expansion. The negative of the report was the completion rate, which declined 1.9 percent.

Consumer Sentiment

Preliminary February reports have consumer sentiment jumping over 4 points from 95.7 to 99.9, the highest score in 14 years. Current conditions hit a level of 115.1 while the expectations component grew to 90.2.

This week in the economy:

  • As of February 15th, the 30-year average fixed rate climbed 6 basis points to 4.38 percent with 0.6 points, according to Freddie Mac.
  • In the week of February 9th, the purchase sector of mortgage fell by a seasonally adjusted 6 percent amidst rising rates. Refinancing applications 2.0 percent from the previous week.
  • In the week of February 10th, initial jobless claims rose to 230,000 though they remain near historic lows.
  • Despite stock market volatitility, the Bloomberg Consumer Comfort Index jumped over 2.5 points to a level of 57.0, a new expansion high.

The economic calendar for the week of February 19th, 2018:

  • Wednesday – MBA Mortgage Applications, Existing Home Sales
  • Thursday – Jobless Claims, Bloomberg Consumer Comfort Index

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