U.S. Housing Starts Jump
Mortgage markets generally were quieter than they have been over the last several weeks. The most highly anticipated economic release, the Fed minutes, had little impact. Mortgage rates ended the week a little higher.
The minutes from the April 29 Fed meeting released on Wednesday contained no major surprises. According to the minutes, Fed officials do not expect that economic conditions will justify a federal funds rate hike in June. They attributed weak economic growth during the first quarter to “transitory” factors including bad weather and the West Coast port shutdown. Most investors now are looking for the first rate hike to take place in September or December.
The housing data released this week was mixed. Single-family housing starts in April jumped 16% from March to the highest level since January 2008. By contrast, April existing-home sales fell 3% from March, but they still were 6% higher than a year ago. The median existing-home price was 9% higher than a year ago.
According to the NAR, a lack of supply is holding back sales activity and pushing home prices higher. Based on this month’s strong data on housing starts, builders, fueled by low rates, may help to alleviate the shortage of available homes.
Next week, Durable Orders, an important indicator of economic activity, will be released on Tuesday, along with New Home Sales. Pending Home Sales will be released on Thursday. Revisions to first quarter GDP will come out on Friday. Treasury auctions will take place on Tuesday, Wednesday, and Thursday. News about Greece also could have an influence on global bond yields. Mortgage markets will be closed on Monday in observance of Memorial Day.
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