Wednesday’s Fed meeting was positive for mortgage rates as there was no change made to the federal funds rate, as expected. The Fed noted that while labor and housing market data has been improving, overall economic activity has slowed.
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Though sales have been somewhat soft in the midst of the busiest homebuying season, the Pending Home Sales Index for March shows further improvement may be on the horizon. The index rose a higher-than-expected 1.4 percent in the month of March, with the year-over-year rate standing at plus 1.4 percent.
New Home Sales in March weren’t outstanding but still resulted in positive numbers. Sales for the month came in at a 511,000 annualized rate, on the lower end of the 500,000 to 532,000-consensus range. Year-over-year new home sales are up 5.4 percent and supply improved from 5.6 months to 5.8 months.
Gross Domestic Product (GDP), the broadest measure of economic activity, came in at an annualized rate of 0.5 percent for the first quarter of 2016. Econoday was calling for a consensus level of 0.7 percent. Highlights in the report showed consumer spending increased nearly 2 percent and residential investments were up a respectable 14.8 percent.
Last week in the economy:
- Mortgage rates (national average) fell 0.7 percent (7 basis points).
- The purchase sector of MBA Mortgage Applications fell 2 percent in the April 22 week, pulling down the year-over-year rate from 17 percent to 14 percent. The year-over-year rate peaked at 30 percent in March. The refinance sector also lost momentum, down 5 percent for the week.
- Initial Jobless Claims increased by 9,000 in the April 23 week but the 257,000 is still near record lows.
- The Consumer Confidence Index showed a significant drop in the “jobs-hard-to-get” sector, which possibly hints at strength in April’s employment report. Regardless, confidence dropped over 2 points for April to 94.2.
What’s on economic calendar for the week of May 2, 2016:
- Wednesday – MBA Mortgage Applications & ADP Employment Report
- Thursday – Jobless Claims & Consumer Comfort Index
- Friday – Employment Situation