Economic events released over the past two holiday weeks have had little effect on mortgage rates, which ended this week slightly higher.
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The last lot of housing data showed that 2015 was a year of gains for the housing market, but the last couple months of the year had dropped from 2015 highs. November’s 11% decline in existing home sales is partially attributed to longer closing times experienced after the October enactment of new closing disclosure regulations (TRID).
November pending home sales declined for the third time in four months as homebuyers battled rising home prices and limited inventory. The pending home sales index was down 0.9% from October but is still up 2.7% year-over-year. The index measures contracts to buy existing homes, which were signed during the month. Though down in November, Fannie Mae predicts the homebuying strength seen in 2015 will continue into the new year with a 3.9% increase in total home sales.
The core PCE price index, the most recent inflation reading, showed that November inflation remained contained at an annual rate of 1.3%. The strength of the dollar and low commodity pricing have been major factors in keeping 2015 inflation low. 2016’s core PCE will be dependent on the Fed’s effectiveness at keeping expectations for future inflation low.
Last week in the economy:
- Mortgage rates (the national average) increased by 0.02% (2 basis points).
- The purchase index of MBA Mortgage Applications picked up traction following the Fed decision to increase the federal funds rate. Purchase applications increased by 4 percent and refinancing applications shot up 11 percent.
- Initial jobless claims climbed an unexpected 20,000 to 287,000 in the December 26 week to the highest level since the week of July 4. This also caused the 4-week average to reach the highest level since mid-July.
- Consumer Confidence rebounded in December to 96.5, up from 92.6 in November and well above high-end predictions.
- The Bloomberg Consumer Comfort index was also boosted to a two-month high in the December 27 week as consumers “registered their most upbeat assessments of the buying climate since April.” All three components – attitudes about the national economy, personal finances and conditions of consumerism – were up.
What's on the economic calendar for the week of January 4, 2016:
Wednesday: MBA Mortgage Applications, Fed Minutes & ADP Employment Report
Thursday: Jobless Claims
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