Overview: While stocks posted large declines over the past week, it was a quiet period for mortgage markets, and rates ended with little change.
The most recent housing sector data came in pretty close to the expected levels. In October, sales of previously owned homes rose slightly from September, but they still were 5% lower than a year ago. Total housing inventory at the end of October was down a little from September to a 4.3-month supply. A 6.0-month supply is generally viewed as a healthy balance between buyers and sellers. Median home prices were 4% higher than a year ago.
A lack of inventory has been one major factor holding back home sales, and the latest data on new construction provided little reason for optimism that this will improve in the near term. In October, overall housing starts rose a little from September. The increase was due to multi-family units, though, as single-family starts fell a bit from the prior month. In addition, the National Association of Home Builders (NAHB) Housing Market Index showed that home builder confidence declined sharply from 68 to 60, far below the consensus of 67. Builders point to rising land, material, and labor costs as obstacles to a faster pace of new construction.
Outside of the housing sector, the economic news was more encouraging. After a couple of relatively weak months, retail sales picked up in October. Excluding the volatile auto component, retail sales rose a healthy 0.7% from September, which was a little stronger than expected. This lift in consumer spending was good news for the economy heading into the holiday season.
Looking ahead, mortgage markets will be closed on Thursday for Thanksgiving and will close early at 2:00 p.m. EST on Friday. On November 28, the New Home Sales report, the second estimate of third quarter gross domestic product (GDP), and the minutes from the November 8 Fed meeting will be released. The detailed minutes provide additional insight into the debate between Fed officials about future monetary policy and have the potential to move markets. The core Personal Consumption Expenditures (PCE) Price Index, the inflation indicator favored by the Fed, will come out on November 29.